In yet another signal in support of the notion that “the era of lax enforcement is over, and the new era of vigorous and effective antitrust law enforcement has begun,”¹ on October 31 the Antitrust Division of the Department of Justice (“DOJ”) obtained its first criminal attempted monopolization conviction in more than four decades.

Nathan Zito, co-founder of Z&Z Asphalt, was charged with a single felony count that outlined his invitation to conspire with a competitor, through a “sham” transaction, to attempt to monopolize the highway crack-sealing services markets in Montana and Wyoming. According to the charging document, Zito offered his competitor money and the promise not to compete for business in Nebraska and South Dakota in exchange for this market allocation scheme.² Zito pled guilty to the charge and faces up to 10 years’ imprisonment and up to $1 million in fines.

The DOJ took a new prosecutorial posture in this case. Although the government has in the past brought criminal market allocation actions under Section 1 of the Sherman Act, in this instance the charge was brought under Section 2 of the Sherman Act for attempted monopolization for at least two reasons. First, the competitor never agreed to conspire to attempt to monopolize the relevant market, and so without an agreement, a Section 1 charge would likely not have been successful. Second, as with the notice Assistant Attorney General Jonathan Kanter issued about the increased Section 8 interlocking directorate enforcement earlier this year,³ Kanter also promised that the “[DOJ] will aggressively pursue enforcement of the criminal antitrust laws to protect consumers, workers and businesses harmed by unlawful collusion and monopolization.”⁴ And while there is jurisprudence to support criminal prosecution for monopolization claims, the government has not brought such claims since the 1970s.⁵

The ongoing and aggressive enforcement of the antitrust laws by the government further reinforces the call antitrust practitioners have been issuing to clients: a thorough and robust compliance and training program are the most effective ways to address the legal risk companies face, especially those with measurable market shares. This case reveals that even an unsuccessful invitation to collude may lead to criminal prosecution under Section 2 of the Sherman Act, and training executives and staff on these dangers should be a priority for company risk management strategies. 

FOOTNOTES

¹ Assistant Attorney General Jonathan Kanter, Keynote Remarks, “Antitrust Enforcement: The Road to Recovery,” available at https://www.justice.gov/opa/speech/assistant-attorney-general-jonathan-kanter-delivers-keynote-university-chicago-stigler

² DOJ Press Release, “Executive Pleads Guilty to Criminal Attempted Monopolization,” October 31, 2022, available at https://www.justice.gov/opa/pr/executive-pleads-guilty-criminal-attempted-monopolization

³ https://www.polsinelli.com/publications/promise-made-promise-kept-the-justice-department-follows-through-with-interlocking-directorate-enforcement

⁴ Jonathan Kanter, Opening Remarks, Spring Enforcers Summit, April 4, 2022, available at https://www.justice.gov/opa/speech/assistant-attorney-general-jonathan-kanter-delivers-opening-remarks-2022-spring-enforcers

⁵ D. Daniel Sokol, Reinvigorating Criminal Antitrust? 60 Wm. & Mary L. Rev. 1545, 1571 (2019).