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The big news in antitrust enforcement is always the international investigation that ends in a fine of tens or hundreds of millions of dollars, such as last year’s agreement by Samsung to pay $300 million for fixing the price of DRAM chips or last week’s agreement by Akzo Nobel to pay $32 million for fixing the price of hydrogen peroxide. Even when the Justice Department announces its statistics, the headline is the amount of money collected in fines. But if this gives comfort to small companies and their counsel, they should think again. Although nonspecialists sometimes believe that the antitrust laws are aimed at limiting the power of big businesses, these laws, particularly the criminal provisions of the Sherman Act, are enforced against all manner of companies. Small businesses do get discovered, prosecuted, and convicted. Recent prosecutions of small companies have been as varied as the economy itself. The Justice Department has investigated roofing contractors in upstate New York for rigging bids. Electrical contractors, concrete suppliers, and insulation manufacturers also have been prosecuted. Small computer firms have been targeted, as have small chemical companies. Moving and storage companies have been prosecuted for bid rigging. Scrap companies have been convicted of price fixing. Under the Sherman Act the Justice Department will prosecute price fixing and bid rigging as crimes. Price fixing and bid rigging are usually responses to corporate pressures for profits and results, not acts of personal greed. As a result, price fixers rarely think of themselves as criminals. Small companies are no less vulnerable to this blind spot than large ones. Individuals convicted of price fixing or bid rigging now face a maximum sentence of 10 years in prison for each count. The actual length of the sentence depends on a number of characteristics of the offender and the offense — most important, the volume of commerce affected by the conspiracy. This does result in shorter sentences for convicted employees of small companies. But it’s not much help. Recent amendments to the federal sentencing guidelines have served to increase the lowest sentence available for price fixing (without a departure from the guidelines) to 10 months confinement, at least half of which must be served in prison. Bid rigging is treated more harshly; a person convicted of this offense must spend at least one year in prison. Companies convicted of cartel activity face large fines calculated by looking at the volume of commerce affected by the price fixing. The base fine is 20 percent of the volume of commerce regardless of what the actual loss was. Even after adjustments for various factors, fines for antitrust offenses cannot be less than 15 percent of the volume of commerce. This may well be enough to bankrupt a small company, particularly if the company has few other products or services besides those whose prices were fixed, and especially if the price fixing lasted more than a year. Lacking expertise in antitrust law, small companies may think that colluding to keep prices lower than would result from unrestrained competition is legal. No, it’s not. In recent years the Justice Department has prosecuted bidders who agreed to keep purchase prices at auction low so that they could make more money on resale in a number of real estate markets. Earlier this year the department prosecuted a similar scheme in the otter-pelt market. When targets of an antitrust investigation lie to the grand jury or falsify or destroy documents, the Justice Department will prosecute for obstruction of justice — even when no substantive antitrust offense is found. The department has launched such prosecutions against smaller businesses in a number of markets, including linen supply, feeder goldfish (fish sold to be fed to other fish), and computer products. Even when the government is done with you, it’s not necessarily all over. For every criminal antitrust offense, there is also a tort. Private parties may sue for treble damages suffered as a result of price fixing or bid rigging, as well as for attorney fees. And a criminal conviction is prima facie evidence of liability. The lesson for small companies and their counsel is clear: Do not ignore the antitrust laws because you think they apply to someone bigger or more profitable. They apply to you too, and you ignore them at your peril.
John G. Calender is a shareholder and Phillip C. Zane is of counsel in the D.C. office of Baker, Donelson, Bearman, Caldwell & Berkowitz.

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