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Criminal Liability of Officers and Directors for Corporate Antitrust Violations

Officers, directors, and agents of a corporation that violates a criminal antitrust law may be found personally guilty of a misdemeanor if they authorized the violation of law, and they may be sentenced to up to a year in jail and fined up to $5,000. Section 14 of the Clayton Act, 15 U.S.C.S. § 24, provides:



Whenever a corporation shall violate any of the penal provisions of the antitrust laws, such violation shall be deemed to be also that of the individual directors, officers, or agents of such corporation who shall have authorized, ordered, or done any of the acts constituting in whole or in part such violation, and such violation shall be deemed a misdemeanor, and upon conviction thereof of any such director, officer, or agent he shall be punished by a fine of not exceeding $5,000 or by imprisonment for not exceeding one year, or by both, in the discretion of the court.

Thus, individual officers, directors, and agents of a corporation may be held personally responsible for criminal violations of the antitrust laws by the corporation. Before such responsibility is assessed, however, violation by the corporation of a penal provision of the antitrust laws, such as Sections 1, 2, or 3 of the Sherman Act, 15 U.S.C.S. §§ 1-3, must be shown. If such a violation is shown, those individuals who authorized, ordered, or performed “any of the acts” involved in the violation may then be subject to prosecution under Section 14 of the Clayton Act for a misdemeanor.

Section 14 of the Clayton Act has not generated substantial case law. This may be due to judicial precedent that the Section 14 misdemeanor provision is supplemental to, rather than a replacement for, felony provisions of Sections 1 through 3 of the Sherman Act. Section 1 of the Sherman Act, for example, provides that any person (defined to include individuals as well as corporations and other entities) who agrees or conspires to restrain trade is guilty of a felony. A corporation violating Section 1 may be fined up to $100 million, and an individual violating Section 1 may be imprisoned for up to 10 years and fined up to $1 million.

Knowing violations of criminal antitrust provisions by individual officers or directors thus are subject to felony prosecution. However, if a corporate antitrust violation is proved but no conspiracy of those officers or directors who authorized the contract is charged and proved, those officers or directors may still be subject to the misdemeanor provision of Section 14 of the Clayton Act if it is shown that they authorized, ordered, or performed any of the acts taking place in the course of their corporation’s violation of the antitrust laws.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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