One of the most important activites the government can engage in when protecting the free market, is ensuring that it is in fact, and remains, free.
Unfortunately, then, some minimal regulation of the market-place and its participants must take place merely in order to ensure that it is an honest market, and that it reflects to some extent the same sense of right and wrong traditionally reflected in the law of torts.
The Sherman Anti-Trust Act of 1890 was written to do just that. Unfortunately enforcement of it seems to wobble between over-zealous and partisan on the one hand, and deliberately lax on the other.
Teddy Rosevelt is reported as saying, “When I took office the anti-trust law was practically a dead letter and the interstate commerce law in as poor a condition. I had to revive both laws. I did. I enforced both.” At Milwaukee, Wis., October 14, 1912.) Mem. Ed. XIX, 448; Nat. Ed. XVII, 326.
At other times, of course government policy seems to view the Sherman Act as an impediment to efficiency. As one participant wrote:
“The first Clinton administration acknowledged strains on the defense industrial base and put into place two policies to address this problem: acquisition reform (1) and an industry consolidation policy. Although much remains to be done, there has been considerable progress on acquisition reform. On the other hand, the success of the consolidation policy that attempted to balance the number of competing firms with efficiency has been more controversial.
In 1993, analysts assigned by Secretary of Defense Les Aspin to conduct a “bottom-up review” of U.S. defense posture concluded that the defense industry needed to be restructured. Then Deputy Secretary of Defense William J. Perry announced to industry leaders, at what has come to be referred to as the “Last Supper,” the Department of Defense (DoD) policy to encourage consolidation.
In July 1993, serving as the Undersecretary of Defense for Acquisition and Technology, I introduced rules for sharing savings from consolidation between DoD and industry. The Defense Science Board formed a task force, composed of defense industry executives and government lawyers, to address the antitrust issues raised by the consolidation policy. In the five-year period of 1993-1998, many major defense firms merged or were acquired.
In 1998, DoD unexpectedly reversed the pro-consolidation policy and urged the Department of Justice (DOJ) to reject the proposed merger of Lockheed Martin and Northrop and the proposed General Dynamics acquisition of Newport News Shipbuilding. The absence of a clear signal ending the consolidation policy is unfortunate because it left several defense firms stranded on a different course. In the spring of 2001, both General Dynamics and Northrop! Litton made offers for Newport News Shipbuilding, thus re-opening the industry consolidation question for the Bush administration.” Acquisition Review Quarterly / Fall, 2001 Consolidation of the U.S. Defense Industrial Base by John M. Deutch
This next case however, seems to be pretty clear cut. An instance it appears where the government is doing just what it should do in order to preserve the integrity of the economic system.
So: So Sorry, a most regrettable error in judgment …
Yazaki to pay $470 million fine, Denso $78 million; 4 executives from Yazaki to serve prison time
Yazaki Corp. and Denso Corp., two of Japan’s largest auto-parts suppliers, have agreed to plead guilty in a widening multicontinent bid-rigging case, the U.S. Department of Justice said today.
Yazaki and Denso will pay a combined total of $548 million in criminal fines as part of a plea agreement, the department said in a statement. Four of Yazaki’s Japanese executives also have agreed to plead guilty and serve prison time in the United States.
Denso was charged with conspiring to charge higher prices on heating-control panels and electronic control units. The Yazaki charges involved wire harnesses and related products.
Yazaki will pay a $470 million fine — the second-largest criminal fine ever for a Sherman Act antitrust violation, according to the Justice Department. Denso will pay $78 million.
The four Yazaki executives were identified as Tsuneaki Hanamura, Ryoji Kawai, Shigeru Ogawa and Hisamitsu Takada. They have agreed to serve prison time ranging from 15 months to two years.
The two-year sentences would be the longest term of imprisonment imposed on a foreign national voluntarily submitting to U.S. jurisdiction for a Sherman Act antitrust violation, the Justice Department said. The fine amounts and prison sentences are subject to court approval.
Yazaki ranks No. 13 on the Automotive News list of the 100 top global suppliers, with total estimated sales to automakers of $12.5 billion during its 2010 fiscal year. Denso ranks No. 2 on the list, with total estimated sales to automakers of $32.9 billion during its 2010 fiscal year.
In a statement, Denso said it cooperated in the investigation and will continue to do so. The company said its chairman (Koichi Fukaya), president, certain board members and executive directors will voluntarily return 10-30 percent of their compensation for a three-month period beginning in February. Eight executives are taking the pay cuts, a company spokeswoman said.
“It is Denso’s policy to comply with all applicable antitrust laws,” a company statement said.”
Public law of the US
Sherman Anti-Trust Act (1890)
Fifty-first Congress of the United States of America, At the First Session,
Begun and held at the City of Washington on Monday, the second day of December, one thousand eight hundred and eighty-nine.
An act to protect trade and commerce against unlawful restraints and monopolies.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
Sec. 1. Every contract, combination in the form of trust or other- wise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, at the discretion of the court.
Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof; shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.
Sec. 3. Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade or commerce in any Territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations, is hereby declared illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.
Sec. 4. The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney-General, to institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition the court shall proceed, as soon as may be, to the hearing and determination of the case; and pending such petition and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises.
Sec. 5. Whenever it shall appear to the court before which any proceeding under section four of this act may be pending, that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof.
Sec. 6. Any property owned under any contract or by any combination, or pursuant to any conspiracy (and being the subject thereof) mentioned in section one of this act, and being in the course of transportation from one State to another, or to a foreign country, shall be- forfeited to the United States, and may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure, and condemnation of property imported into the United States contrary to law.
Sec. 7. Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act, may sue therefor in any circuit court of the United States in the district in which the defendant resides or is found, without. respect to the amount in controversy, and shall recover three fold the damages by him sustained, and the costs of suit, including a reasonable attorney’s fee.
Sec. 8. That the word “person,” or ” persons,” wherever used in this act shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the Territories, the laws of any State, or the laws of any foreign country.
Approved, July 2, 1890.