Corporations and c-suite executives should take note of a potentially chilling development this Halloween: the Department of Justice's Antitrust Division secured a guilty plea on October 31, 2022, in its first criminal monopolization prosecution since 1977. According to a DOJ statement, the Antitrust Division brought a single-count charge under Section 2 of the Sherman Act against the president of a paving and asphalt contractor based in Billings, Montana on September 19, 2022.1 The charge alleged that Nathan Nephi Zito of Z&Z Asphalt attempted to monopolize the highway crack-sealing services market in Montana and Wyoming in January 2020 by soliciting a "strategic partnership" to allocate markets with a competitor. In this proposed partnership, Z&Z Asphalt would claim business in Montana and Wyoming, and its competitor would claim South Dakota and Nebraska. Zito also offered the competitor $100,000 in additional compensation, and proposed that they enter into a sham transaction to hide the illegal agreement. The competitor rejected Zito's offer and reported Zito to the Department of Transportation, which led to the criminal proceeding. Zito admitted the facts in the charge and pled guilty.
Under the terms of the plea agreement, Zito must pay a $27,000 fine. While the agreement does not include any specific term of imprisonment, a Department of Justice press release states that Zito "faces a maximum sentence of 10 years' imprisonment and a maximum fine of $1 million."2 The parties agree that the U.S. Sentencing Guidelines apply and that the relevant volume of commerce is $2,700,000. The sentencing hearing is set for February 23, 2023.
While the parties did not litigate the Section 2 issue, this guilty plea potentially represents a significant step in realizing Assistant Attorney General Jonathan Kanter's plans to "vigorously enforce" Section 2 and criminalize monopolization.3 AG Kanter has frequently warned that the DOJ's Antitrust Division would charge companies criminally for monopolization and attempted monopolization anywhere "illegitimate monopoly behavior" "subjects the American public to harm." While this criminal prosecution is of an individual and not the company itself—and it looks more like a Section 1 market allocation agreement than an actual attempt to monopolize—the guilty plea is nonetheless a milestone for the Department of Justice, and may signal where the department will focus its efforts going forward.
Footnotes
1 Executive Pleads Guilty to Criminal Attempted Monopolization | OPA | Department of Justice
2 Id.
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