A recent Supreme Court decision that addresses the degree of proof required to increase criminal fines beyond statutory limits is likely to increase the importance of economic analysis in price-fixing cases. It has long been assumed that to raise antitrust fines above the Sherman Act’s $100 million maximum for companies, the Department of Justice (DOJ) only had to prove the amount of gain or loss from the crime by a preponderance of evidence. The decision in Southern Union v. United States raises that standard of proof.
In 2000, the Supreme Court in Appendi v. New Jersey held that the Sixth Amend-ment guarantee of a right to a trial by jury requires that any fact that increases the maximum punishment authorized by statute for a particular crime be proved to a jury beyond a reasonable doubt. Thus, judges may not increase prison sentences beyond the statutory maximum based on facts that aren’t submitted to a jury. Ever since Appendi, courts have struggled with the question of how far that holding applies. In particular, it was not clear if the holding applied only to prison sentences for individuals or also applied to fines for corporations. Recently, in United States v. AU Optronics Corporation, the district court judge ruled that the standards in Appendi would apply in the price-fixing context, where the primary form of punishment sought for corporate defendants was a fine.
The Supreme Court’s Southern Union decision confirms this higher standard for cartel fines. The Court held that the rule of Appendi applies to the imposition of criminal fines and not just prison sentences. Specifically, a jury must determine any fact necessary to increase a fine beyond the maximum a judge may impose. According to the Court, this holding preserves the historic function of a jury in determining whether the prosecution has proven every element of an offense beyond a reasonable doubt.
The Supreme Court’s ruling has several implications for the role of economic analysis in cartel cases. Evidence of the effects of a cartel may significantly affect the fines levied against its members. Thus, both the DOJ and defendants will need to present a sound economic analysis of those effects at trial. Such evidence will be particularly important if the DOJ is seeking more than $100 million in fines. Even in pre-trial and negotiation stages, the parties’ assessment of the strength of their respective cases and the amount of damages that can be proven at trial will be critical. In this regard, economic analysis can be crucial in helping defendants assess the appropriate amount of a settlement to avoid litigation.