Earlier today, Finland-based UPM-Kymmene Corp. announced that it would not be prosecuted by the U.S. Department of Justice for alleged “price-fixing” in the American labelstock (adhesive labels) market. If you’re wondering why a company would announce that it’s not being prosecuted, the answer is simple. Since the 1970s, the DOJ’s Antitrust Division has had a policy of awarding “amnesty” to the first member of an alleged “price-fixing” conspiracy to come forward and assist the government’s investigation. UPM has apparently received the available amnesty in the DOJ’s investigation of the labelstock market.
This amnesty policy is not provided for in the antitrust laws, and in fact the government’s near-total reliance on amnesty in criminal antitrust investigations creates serious constitutional problems. For one thing, the DOJ is openly refusing to prosecute a firm that actually confesses to violating the law, as UPM did here. The DOJ offers a utilitarian justification—by letting one company go, the state can more easily prosecute the other conspirators, who generally plead guilty and pay multi-million dollar fines rather than face the evidence gathered by the DOJ’s collusion with the amnesty recipient.
Equal protection of the laws is not a priority for the Antitrust Division, which prefers to emphasize the number of guilty pleas it obtains and, more importantly, the “record” amount of fines it collects. But this raises additional issues. First, the fines collected are usually remitted to the treasury; they are not used to compensate the purported “victims” of the antitrust conspiracy, because these firms can still file civil antitrust lawsuits and collect treble damages.
Second, by selectively declining to prosecute one conspirator—the amnesty recipient—the DOJ contradicts the very pretext it uses to justify antitrust prosecution: promoting competition. After all, if three firms engage in “price-fixing,” and two firms end up paying millions in fines while the third receives immunity, the third firm has received a decided competitive advantage despite engaging in “illegal” activities. And more fundamentally, imposing punitive fines removes capital from the private market to the state treasury. That does nothing to improve competition in the market itself (or even prevent future “price-fixing.”)
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