Another Government WMD

S. M. Oliva
Mar. 10, 2006

In January, I wrote about Senate legislation that would give the Department of Justice’s Antitrust Division wiretap powers in criminal antitrust investigations. I noted then that such authority would enable prosecutors to spy without restriction on any American business. At the time, the Senate had passed the bill, and it was pending before the House Judiciary Committee.

As it turns out, House Republicans had no intention of discussing the merits of the Senate’s legislation in the light of day. Instead, in a craven attacks on civil liberties and free markets, Congress tacked an antitrust wiretap provision onto the renewal of the USA PATRIOT Act, legislation that is purportedly designed to address terrorism. During closed-door meetings last December between House and Senate negotiators, language was added declaring Sections 1, 2, and 3 of the Sherman Act "predicate offenses" for obtaining judicial wiretap orders. This was the same language used in the original Senate legislation. No explanation was given by congressional negotiators as to why antitrust matters were incorporated into anti-terrorism legislation.

The only reason that I can discern for this action is that the House Republican leadership – particularly Judiciary Committee chairman F. James Sensenbrenner, a militant backer of antitrust and prosecutorial power – wanted to foreclose any possible debate of the antitrust provision. Indeed, there was no record of any floor debate on the antitrust provision in either chamber. The single largest expansion of criminal antitrust law in decades came in under the radar and without a single dissenting voice.

Marie Leone, writing at CFO.com, has an excellent article on the consequences of the DOJ’s new wiretap powers:

Under the amendments, the DOJ could thus ask a federal judge for permission to wiretap or bug suspected violators of conspiratorial antitrust crimes like price fixing. But corporate directors and officers are likely to be more troubled by prosecutors' new ability to request wiretaps for such milder suspected antitrust violations as setting up trade monopolies or distribution arrangements that restrain commerce.. . .

[T]he new wiretapping of suspected hard-core antitrust criminals permitted under the act could spell intellectual property problems for corporations, thinks Mark Racanelli, a white-collar defense attorney with the New York office of O'Melveny and Myers. Trade secrets might be picked up on tape inadvertently and then made part of the public record in connection with an indictment.

That could happen when a legitimate business discussion – such as talk about a planned merger or the introduction of a new product – provides context for the crime or is intertwined with a conversation about illegal activities, explains Racanelli.

But keeping corporate information under wraps may not be possible. That's because tapes from wiretaps or bugs are usually considered critical to a case, adds Racanelli, a former lawyer for the federal government. "From a prosecutor's perspective, it is better to have a tape than just a witness. Tapes are more powerful evidence," he notes.


The antitrust laws, particularly the Sherman Act, do not specify what acts are subject to criminal liability versus merely civil penalties. No businessman can be assured that their actions won’t trigger an antitrust prosecution. Wiretap authority will embolden prosecutors to expand the scope of criminal antitrust liability, for no other reason than to ensure prompt guilty pleas from executives fearing prison time. Without wiretap powers, the DOJ won more than 96% of their antitrust cases, usually without having to face the judicial and public scrutiny of trials. Now, with wiretap powers combining with the DOJ’s existing prosecutorial "tools," it’s safe to predict that there will never be a criminal antitrust trial in this country again. From here on out, it will be plea bargains exclusively.

The actual threat to American commerce cannot be overstated. Wiretap powers combined with a vaguely worded Sherman Act means that every business in this country can be bugged at any time for any reason, because all business decisions are potential antitrust violations. There is now nothing to stop the DOJ from spying on corporate merger discussions, product meetings, or even private phone calls between executives or employees.

What Congress has done is erase the line between lawful business activity and organized crime (and even terrorism.) What the FBI once did to the Mafia will now be done to American businesses, particularly firms in politically unpopular industries, such as energy, telecommunications, and health care. And we’re not just talking about Fortune 500 companies. Small businessmen, even sole proprietors, may be bugged to further political antitrust objectives. For example, the FTC and DOJ have waged a five-year campaign against small physician groups for so-called "price fixing" in negotiations with large insurance companies. Until now, these investigations have been treated as civil matters. Armed with the revised PATRIOT Act, however, the DOJ can reclassify these cases as criminal and wiretap your family’s doctor and the administrative consultants that advise them in their dealings with insurers.

The Antitrust Division now has possession of an economic weapon of mass destruction. We don’t know when it will be deployed, or against what industry it will be used. But it will be used, and the consequences are likely to be catastrophic. And if you think I’m being melodramatic, ask yourself these questions: Why would the Antitrust Division need wiretap authority when it already wins virtually all of its cases by default? And why would House Republicans bypass the normal legislative process to create new prosecutorial powers unrelated to any anti-terrorism or national security objective?












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