Rare criminal antitrust case results in probation, not prison

Blackened range remains on both sides of the Montana 200 highway between Sand Springs and Mosby where the Lodgepole Complex jumped the road
Blackened range remains on both sides of the Montana 200 highway between Sand Springs and Mosby, U.S. July 23, 2017. Bureau of Land Management/Handout via REUTERS.
  • Montana business owner charged with attempted criminal monopolization
  • Prosecutors sought 6 to 12 months in prison after guilty plea

March 30 - A U.S. judge in Montana on Wednesday sentenced the former president of a paving and asphalt contractor to three years' probation in what lawyers say is a rare U.S. Justice Department criminal monopoly prosecution.

The defendant, Nathan Zito, pleaded guilty last year to a provision of U.S. antitrust law that makes it a felony to attempt to monopolize a market. Zito was accused of trying to convince a rival to divide up Montana and Wyoming for publicly funded crack-sealing projects on highways.

Prosecutors had asked U.S. District Judge Susan Watters to sentence Zito, 44, of Billings to between six months and one year in prison.

Zito's defense lawyer, Peter Lacny, did not immediately respond to a message seeking comment. He had asked the judge to impose a probationary sentence.

"Nathan has been severely punished by this conviction alone — he has lost his business, his career, and had his good reputation permanently tarnished," Lacny told the court. "Prison is not necessary to protect the public, or to deter Nathan or others."

A spokesperson for the Montana U.S. attorney's office said in a statement that a prison sentence would have been "consistent with the sentencing guidelines." The statement also said Zito "is currently barred from both federal and state contracting work for a number of years, must pay a fine, and is no longer with the company."

In a court filing, the government argued deterrence was necessary because "competitive bidding will be particularly important in coming years as billions of new dollars in federal infrastructure spending are allocated to the states."

The DOJ said the punishment needed to be "substantial enough to outweigh the expected criminal rewards from collusive and fraudulent behavior."

The prosecution has received significant attention from major U.S. law firms that track enforcement trends and developments on legal issues.

In various client advisories, antitrust and competition lawyers said Zito's guilty plea was notable because the alleged conduct historically had been addressed through civil enforcement.

"It is now clear that companies and their employees that invite a competitor to collude may face criminal prosecution, regardless of whether the invitation results in any agreement," an advisory from Wilmer Cutler Pickering Hale and Dorr said.

Skadden, Arps, Slate, Meagher & Flom in its report questioned whether the prosecution was the start of an expanded enforcement initiative. The law firm said it was unlikely, since the DOJ had not otherwise issued new "guidance" for lawyers and regulated parties.

Watters ordered Zito to serve six months of home detention as part of his probation, and he must pay a $27,000 fine.

The case is United States v. Zito, U.S. District Court for the District of Montana, No. 1:22-cr-00113-SPW.

For plaintiff: Bryan Dake and Jeremy Goldstein of the Justice Department

For defendant: Peter Lacny of Datsopoulos, MacDonald & Lind

UPDATE: This report was updated with comment from the U.S. attorney's office for the District of Montana.

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