Source: https://www.legalcrystal.com/case/101855/united-states-vs-phosphate-export-assn
Timestamp: 2017-04-30 03:53:32
Document Index: 385235699

Matched Legal Cases: ['§ 1', '§ 1', '§ 1', '§ 2', '§ 62', '§ 604', '§ 2354', '§ 1', '§ 61', '§ 201', '§ 1', '§ 61', '§ 30']

United States Vs Phosphate Export Assn - Citation 101855 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize United States Vs. Phosphate Export Assn. - Court Judgment	LegalCrystal Citationlegalcrystal.com/101855CourtUS Supreme CourtDecided OnNov-25-1968Case Number393 U.S. 199AppellantUnited StatesRespondentPhosphate Export Assn.Excerpt:
united states v. phosphate export assn. - 393 u.s. 199 (1968)
the government filed a civil antitrust action against appellee association and its member firms charging violations of § 1 of the sherman act with regard to 11 sales by the association of concentrated phosphate to the republic of korea under the united states foreign aid program. in two cases, the government itself let the contracts, and the remaining nine..... Judgment:
1. The case is not moot. Pp.
393 U. S. 202
(a) The Government sought relief not only against the association, but also against its members. Pp.
(b) The AID regulation does not apply to all contracts on which the former members of the association might bid. P.
(c) Appellees' statement that it would be uneconomical to engage in further joint operations, standing alone, does not satisfy the stringent test for mootness, but appellees may show on remand that the likelihood of further violations is sufficiently remote to make injunctive relief unnecessary. Pp.
2. The antitrust exemption of the Webb-Pomerene Act, which was enacted to "extend our foreign trade" without significantly injuring American consumers, does not insulate transactions initiated, controlled, and financed by the United States Government, merely because a foreign government is the nominal "purchaser." Pp.
393 U. S. 206
elements were comparatively insignificant, and the burden of noncompetitive pricing fell not on the foreign purchaser, but on the American taxpayer, and it stretches neither the language nor the purpose of the Act to determine that such sales are not "exports." Pp.
(b) On the contracts involved here, the world's major trading nations were ineligible to compete, as procurement was limited essentially to the United States and the underdeveloped countries, so that the major impact of permitting the combination appellees desire would be not to encourage exports, but to deprive Americans of the main benefits of competition among American firms. P.
393 U. S. 209
Involved in this case are 11 sales of concentrated phosphate made between 1961 and 1966 by appellee association. The phosphate was supplied by the association's members, [
] which are all producers of fertilizer, and was
then shipped to the Republic of Korea under the United States foreign aid program. The Government, in a civil antitrust complaint filed on December 21, 1964, contended that the concerted activities of the association and its members in regard to these 11 sales violated § 1 of the Sherman Act, 26 Stat. 209 (1890), as amended, 15 U.S.C. § 1. Appellees defended on the ground,
that their activities were exempted from antitrust liability by § 2 of the Webb-Pomerene Act, 40 Stat. 517 (1918), 15 U.S.C. § 62, [
] as "act[s] done in the course of export trade." The trial court held that the Webb-Pomerene Act did immunize appellees' conduct, 273 F.Supp. 263 (1967), and dismissed the complaint.
We are met at the outset with appellees' contention that this case is now moot. Appellees' argument rests on two events which occurred after the case had been submitted to the District Court. On January 1, 1967, the Agency for International Development (AID), the State Department agency in charge of the foreign aid program, amended its regulations to preclude Webb-Pomerene associations from bidding on certain procurement contracts whenever procurement was limited to United States suppliers. [
] According to appellees, this new regulation made it uneconomical for the association to continue in operation, [
] since a large proportion of AID-financed procurement is limited to American sources. [
] Accordingly, on December 28, 1967, appellee association dissolved itself. [
] The new regulation and the dissolution, we are told, moot this case.
The test for mootness in cases such as this is a stringent one. Mere voluntary cessation of allegedly illegal conduct does not moot a case; if it did, the courts would be compelled to leave "[t]he defendant . . . free to return to his old ways."
see, e.g., United States v. Trans-Missouri Freight Assn.,
(1897). A case might become moot if subsequent events made it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur. But here we have only appellees' own statement that it would be uneconomical for them to engage in any further joint operations. Such a statement, standing alone, cannot suffice to satisfy the heavy burden of persuasion which we have held rests upon those in appellees' shoes.
. Of course, it is still open to appellees to show, on remand, that the likelihood of further violations is sufficiently remote to make injunctive relief unnecessary.
-636. This is
The 11 transactions involved in this case were not simple cash purchases by the Republic of Korea. [
] Not only were they financed by the United States Government; AID retained effective control over them at every stage.
The transactions involved were controlled by an impressive network of international treaties and agreements, as well as by American statutes, regulations, and administrative procedures. The procurement process, as revealed by the stipulated record, was rather involved. It began when funds were appropriated by Congress. Those funds were allocated to various development programs by AID, in accordance with the provisions of the applicable statutes and AID's assessments of its priorities. The money allocated to Korea by this process was not simply shipped to Seoul, to be used as Korea wished. In fact, most of it never left this country. In accordance with a series of agreements, Korea was authorized to request that the United States finance purchases of certain "eligible commodities." [
] A rather complicated "Procurement
When each transaction was approved, a "Procurement Authorization" was issued by AID; it was specifically made subject to detailed regulations which specify the procedures to be followed in awarding any contracts. [
] It also contained an authorization to a specified American bank to pay for the goods to be procured.
We are asked to decide whether transactions of this sort constitute "act[s] done in the course of export trade," within the meaning of the Webb-Pomerene exemption from the Sherman Act. [
] Although the Webb-Pomerene Act has been on the statute books for a half century, this is the first time this Court has been called upon to interpret the meaning of the words "export trade." Upon a full consideration of the language, the purpose, and the legislative history of the statute, we reverse the judgment below.
In this atmosphere, the Act was passed. It is clear what Congress was doing; it thought it could increase American exports by depriving foreigners of the benefits of competition among American firms, without in any significant way injuring American consumers.
325 U. S. 211
(1945). The validity of this economic judgment is not for us to question, but it is quite relevant in interpreting the language Congress chose. The question before us is whether Congress meant its exemption to insulate transactions initiated, controlled, and financed by the American Government just because a foreign government is the nominal "purchaser." We think it did not.
In interpreting the antitrust laws, we are not bound by formal conceptions of contract law.
(1964). We must look at the economic reality of the relevant transactions. Here, although the fertilizer shipments were consigned to Korea, and although, in most cases, Korea formally let the contracts, American participation was the overwhelmingly dominant feature. The burden of noncompetitive pricing fell not on any foreign purchaser, but on the American taxpayer. The United States was, in essence, furnishing fertilizer to Korea. AID selected the commodity, determined the amount to be purchased, controlled the contracting process, and paid the bill. The foreign elements in the transactions were, by comparison, insignificant.
Appellees contend that a contrary result should be reached because they were competing for contracts with foreign suppliers. Evidently, it is their contention that they therefore fall within the class which Congress intended to allow to form export associations. But AID has already given American suppliers great competitive advantages in their battle with foreign firms. The governing statute requires a preference for American procurement. Foreign Assistance Act of 1961, § 604, 75 Stat. 439, 22 U.S.C. § 2354. On none of the contracts involved here were any of the major trading nations of the world eligible to compete; procurement was limited essentially to the United States and the underdeveloped countries. To say that American producers need an additional stimulus to be able to compete strains credulity. The major impact of allowing the combination appellees desire would not be to encourage American exports; it would be to place the burden of noncompetitive pricing on the shoulders of the American taxpayer. But whatever the impact on exports might be, it is clear that the framers of the Webb-Pomerene Act did not intend that Americans should be deprived of the main benefits of competition among American firms. [
] Since, in all relevant aspects, the transactions involved here were American, not Korean, we hold that they are not "export trade"
"Nothing contained in sections 1-7 of this title shall be construed as declaring to be illegal an association entered into for the sole purpose of engaging in export trade and actually engaged solely in such export trade, or an agreement made or act done in the course of export trade by such association, provided such association, agreement, or act is not in restraint of trade within the United States, and is not in restraint of the export trade of any domestic competitor of such association:
That such association does not, either in the United States or elsewhere, enter into any agreement, understanding, or conspiracy, or do any act which artificially or intentionally enhances or depresses prices within the United States of commodities of the class exported by such association, or which substantially lessens competition within the United States or otherwise restrains trade therein."
AID, Operations Report, Fiscal Year 1967, p. 74. The very large percentage of foreign aid procurement actually coming from American sources exceeds that required by regulation.
Appellees contend that economic factors dictated the dissolution,
4, and the Government does not argue that the dissolution was related to the fact that a notice of appeal in this case was filed on November 9, 1967.
This particular limitation to a specific list of commodities is contained in the record in a Program Assistance Grant Agreement, dated November 29, 1965. Appendix 108, 116. Although this agreement could not have applied to the earlier transactions involved here, the stipulated record contains only examples -- and not a complete compilation -- of all the documents involved. In any case, earlier agreements which are included in the record contain limitations which give the Government equivalent powers.
There was a brief mention during the congressional debates of the existence of American loans to European nations whose purchasing power might be reduced by higher American export prices.
55 Cong.Rec. 2789 (1917). Such an isolated statement cannot determine the meaning of a statute. But, in any case, it is clear that America's World War I loans bear little if any resemblance to the modern foreign aid program. Not only was it expected that they would be repaid, but also the loans were not made subject to the detailed American administrative control typical of today's foreign aid program.
The majority holds today that concentrated phosphate shipped from an American firm in Florida to the Republic of Korea, which has itself solicited bids on the world market, [
] are not "exports" within the meaning of the Webb-Pomerene Act, § 1, 40 Stat. 516 (1918), 15 U.S.C. § 61. The United States supplied the funds which Korea used to pay for the purchases, and retained limited power to control their expenditure. Korea was not obliged to repay the funds to the United States directly, but it was required to set aside proceeds of resale of the phosphate as "counterpart funds" to be spent in ways prescribed by the United States. [
] This decision conforms neither to the plain meaning of the word "exports" nor to the underlying purposes of the Webb-Pomerene Act.
Korea. In any ordinary sense, these "goods" were "exported from the United States." Even the AID regulations refer to receiving countries as "importers" and to these transactions as "exports."
22 CFR § 201.42 (106). [
] And the District Court found that AID encouraged, or at least tolerated, bidding by Webb-Pomerene associations in these transactions. Nor does the exclusion from the definition of exports of goods sold "for consumption . . . within the United States," § 1, 15 U.S.C. § 61, discussed by the majority, have any application to this case. The parties have so stipulated, since the phosphate was obviously to be consumed in Korea. And there is no contention here that purely domestic trade was "restrained" in any way, or that prices in it were "enhanced" or "depressed." [
] Given the clarity of the statute, there is no need to resort to legislative history.
E.g., Unexcelled Chemical Corp. v. United States,
345 U. S. 64
more cheaply than any single American seller, and their advertising and distribution costs are generally lower than those of separate American firms. [
] Having made these findings, Congress concluded that American firms should be allowed to combine to achieve lower costs, lower prices and more comprehensive and effective service, in order to be able to compete on an equal footing for foreign shipments.
In a transaction such as this, where American goods compete with foreign goods for foreign consumption, Congress had no objection to the formation of American associations to achieve lower prices and compete with foreign suppliers. That such competition was involved here is graphically illustrated by the fact that, in most of the Korean purchases involved in this case, [
] foreign bidders were successful in capturing at least part of the market, and the Government admits that foreign competition was never absent. It was precisely to enable American firms to meet such competition that the Webb-Pomerene Act was passed.
Moreover, it is no kindness to the American taxpayer to carve out an exception forbidding the formation of Webb-Pomerene associations in this case, given the assumptions on which the Act was passed. Congress specifically discussed phosphate as a commodity where American associations were necessary in order to achieve the savings and organization which would enable them to compete with foreign cartels in price and service. [
Indeed, even government statistics relating to balance of payments refer to shipments such as these as "exports."
Department of Commerce, Bureau of the Census, Statistical Abstract of the United States 1968, at 669, 801; 15 CFR § 30.1
S.Rep. No. 1056, 64th Cong., 2d Sess. (1917); H.R.Rep. No. 1118, 64th Cong., 1st Sess. (1916); Hearings on H.R. 17350 before the Senate Committee on Interstate Commerce, 64th Cong., 2d Sess., 44 (1917).