Source: http://www.chanrobles.com/usa/us_supremecourt/393/199/case.php
Timestamp: 2019-12-10 08:19:05
Document Index: 5148225

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

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, [Footnote 1] which are all producers of fertilizer, and was chanroblesvirtualawlibrary
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, inter alia, that their activities were exempted from antitrust liability by § 2 of the Webb-Pomerene Act, 40 Stat. 517 (1918), 15 U.S.C. § 62, [Footnote 2] 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. chanroblesvirtualawlibrary
Two factors make this argument untenable. First of all, the dissolved association was not the only defendant in this case. The Government sought injunctive relief against the association's members as well; they were to be chanroblesvirtualawlibrary
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." United States v. W. T. Grant Co., 345 U. S. 629, 345 U. S. 632 (1953); see, e.g., United States v. Trans-Missouri Freight Assn., 166 U. S. 290 (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. United States v. W. T. Grant Co., 345 U.S. at 345 U. S. 633. 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. Id. at 345 U. S. 633-636. This is chanroblesvirtualawlibrary
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." [Footnote 8] A rather complicated "Procurement chanroblesvirtualawlibrary
After AID had in this way chosen what goods were to be purchased, either of two methods of procurement was used. In two cases, the Government itself let the contracts, through its General Services Administration. In the other nine cases, the formal act of letting the contracts was performed by the Office of Supply of the Republic of Korea (OSROK). In performing this task, the Koreans were subject to detailed regulation by AID. The invitation for bids even had to be submitted to AID so that it could be circulated in this country. All documents had to be in English, and criteria for selecting the winning contractors were carefully defined in advance. An abstract of bids received and a notice naming the contractor selected had to be sent to Washington. Finally, a letter of credit was issued, the supplier paid, and the payor bank reimbursed by the United States Treasury. chanroblesvirtualawlibrary
This reading of the Act is confirmed both by its structure and its legislative history. The Act itself contains chanroblesvirtualawlibrary
In interpreting the antitrust laws, we are not bound by formal conceptions of contract law. Simpson v. Union Oil Co., 377 U. S. 13 (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. chanroblesvirtualawlibrary
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. [Footnote 11] Since, in all relevant aspects, the transactions involved here were American, not Korean, we hold that they are not "export trade" chanroblesvirtualawlibrary
The statute defines "export trade" as trade in goods "exported, or in the course of being exported from the United States." § 1, 15 U.S.C. § 61. In this case, more than 800,000 tons of concentrated phosphate were shipped directly from the association in Florida to chanroblesvirtualawlibrary
But even the legislative history lends no support to the majority, and indeed leads to a contrary conclusion. The majority asserts that Congress thought it could increase American exports by ending competition for foreign shipments among American firms without impairing domestic competition. That is correct. Congress recognized that trade in foreign nations is not ringed about with the antitrust restrictions which keep domestic industry competitive. Congress found foreign trusts to have substantial advantages over their American competitors. They can offer to extend credit and fill large orders which no single American firm could fill; they can maintain staffs to keep in touch with foreign demand chanroblesvirtualawlibrary
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. [Footnote 2/7] chanroblesvirtualawlibrary