United States v. Concentrated Phosphate Export Association

by Thurgood Marshall

United States Supreme Court

393 U.S. 199

United States  v.  Concentrated Phosphate Export Assn., Inc., et al.

On Appeal from the United States District Court for the Southern District of New York

No. 29.  Argued: October 24, 1968 --- Decided: November 25, 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 were let by an agency of the Korean Government. The Agency for International Development (AID) retained effective control over the transactions, from approving the procurement, through the financing thereof by the United States, to the shipping. The trial court upheld appellees' contention that they were exempt from antitrust liability under § 2 of the Webb-Pomerene Act as acts "done in the course of export trade." Appellee association has since dissolved itself, alleging that a recent AID regulation has made continued operation uneconomical.

Held:

1. The case is not moot. Pp. 202-204.

(a) The Government sought relief not only against the association but also against its members. Pp. 202-203.

(b) The AID regulation does not apply to all contracts on which the former members of the association might bid. P. 203.

(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. 203-204.

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. 206-210.

(a) The economic reality of the transaction shows that American participation was overwhelmingly dominant, the foreign 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. 208-209.

(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. 209.

273 F.Supp. 263, reversed and remanded.

Deputy Attorney General Christopher argued the cause for the United States. On the brief were Solicitor General Griswold, Acting Assistant Attorney General Zimmerman, Lawrence G. Wallace, and Howard E. Shapiro.

Samuel W. Murphy, Jr., argued the cause for appellees. On the brief were Marcus A. Hollabaugh and Alan S. Ward for Concentrated Phosphate Export Assn., Inc., Mr. Murphy and Andrew J. Kilcarr for American Cyanamid Co., Lawrence J. McKay and Jerrold G. Van Cise for W.R. Grace & Co., Edgar E. Barton for International Minerals & Chemical Corp., Edward F. Howrey and John Bodner, Jr., for Mobil Oil Corp., Alfred D. Berman and Randolph Guggenheimer, Jr., for Tennessee Corp., appellees.

Notes