MR. JUSTICE MARSHALL delivered the opinion of the Court.
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,
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.
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
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, 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 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 633-636. This is
The 11 transactions involved in this case were not simple cash purchases by the Republic of Korea.
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."
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.
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.
The Webb-Pomerene Act was passed "to aid and encourage our manufacturers and producers to extend our foreign trade." H. R. Rep. No. 1118, 64th Cong., 1st Sess., 1 (1916). Congress felt that American firms needed the power to form joint export associations in order to compete with foreign cartels. But while Congress was willing to create an exemption from the antitrust laws to serve this narrow purpose, the exemption created was carefully hedged in to avoid substantial injury to domestic interests. Congress evidently made the economic judgment that joint export associations could increase American foreign trade without depriving American consumers of the main advantages of competition.
This reading of the Act is confirmed both by its structure and its legislative history. The Act itself contains
The legislative history is even more explicit. During the hearings on the bill, one Congressman, Charles C. Carlin of Virginia, stated clearly what was later to be one of the dominant themes of the floor debate. In a question addressed to the Chairman of the Federal Trade Commission, who was testifying in support of the bill, he said:
The same theme was reiterated on the floor by the Act's two main sponsors. Senator Pomerene said bluntly, "[W]e have not reached that high plane of business morals which will permit us to extend the same privileges
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. Cf. United States Alkali Export Assn. v. United States, 325 U.S. 196, 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. 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.
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.
MR. JUSTICE HARLAN took no part in the decision of this case.
MR. JUSTICE WHITE, with whom MR. JUSTICE STEWART joins, dissenting.
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,
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
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
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
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.
Congress explicitly found that Webb-Pomerene associations would lead to lower, not higher, prices in competition with foreign suppliers. It was on this basis that joint efforts by American companies in the export trade were exempted from the antitrust laws. Those charged with the duty faithfully to execute the laws should honor that exemption, not challenge it with facile assertions that the Act was "chauvinistic." Certainly this Court is not equipped or empowered to challenge either the exemption or the assumptions on which it rests.
To carve out an exception from the word "export" based on this Court's notions of sound economic policy is to contradict the plain words of the statute and the congressional judgment that American associations were necessary to lower prices and combat foreign competition. If such an exception were ever justified, it would be in a case where not only are Americans paying the bill, but also foreign competition is absent. This is not such a case.
Section 1 of the Act, 40 Stat. 516 (1918), 15 U. S. C. § 61, defines "export trade" as "solely trade or commerce in goods, wares, or merchandise exported, or in the course of being exported from the United States or any Territory thereof to any foreign nation; but the words `export trade' shall not be deemed to include the production, manufacture, or selling for consumption or for resale, within the United States or any Territory thereof, of such goods, wares, or merchandise, or any act in the course of such production, manufacture, or selling for consumption or for resale."