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imported article enters or is intended to enter. Every person who is or shall hereafter be engaged in the importation of goods or any commodity from any foreign country in violation of this section of this Act, or who shall combine conspire with another to violate the same, is guilty of a misdemeanor, and on conviction thereof in any court of the United States such person shall be fined in a sum not less than one hundred dollars and not exceeding five thousand dollars, and shall be further punished by imprisonment, in the discretion of the court, for a term not less than three months nor exceeding twelve months.

SEC. 76. That any property owned under any contract or by any combination, or pursuant to any conspiracy, and being the subject thereof mentioned in section seventy-three of this Act, imported into and being within the United States or being in the course of transportation from one State to another, or to or from a Territory or the District of Columbia, shall be forfeited to the United States, and may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure, and condemnation of property imported into the United States contrary to law.

Sec. 77. That any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this Act may sue therefor in any circuit court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee.

Section 6 (h) of the Federal Trade Commission Act (Foreign Investigations):

SEC. 6. That the Commission shall also have power

(h) To investigate from time to time trade conditions in and with foreign countries where associations, combinations, or practices of manufacturers, merchants, or traders, or other conditions may affect the foreign trade of the United States, and to report to Congress thereon, with such recommendations as it deems advisable.

EXHIBIT 7

[Federal Trade Commission, Washington, Foreign Trade Series No. 2] PRACTICE AND PROCEDURE UNDER THE EXPORT

TRADE ACT (WEBB-POMERENE LAW), 1935

FEDERAL TRADE COMMISSION

Ewin L. DAVIS, Chairman; CHARLES H. MARCH, Vice Chairman; WILLIAM A.

AYRES; GARLAND S. FERGUSON, Jr.; ROBERT E. FREER; OTIS B. JOHNSON, Secretary.

(This pamphlet is a revision of the Foreign Trade Series No. 1, published by the Federal Trade Commission in 1919. Prepared by the Export Trade Section of the Legal Division, Ellen L. Love, Chief, October 1935.)

INDEX Purpose of the law.

First-report form. Provisions of the act.

The Export Trade Act. Filing of papers with the Commission. Sections 5 and 6 (h), Federal Trade Webb law organization and operation. Commission Act. Advantages obtained by Webb law Section 7 of the Clayton Act. groups.

Sections 1, 2, and 3 of the Sherman Products exported.

Act. Associations formed under the law, Sections 73, 76, and 77 of the Wilson 1918-35.

Tariff Act.

(V)

PURPOSE OF THE LAW

The Export Trade Act, passed on April 10, 1918,7 is entitled "An act to promote export trade and for other purposes.” It was the result of an inquiry made by the Federal Trade Commission upon which report was made to Congress in 1916. Hearings were conducted by the Commission throughout the United States, attended by industrialists and exporters interested in the proposed legislation. The Commission recommended to Congress the passage of a law which should grant exemption from the antitrust laws to export combines, with proper safeguards to domestic business, in order to facilitate the movement of American goods to foreign countries, to serve as an encouragement to exporters, and to enable them to compete successfully in foreign markets with selling combinations of other countries.

Bills were introduced in Congress in 1916 and 1917 by Senator Atlee Pomerene and Congressman Edwin Y. Webb, and hearings conducted by the Senate Committee on Interstate Commerce and the House Committee on the Judiciary. The act is therefore known as the Webb law or the Webb-Pomerene law. It was endorsed by President Wilson, Secretary of Commerce Redfield, the Federal Trade Commission, a number of trade associations in various industries, the chambers of commerce, the National Foreign Trade Council, and the American Manufacturers Export Association.

140 Stat. 516. See p. 14 of this report.

2 Report on Corporation in American Export Trade, 1916, 2 vols. (supply now exhausted).

PROVISIONS OF THE ACT

Section 1 defines the terms "export trade," "trade within the United States," and "association," wherever used within the law. Export trade means “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” and shall not be deemed to include the production, manufacture, or selling for consumption or for resale, within the United States or any Territory thereof. Association means "any corporation or combination, by contract or otherwise, of two or more persons, partnerships, or corporations."

Sections 2 and 3 provide exemption from the antitrust laws to "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," with the provision that such association, agreement, or act shall not be in restraint of trade within the United States, or in restraint of the export trade of any domestic competitor; and with the further prohibition of any agreement, understanding, conspiracy, or act which shall artificially or intentionally enhance or depress prices within the United States, of commodities of the class exported by the association, substantially lessen competition, or otherwise restrain trade within the United States.

Section 4 is an amendment to the Federal Trade Commission Act. It extends the jurisdiction of the Commission to unfair methods of competition used in export trade against competitors engaged in export trade, even though the acts constituting such unfair methods are done without the territorial jurisdiction of the United States. This section applies to any exporter from the United States, and not specifically to a Webb law group. Procedure under this section is in accordance with section 5 of the Federal Trade Commission Act.

Section 5 of the Webb law provides for the filing of papers with the Federal Trade Commission by an export association, and covers procedure in case of violation of the act. Organization papers, which

3 H. R. 16707, Congressman Webb, 64th Cong., 1st sess., 1916. H. R. 17350, Congressman Webb, 64th Cong., 2d sess., 1916. H. R. 2316, Congressman Webb, 65th Cong. (same as s. 634, Senator Pomerene), passed both Houses, signed in 1918. Hearings before House Committee on the Judiciary, on H. R. 16707, and copy of bill and report, serial 48, 64th Cong., 1st sess., July 1916, 85 pages. Hearings before Senate Committee on Interstate Commerce, 64th Cong., 2d sess., on H. R. 17350, January 1917, 156 pages. Report No. 1118, 64th Cong., 1st sess., House Committee on the Judiciary, to accompany H. R. 17350, August

15, 1916, 4 pages. Report No. 1056, 64th Cong., 2d sess., Senate Committee on Interstate Commerce, to accompany H. R. 17350, February 14, 1917, 4 pages. Report No. 9, 65th Cong., 1st sess., to accompany S. 634, Senate Committee on Interstate Commerce, April 16, 1917, 4 pages. Report No. 50, 65th Cong., 1st sess., to accompany H. R. 2316, 'House Committee on the Judiciary, May 11, 1917, 10 pages. Report No. 109, 65th Cong., 1st sess., Senate Committee on Interstate Commerce, to accompany H. R. 2316, August 15, 1917, 4 pages.

* 38 Stat. 717, secs. 5 and 6 (h) on pp. 17–19 of this report.

shall be filed "within 30 days after its creation” include a verified first report, copies of the articles or contract of association, bylaws, and if the group is incorporated, a copy of its certificate of incorporation, An annual report is required, and the association shall also furnish "such information as the Commission may require as to its organization, business, conduct, practices, management, and relation to other associations, corporations, partnerships, and individuals." Penalties are prescribed for failure to comply with these provisions. If the Commission has reason to believe that the law has been violated, it shall conduct inquiries and make recommendations for readjustment of the association's business. Should an association fail to comply with the recommendations, the Commission shall refer its findings and recommendations to the Attorney General of the United States for such action as he may deem proper.

For the purpose of enforcing these provisions, the Commission shall have all the powers, so far as applicable, that are given to it under the Federal Trade Commission Act.

No amendments have been made to the act since its passage in 1918. In 1921 a bill was introduced to amend section 2,5 but little interest was shown and it was not voted upon. In 1928 a bill was introduced which would have extended the scope of the law to include import combines, but this was rejected by the House of Representatives and was not voted on in the Senate.

No case has arisen in which an association has refused to comply with recommendations of the Commission; and no violations of law have been referred by the Commission to the Attorney General.

FILING OF PAPERS WITH THE COMMISSION

The organization of a Webb law association, requiring, as it does, full cooperation and agreement of all of the member companies, more often consumes weeks or months of discussion and negotiation. During that period the Commission offers its services, informally, to the negotiators. The organization papers, when finally executed, are acted upon by the full Commission. These papers include the first report (for which the Commission supplies blanks"), the certificate of incorporation if it is incorporated, bylaws, membership agreement, contract forms, working rules or regulations, or other documents covering the proposed operation. If there is any clause therein that seems to show an intent to operate in such a way as to violate the law, informal advice is given by the Commission to that effect, with an opportunity to amend; but there is no formal approval or disapproval, and the receipt or filing of the papers does not serve as a permit or license to operate under the law. Before the act was passed, an attempt was made to include an amendment which would have provided for permits to be issued by the Commission, and authority to revoke such a permit; but strong objection was voiced and this provision was not made a part of the law. When the Commission has received and filed the papers of a newly organized association, it issues a brief news

5 S. 2683, 67th Cong., 1st sess. (Senator Fletcher), Nov. 4, 1921 ; same bill introduced as S. 812, 68th Cong., '1st sess., Dec. 10, 1923.

& S. 2312 (Senator Wesley L. Jones) and H. R. 8927 (Congressman Walter H. Newton) 70th Cong., ist sess.

Copy of the first report form on pp. 11–13 of this report.

release, announcing the name and address, its officers and members, and the commodity to be exported.

Annual reports as of January of each year, keep the Commission's records current; blanks for this purpose are mailed to each association. Other information may be required, and the association offices are visited from time to time. Association records in the Commission files are not open for public inspection; but the Commission's annual report to Congress for each year, covers a general statement of operation during that period, with a list of the association's filing papers and a summary of the business transacted by all of the groups.

The Commission has received many inquiries from the associations and others, concerning their operation, to which reply has been made with informal advice. As yet none of the Commission's inquiries under section 5 have reached the stage of formal complaint and hearings, and no formal orders have been issued.

WEBB LAW ORGANIZATION AND OPERATION

In drafting organization papers, the first thing to bear in mind is that the association shall be engaged solely in export trade; and this does not include production, manufacture, or selling for consumption or for resale, within the United States. The Commission is sometimes asked if an association may operate mills to produce the goods for export; but the terms of the act would not seem to cover such operation and the Commission has given informal advice to that effect.

Under section 1 of the act, products may be exported to “any foreign nation.” A number of associations have asked if a Webb-law group may ship to Puerto Rico, or to the Philippines. To this the Commission has replied informally that under numerous court decisions the insular possessions have been held to be not foreign to this country; they are therefore not markets to which a Webb-law group may ship. The status of the Philippine Islands may be changed by independence at some later date.

The law does not prescribe incorporation, but a number of groups formed under the act have become incorporated under State laws for their own convenience. Nor does the act require that an association shall be a nonprofit organization, although many of the associations have operated on an expense basis, the profits accruing to the individual members.

Usually a Webb-law group is formed by producers or manufacturers of the same products, and there may be several groups in the same industry. One of the lumber-export associations ships redwood, and one walnut, but several have shipped pine. On the Pacific coast one group sells dried fruit packed in California, and another handles the same products packed in the Oregon district. , In some cases a Webb-law association has been affiliated with more than one group. A petroleum company files as an association under the law and is also a member of a larger Webb-law group in the same industry; a similar plan was at one time used by two of the phosphate associations that combined to form another group.

The main office of the association may be at seaport in order to handle the shipping details, or it may be in the locality of the mem

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8 The annual report form is very similar to the first report form, on pp. 11--13 of this report.

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