The Export Trading Company Act of 1982: Antitrust panacea, placebo, or pitfall?

• Published date: 01 September 1983
• Author: John P. Ryan
• DOI: 10.1177/0003603X8302800301
• Date: 01 September 1983
• Subject Matter: Article

The Antitrust Bulletin/Fall 1983

The Export Trading Company Act

of

1982: antitrust panacea, placebo,

or pitfall?

BY

JOHN

P. RYAN, JR. *

501

After a four-year gestation period in Congress, the Export Trad-

ing Company Act (ETC Act) was enacted in October 1982 with

the intent of fostering American exports. IThe act seeks to

promote exports in three ways: first, by a PR program, headed

up by the U.S. Commerce Department; second, by facilitating

bank financing of and authorizing bank equity participation in

export trading companies (ETCs); and third, by providing certain

antitrust protections and advantages to exporting activities.' Lim-

•Partner, McBride &Baker, Chicago, Illinois.

AUTHOR'S NOTE: The author gratefully acknowledges the invaluable

assistance in the preparation

of

this article

of

his colleagues John T.

Al/en, Jr., Robert C. Schnitz, Elizabeth S. Perdue, and Thomas J.

Kinasz.

IThe Export Trading Company Act of 1982, Pub. L. No. 97-290,

96 Stat. 1233 (1982) (to be codified at 15 U.S.C. §§ 7, 4001-3,4011-21;

12 U.S.C. §§ 372, 635a-4, 1841, 1843).

2Under Title I of the ETC Act, an office is established in the

Commerce Department to promote export trading companies. This

office will be the source

of

a certain amount of practical assistance, by

providing educational material and a computerized matching of poten-

©1984 by McBride &Baker.

502 : The antitrust bulletin

ited to this third facet of the statute, this article will attempt to

dig beneath the surface to (1) identify the real, versus the

imagined, antitrust benefits

of

the legislation, (2) dispel the

publicized notion that making use of the statute's certification

procedure increases the exporter's antitrust exposure, and (3)

underscore the continuing concern that certain export joint ven-

tures should have regarding their vulnerability to foreign antitrust

laws. Additionally, we will identify and discuss a number

of

questions that are left open by the legislation, none

of

which has

been answered by the guidelines the Commerce Department

issued on April 8, 1983.3

I. An overview

of

the legislative history

The ETC Act is the product of several years

of

drafting,

discussion, and compromise. From 1979 through 1982, various

bills were presented in the House and Senate, representing dif-

ferent approaches to the need for improving U.S. export per-

forrnance.' In 1980, after extensive hearings and markups in

committee, the Senate passed S. 2718, which provided for bank

ownership

of

ETCs and a procedure by which export trade

associations under the Webb-Pomerene Act could receive ad-

vance certification that their activities would not violate the

tial exporters with interested export management companies, export

trading companies, and other companies involved in some phase of

export activity. Title II of the act contains the banking provisions and

Titles III and

IV,

the antitrust provisions. The text of Titles III and IV is

set forth in Appendix A.

3Guidelines for the Issuance of Export Trade Certificates

of

Review, 48 Fed. Reg. 15,937-40(1983) [hereinafter cited as Guidelines].

See Part VI of this article for a discussion of the guidelines. The text of

the guidelines is set forth in Appendix B.

4See, e.g., S. 864, 96th Cong., 1st Sess. (1979) (amending the

Webb-Pomerene Act); S. 1663, 96th Cong., 1st Sess. (1979) (providing

ETCs with antitrust, tax, and banking advantages); and H.R. 2326, 97th

Cong., 1st Sess. (1981) (amending the antitrust laws).

The

ETC

Act

503

antitrust laws.' This bill, with modifications, was reintroduced in

the 97th Congress as S. 734, which passed the Senate on April 8,

1981.6

In the House, consideration

of

similar export promotion bills

culminated in the passage

of

an amended version of S.

734,7

in

which the House's banking provisions and antitrust certification

provisions were substituted for the Senate's." In addition, the

House passed a separate bill, H.R. 5235, providing for amend-

ment

of

the antitrust laws to clarify the scope of antitrust

jurisdiction."

596th Cong., 1st Sess., 126

CONGo

REC.

S1l935 (dailyed. Sept. 3,

1980). The Webb-Pomerene Act, 15 U.S.C. §§ 61-65 (1976), which has

been left undisturbed by the new legislation, was enacted in 1918 in

response to a similar desire to promote exports and provide antitrust

comfort to associations formed for export trade. Under that act, such

associations could, by registering with the Federal Trade Commission

and complying with certain standards, be "exempt" from the antitrust

laws. However, since the standards to be complied with were basically a

restatement of general antitrust standards, and since there was no

provision for advance certification, this "exemption" amounted to no

more than the initial statutory attempt to codify the effects test dis-

cussed in Part II.A of this article. C/. United States V. Minnesota

Mining &Mfg. Co., 92 F. Supp. 947 (D. Mass. 1950).

697th Cong., 1st Sess., 127

CONGo

REC.

S3622 (daily ed. Apr. 8,

1981).

797th Cong., 2d Sess., 128

CONGo

REC.

H4657 (daily ed. July 27,

1982).

8The House version of S. 734 differed from the Senate's version in

four major respects: first, certification was available to "any person,"

not limited to export trading companies and associations; second,

certification was to be the responsibility of the Department of Justice,

rather than the Department of Commerce; third, the certification

standards were simply the "antitrust laws" as opposed to the specific

standards (loosely derived from the Webb-Pomerene Act) of the Senate

version; and fourth, private parties could sue for single damages if there

was a violation

of

the antitrust laws.

997th Cong., 2d Sess., 128

CONGo

REC.

H4984 (daily ed. Aug. 3,

1982).