Define: Webb-Pomerene Act

Webb-Pomerene Act
Webb-Pomerene Act
Quick Summary of Webb-Pomerene Act

The Webb-Pomerene Act, enacted in 1918, enables American businesses to form export associations to collaborate and compete with other countries’ groups in selling their products internationally. However, these associations are prohibited from setting prices or controlling the buyers of their products. This law continues to be in effect today.

Full Definition Of Webb-Pomerene Act

The Webb–Pomerene Act, passed in 1918, grants a limited exemption to export businesses from antitrust laws. This exemption allows export businesses to establish joint export associations without violating antitrust laws. The main objective of the Webb–Pomerene Act is to facilitate the expansion of foreign trade for American manufacturers and producers. Congress recognized the need for American firms to have the ability to form joint export associations in order to effectively compete with foreign cartels. However, it is important to note that the exemption provided by the Webb–Pomerene Act is carefully crafted to prevent any harm to domestic interests. It is crucial to understand that an export association formed under this act cannot engage in price-fixing or establish exclusive markets in collaboration with foreign competitors, as this would still be considered a violation of antitrust laws.

To illustrate, let’s consider the case of an American company that produces widgets and wishes to expand its business by exporting widgets to other countries. However, the company is concerned about competing with foreign cartels that control the widget market in those countries. To level the playing field, the company decides to form a joint export association with other American widget producers under the protection of the Webb–Pomerene Act. This allows them to collaborate and export widgets without infringing upon antitrust laws. In this example, the American widget producers are able to establish a joint export association under the Webb–Pomerene Act, enabling them to effectively compete with foreign cartels while remaining compliant with antitrust laws.

Webb-Pomerene Act FAQ'S

The Webb-Pomerene Act is a U.S. federal law enacted in 1918 that allows American companies engaged in export trade to form associations or cooperatives to collectively negotiate and set prices, terms, and conditions for their exports.

The Act applies to American companies involved in export trade, including manufacturers, producers, and exporters.

The Act aims to promote and facilitate export trade by allowing American companies to collaborate and negotiate collectively, thereby enhancing their competitiveness in the global market.

No, the Act does not impose any specific restrictions on the types of companies that can form associations. However, the companies must be engaged in export trade to qualify.

No, while the Act allows companies to collectively negotiate, it does not grant them immunity from antitrust laws. Associations formed under the Act must still comply with antitrust regulations and cannot engage in anti-competitive practices.

Yes, associations formed under the Act can collectively negotiate and set prices for their exports. However, these prices must be reasonable and not result in anti-competitive behavior.

Yes, associations must file an annual report with the Federal Trade Commission (FTC) providing information about their activities, including the prices, terms, and conditions negotiated for their exports.

Associations formed under the Act cannot exclude companies based on their size, location, or any other discriminatory criteria. The Act promotes fair and open participation for all eligible companies.

Yes, associations formed under the Act can collaborate with foreign companies for export trade purposes. However, they must ensure compliance with any applicable international trade laws and regulations.

Yes, associations can be dissolved voluntarily by a vote of their members or through other legal means. Dissolution may be necessary if the association is no longer serving its intended purpose or if its members decide to pursue other avenues for export trade.

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This glossary post was last updated: 17th April 2024.

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