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The Concentrated Phosphate Export Association consists of the five largest phosphate producers. The Agency for International Development (AID) undertook to sell fertilizer to Korea and solicited bids. The association set prices and submitted a single bid on 300,000 tons. A paid the contract price determined the amounts to be purchased, coordinated the procedure for buying, and undertook to resell to Korea. The Justice Department sued the association and its members, claiming that their actions violated Section 1 of the Sherman Act. What defense might the defendants have? What is the result?

User Rra
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Final answer:

Defendants in the antitrust suit against the Concentrated Phosphate Export Association might argue for a joint venture defense or necessity for international trade, though past cases like the international vitamin cartel involving firms like Hoffman-La Roche suggest they could face significant fines and jail time if found guilty.

Step-by-step explanation:

The Concentrated Phosphate Export Association and its activities could potentially be seen as a violation of Section 1 of the Sherman Act, which prohibits cartels and concerted practices that restrict competition. However, the defendants might argue that their actions were part of a joint venture or that they were necessary for international trade efficiency or cost savings, which could be considered a legitimate business purpose under certain circumstances.

A historical reference can be made to the antitrust case involving vitamin manufacturers, such as Hoffman-La Roche, BASF, and Rhone-Poulenc, who formed an international cartel, similarly setting production and pricing agreements. This case resulted in significant fines and jail time for executives upon the cartel's exposure and subsequent prosecution by antitrust regulators. The Justice Department's suit against the association for its bidding conduct on fertilizer to Korea is likened to the prosecution of past international cartels found guilty of violating antitrust laws.

Considering precedent, the likely outcome for the defendants, if their actions are clearly in violation of the Sherman Act, would be penalties including fines and possibly jail time for executives involved, unless they can successfully defend their actions with valid legal arguments or exceptions.

User Martin Stannard
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