The clayton act sought to enhance and address weaknesses in the sherman act by preventing such unfair or anticompetitive. The clayton antitrust act us house of representatives. If a suit under the antitrust laws is not instituted during the 30day or shortened period, the merger may be consummated and thereafter will be exempt from. Antitrust laws pertaining to mergers and acquisitions. Though the senate passed its own version on september 2, 1914, by a vote of 4616, the final version of the law written after deliberation between senate and the house, did not pass the senate until october 5 and the house until october 8 of the next year. Acquisitions and mergers under section 7 of the clayton act. One way in which the federal trade commission 1914 and the clayton antitrust act 1914 are similar is that both 2 attempted to correct abusive business practices, since they both aimed at curbing the monopolies that were dragging the us economy down. The clayton antitrust act of 1914 was a part of united states antitrust law with the goal of. A democrat, he was the author of the clayton antitrust act of 1914.
Us antitrust law and policy in historical perspective harvard. Congress passed the first antitrust law, the sherman act, in 1890 as a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade. What was the major purpose of the sherman antitrust act 1890. Congress in 1914 that provides further clarification and substance to the sherman antitrust act of 1890 on topics. Their scheme would be an anticompetitive merger, which would likely be a violation of antitrust laws and one of the actions the clayton antitrust act was designed to stop. Department of justice doj, and provides consumer protection. Wilson delivered on his promise with passage of the clayton anti trust act on october 15, 1914. The clayton antitrust act is a united states antitrust law that was enacted in 1914 with the goal of strengthening the sherman antitrust act. The clayton antitrust act 1914 carnegie mellon university. Clayton antitrust act 1914 812 words essay example. Be it enacted by the senate and house of representatives of the united states of america in congress assembled, that antitrust laws, as used herein, includes the act entitled an act to protect trade and commerce against unlawful restraints and monopolies, approved july second, eighteen. Department of justice, antitrust division page ii3. Merger control was introduced with the clayton act in 1914.
Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce are hereby declared unlawful antitrust statutes sherman act ec treaty. Clayton antitrust act of 1914 the clayton antitrust act of 1914 made good some of the deficiencies of the sherman antitrust act of 1890. The clayton antitrust act of 1914, codified at 15 u. The clayton antitrust act, passed in 1914, continues to regulate u. The clayton antitrust act 1914 forbade several practices that destroyed competition or prevented new businesses from forming. After seeing that companies found ways to avoid restrictions of the sherman antitrust act for example, merging together so they could control the market, congress passed the clayton act. Act, which included section 7, an anti merger provision that was intended to reach consolidations leading to monopoly. The eu has an administrative system for antitrust enforcement, in which. Congress in 1914 that provides further clarification and substance to the sherman antitrust act of 1890. The clayton antitrust act was much more effective than the earlier sherman antitrust act and gave the government the power to protect both competition and consumers by restricting certain unhealthy business practices.
In 1914, congress passed two additional antitrust laws. That regime started with the sherman antitrust act of 1890, the first federal law outlawing practices. He chaired the senate committee on the judiciary from 1899 to 1929. For example, with respect to monopolists, the sherman act prohibited only unlawful maintenance or acquisition of monopoly. Clayton antitrust act of 1914 wikipedia republished. Section 7 of the clayton antitrust act of 1914 clayton act, as amended, applies to any acquisition of stock or. The clayton act home alphabetic chronological legal area product full textsearch key statutes glossary links antitrust.
A 1950 refinement of previous antitrust legislation dealing primarily with mergers. Clayton antitrust act summary, history, significance. The federal trade commission act, along with two other antitrust laws, were created for the sole objective to protect the process of competition for the benefit of consumers, making sure. According to johnston and johnston 256, the act aimed to deter unfair business practices such as monopolistic market structures, which affect negatively the consumers due to lack rivalry in the market. As the first paragraph says, the sherman act had major loopholes, and isnt very specific.
The clayton act specified particular prohibited conduct, the threelevel enforcement scheme, the exemptions, and the remedial measu. Within this framework we have relied on our experience with numerous banking transactions to develop certain factual conclusions that guide our analysis. The hartscottrodino antitrust improvements act of 1976 requires certain. The sherman antitrust act is a federal law prohibiting any contract, trust, or conspiracy in restraint of interstate or foreign trade. Clayton antitrust act overview and history, sections, enforcement. The purpose of the antitrust laws is to protect competition, not protect. The clayton antitrust act, which dates to 1914, bans mergers that may substantially lessen competition or tend to create a monopoly. Any violations of the sherman act will also violate the federal trade commission act so the federal trade commission can act on cases that violate each act. Clayton antitrust act article about clayton antitrust act. Jul 21, 2016 dojs attempt to block two healthcare mergers reflects its aggressive antitrust enforcement. One way in which the federal trade commission 1914 and the. Note also that a, b, and 21a comprise the robinsonpatman price discrimination act 1936.
Whereas the sherman act only declared monopoly illegal, the clayton act defined as illegal certain business practices that are conductive to the formation of monopolies or that result from them. The sherman act had also triggered the largest wave of mergers in us history, as businesses realized that instead of creating a cartel they could simply. Some sections have been edited or eliminated because of space concerns. Clayton antitrust act legal definition merriamwebster law. The premerger notification requirements of the hartscottrodino act allow the antitrust agencies to examine the likely effects of proposed mergers before they take place. The clayton antitrust act attempts to prohibit certain actions that lead to anticompetitiveness. The clayton antitrust act of 1914 was an addition to the sherman antitrust act of 1890 that protected consumers against harmful, anticompetitive business arrangements such as monopolies and cartels by defining prohibitions and an enforcement scheme. The key question the agency asks is whether the proposed merger is likely to create or enhance market power or facilitate its exercise. Bank mergers and antitrust atr department of justice. Congress as an amendment to clarify and supplement the sherman antitrust act sherman antitrust act, 1890, first measure passed by the u. The clayton act passed by a vote of 277 to 54 on june 5, 1914. United states code title 15 commerce and trade chapter 1 monopolies and combinations in restraint of trade. Section 5 of the federal trade commission act ftc act prohibits unfair methods of. Clayton act section 7 1914 merger law no person engaged in commerce shall aquire the capital of another where the effer of such an aquisition, in any line of commerce, in any section of the country, may be to substantially lessen competition or tend to create monopoly.
Experts told the hill that the states likely have a straightforward case under the clayton antitrust act of 1914, which. The clayton antitrust act of 1914 pearson education. Eu and us competition policies european parliament. But some companies discovered merging as a way to control prices and production instead of forming trusts, competitors united into a single company. Section 7 of the clayton act prohibits mergers and acquisitions when the effect may be substantially to lessen competition, or to tend to create a monopoly. The sherman antitrust act was rather vaguely worded that enabled a businessman to engage in restrictive trade practices adversely affecting competition but without offending any provision of the said statute. It extended the sherman antitrust act of 1890, acting as one of the governments chief weapons against trusts. Government enforcement policy of clayton act section 7. The clayton antitrust act of 1914, was a part of united states antitrust law with the goal of adding further substance to the u. Clayton antitrust act, law enacted in 1914 by the united states congress to clarify and strengthen the sherman antitrust act. The clayton antitrust act is an amendment passed by u.
The clayton antitrust act of 1914 made good some of the deficiencies of the sherman antitrust act of 1890. But section 7 of the clayton act has a market definition different from that of section 2. The clayton antitrust act of 1914 outlawed various abusive business practices, including predatory pricing and anticompetitive mergers. The word person or persons wherever used in this act shall be deemed to include corporations and associations existing under or authorized by the laws of either the united states, the laws of any of the territories, the laws of any state, or the laws of any foreign country.
The clayton antitrust act was created to reinforce the sherman antitrust act, approved by congress in 1890. That regime started with the sherman antitrust act of 1890, the first federal law outlawing practices considered harmful to consumers. The online tool for teaching with documents, from the national archives. Clayton antitrust act article about clayton antitrust.
The same year, the ftc act was passed, creating the federal trade commission ftc federal government agency that enforces the antitrust laws, along with the u. Mergers, compliance, and investigations how can businesses prevent antitrust risk from disrupting their plans. Mar 04, 20 definition of clayton antitrust act an amendment passed by the u. On this date, the 63rd congress 191915 passed the clayton antitrust act p. In response to this behaviour, the clayton act of 1914 included the pro. By the turn of the 20th century, large corporations had cornered whole segments of americas economy using predatory pricing, exclusive dealings, and anticompetitive mergers to drive local businesses to ruin. An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes. Intended to strengthen earlier antitrust legislation, the clayton antitrust act prohibits anticompetitive mergers, predatory and discriminatory pricing, and other forms of unethical corporate behavior. The clayton act declared that unions were not unlawful under the sherman anti trust provisions, and workers compensation bills were passed in most states. Conglomerate mergers and section 7 of the clayton act kennecott copper corp. You will also see why the clayton antitrust act of 1914 is so important to us in the. The clayton antitrust act is an amendment approved by u.
Cab in 1985, and 1989, airline mergers were regulated by the u. The clayton antitrust act 1914 the clayton antitrust act is comprised of 12, 1419, 20, 21, 2227 of title 15. May 08, 2009 the merger decisions in the courts most pre1965 clayton act section cases involved horizontal acquisitions, in the late 1960s and early 1970s much merger jurisprudence was devoted to the analysis and treatment of nonhorizontal mergers. The cellerkefauver act targets mergers where companies purchase suppliers, and. Antitrust division manual fifth edition chapter ii. Clayton antitrust act project gutenberg selfpublishing.
Dojs attempt to block two healthcare mergers reflects its. As a result, the trust largely fell out of favor as a device for interstate mergers and. Ftc former attorney general john mitchell stated in 1969 that the department of justice might very well oppose any merger among the top 200 manufacturing firms or firms of comparable size in other industries. Takeaway the clayton antitrust act of 1914 is like your mom stopping the playground bullies from keeping you out of the basketball game. Congress in 1914 that establishes additional provisions against unfair business practices. Intended to strengthen earlier antitrust legislation, the clayton antitrust act prohibits anticompetitive mergers, predatory and discriminatory pricing. New lawsuit poses major threat to tmobile, sprint merger. With the sherman act in place, and trusts being broken up, business practices in america were changing. Clayton antitrust act 3 pre merger notification section 7a, 15 u. Enacted in 1890, the sherman act had been the first federal law intended to protect consumers by outlawing monopolies, cartels, and trusts. No matter how substantially a proposed merger may lessen competition or tend to create a monopoly, competitors of the combining firms face formidable barriers that often prevent them from suing under section 4 or section 16 of the clayton act. Clayton antitrust act, law enacted in 1914 by the united states. The clayton antitrust act 1 the clayton antitrust act united states congress 1 overview the clayton antitrust act 1914 forbade several practices that destroyed competition or prevented new businesses from forming. The passing of the clayton antitrust act was considered to be prompted by a variety of catalysts, which included the monopolization of commercial markets, unethical commercialpricing strategies, consumer protection, employee protection, and the presumed vagueness within.
A federal antitrust law, enacted in 1914, that amended and expanded upon the sherman act enacted in 1890, which prohibits direct or indirect interference with interstate trade. The united states of america introduced the clayton antitrust act in october 15, 1914. The clayton antitrust act of 1914 strengthened federal antitrust law of the sherman act. The us federal trade commission recently announced increased thresholds for the hartscottrodino antitrust improvements act of 1976 and for determining whether parties trigger the prohibition against interlocking directors under section 8 of the clayton act. Section 4 of the clayton act 1914 allows the recovery of damages by any person injured in his business or property by reason of anything forbidden in the antitrust laws section 4, clayton act. What is the sherman antitrust act and the clayton act. Whereas the sherman act only declared monopoly illegal, the clayton act defined as illegal certain business practices that are conductive to the. Passed in 1890, the sherman antitrust act was the first major legislation passed to address oppressive business practices associated with cartels and oppressive monopolies. Clayton antitrust act is passed why is the clayton antitrust act so important. The antitrust injury doctrine requires competitors to prove that they have not merely sustained some. The clayton antitrust act of 1914 codified at, was a part of united states antitrust law with the goal of adding further substance to the u. Statutory provisions and guidelines of the antitrust division. Through this lesson, you will learn about antitrust laws and why they are important in u. What was the major purpose of the sherman antitrust act 1890 and the clayton antitrust act 1914.
566 1048 763 40 496 476 1539 1258 1317 1281 300 70 678 715 1179 1111 472 633 1314 690 238 214 1374 1084 270 1481 3 689 1036 1080 1216 314 1477 337 1136 808 605 1113 1359 130 1443