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Clayton Antitrust Act

Medha Godbole May 13, 2019
A successor to the Sherman Antitrust Act, the Clayton Antitrust Act was enacted to further complement and strengthen the anti trust laws. Check out the information for more.
The laws regarding regulation of cartels, trusts and monopoly in the market and overall regulation of the market in the USA were laid down in the USA, just as the US Constitution too was shaping up.
The genesis of all this was in the Sherman Antitrust act in the year 1890. That act strove to control the market environment by putting a tight leash on trusts, organizations and companies which went against that act.
To complement and strengthen this Sherman act, which later on turned out to be the basis of anti trust litigation by Federal government, another Act was passed sometime later, in the year 1914.
This was the Clayton Antitrust act, passed by the Congress of the United States, drafted by Henry Clayton which explains the name. Hang in there for more on this act.

Clayton Antitrust Act of 1914

Interestingly, Woodrow Wilson was the president when this act was passed. This Act was mainly a modification and expansion of the already existent federal antitrust law, as a result of the Sherman Act. Clayton Act prescribed changes which were substantive and complementary to the Sherman Antitrust Act.
The entire focus of the Clayton Antitrust act was to capture and nip the anti competitive market practices in the bud. This meant that some types of market conducts were to be prohibited. There are primarily 4 sections of this act which suggested major changes in the Sherman act. The following aspects were laid down by the Clayton Act. These are -

Principle 1

The sales were to be carried out on the condition that the buyer will not deal with or have any transaction with the competitors of the seller. Another condition was that the buyer can purchase another product, however that can be done only after the competition is lessened as a result of these acts.

Principle 2

Yet one more point of contention was the price discrimination between various purchasers, only if that discrimination reduces the competition or tends to create a monopoly, any arena of commerce.

Principle 3

A single individual cannot be a director for two or more competing corporations, in case those were to violate the anti trust criteria by way of merging.

Principle 4

As per the Clayton Anti trust Act, mergers and acquisitions where the impact of that may reduce the competition substantially were discussed. Along with that, mergers and acquisitions where voting securities and assets threshold is met were also discussed.
Apart from these, another very important distinction between the Clayton Antitrust Act and the Sherman act was that Clayton act was more conducive to the labor union activities than its precursor as far as the marketing environment was concerned.
Let us go a bit further and see the implementation and a few other factors related to this act.

How it was Brought Into Enforcement

As per the Act, only civil suits are able to attract the provision and attention of the court. This act is enforced and implemented by the Federal trade commission. It was formed by the antitrust division of the US Department of Justice.
This Clayton Antitrust Law mentioned that - A suit could be filed in the court, and if it permits a suit in the federal courts for three times the actual damages caused by anything forbidden in the antitrust laws. That would include court costs and attorney fees.
That was all about the Clayton Antitrust Act and its different aspects. Hope this was useful!