what is the clayton antitrust act 
the clayton antitrust act is a piece of legislation passed by the u s congress and signed into law in 1914 that defines unethical business practices such as price fixing and monopolies and upholds various rights of labor the federal trade commission ftc and the antitrust division of the u s department of justice doj enforce the provisions of the clayton antitrust act which continue to affect american business practices today 1understanding the clayton antitrust actat the turn of the 20th century a handful of large u s corporations began to dominate entire industry segments by engaging in predatory pricing exclusive dealings and mergers designed to destroy competitors 1in 1914 rep henry de lamar clayton of alabama introduced legislation to regulate the behavior of massive entities the bill passed the house of representatives with a vast majority on june 5 1914 1 then the senate passed its own version and a final version based on deliberation between house and senate passed the senate on oct 6 and the house on oct 8 president woodrow wilson signed the initiative into law on oct 15 1914 2the act is enforced by the ftc and prohibits exclusive sales contracts certain types of rebates discriminatory freight agreements and local price cutting maneuvers it also forbids certain types of holding companies according to the ftc the clayton act also allows private parties to take legal action against companies and seek triple damages when they have been harmed by conduct that violates the clayton act they may also seek and get a court order against any future anti competitive practice 3in addition the clayton act specifies that labor is not an economic commodity it upholds issues conducive to organized labor declaring peaceful strikes picketing boycotts agricultural cooperatives and labor unions as legal under federal law 1sections of the clayton antitrust actthere are 27 sections to the clayton act 4 the most notable among them are discussed more in depth below the second section deals with the unlawfulness of price discrimination price cutting and predatory pricing this section prohibits a company from monopolizing or attempting to monopolize any part of interstate commerce it also makes it illegal for a company to perform anti competitive practices the third section addresses tying arrangements a tying arrangement occurs when one party enters into a contract with another and one of the terms of the arrangement is to not conduct business with a specific third party this section does not allow companies buying or selling to enter into such agreements the fourth section states the right of private lawsuits any individual that has been injured by anything forbidden in the antitrust laws has the right to potential compensation via lawsuit the sixth section covers labor and the exemption of the workforce the section exempts labor unions and agricultural organizations with the premise that labor of a human being is not a commodity or article of commerce the seventh section handles mergers and acquisitions and is often referred to when multiple companies attempt to become a single entity 4 the section prohibits mergers and acquisitions where the end result is less market competition this section also identifies specific concepts including holding companies that are used through the act the eighth section handles directors and officers and their board stewardship the section prohibits directors officers or other executives of the corporate structure from serving on multiple boards at the same time in which the boards are for competing firms this is subject to several exceptions the clayton antitrust act mandates that companies that want to merge must notify and receive permission from the government through the federal trade commission ftc to do so clayton antitrust act amendmentsthe clayton act is still in force today essentially in its original form however it has evolved over the years and is different today from when it was first drafted the clayton antitrust act was somewhat amended by the robinson patman act of 1936 the robinson patman act reinforces laws against price discrimination among customers the law was passed in response to concerns that large retailers were able to negotiate better prices from manufacturers than smaller retailers 5the robinson patman act involves a variety of practices for example the act disallows giving preferential services or allowance to one customer over another it also prohibits charging different prices for the same product to different geographic areas last the act does not allow for discounts or incentives to be offered based on the condition that a competitor is not to be transacted with another amendment is the celler kefauver act of 1950 the celler kefauver act prohibits one company from acquiring the stock or assets of another firm if an acquisition reduces competition it further extends antitrust laws to cover all types of mergers across industries not just horizontal ones within the same sector 6the act gives the government authority to block mergers that would allow a company to gain significant market power even if the new company technically is not a monopoly the act also requires companies give the government notice should they meet certain size thresholds the clayton act was also amended by the hart scott rodino antitrust improvements act of 1976 this amendment requires that companies planning big mergers or acquisitions make their intentions known to the government before taking any such action 3under the act companies must file a premerger notification if the transaction is greater than a specific value or if the companies involved have a certain amount of total assets or annual sales the act also imposes a waiting period of 30 days during which the transaction can t be completed though this period can be extended should government agencies need more time to review the merger request provisions of the clayton antitrust actanother way to consider the clayton antitrust act is through the lens of the provisions contained in the legislation some major highlights of the act via the provisions are below clayton antitrust act and labor unionsas mentioned earlier section 6 of the clayton act provides protections for the right to organize and join labor unions this section states that no court can stop a workers strike or organization this provision is intended to protect collective bargaining rights without interference from employers or the courts the clayton act also provides some protections for unions and their members against antitrust actions section 20 of the clayton act provides an exemption from antitrust liability for certain activities by labor unions such as collective bargaining and strikes this means that although certain activities would otherwise be considered anticompetitive these activities may also be necessary to negotiate fair wages and working conditions it s important to note that the clayton act makes it clear that labor unions are not immune from antitrust liability for all of their activities for example if a union goes beyond the boundaries of a collective bargaining agreement it can still be held liable for price fixing in addition courts can issue injections against unions if their activities threaten to cause damage to property enforcement of the clayton antitrust actthe doj s antitrust division primarily enforces the clayton antitrust act of 1914 in the united states in some cases the ftc can enforce the law as well the ftc and antitrust division investigate and prosecute alleged violations of the clayton act and other federal antitrust laws and investigators can conduct investigations on their own or respond to complaints or referrals in the event that the antitrust division or ftc determines that a clayton act violation has occurred they can take legal action to stop the anticompetitive conduct and seek compensation for any harm suffered some remedies include injunctions to stop behavior divestiture of assets or imposition of fines or fees as discussed earlier the clayton antitrust act allows for private parties to bring about lawsuits to seek damages for harm they have suffered related to antitrust matters they may also seek injective relief to stop the behavior from continuing clayton antitrust act vs sherman antitrust actthe sherman antitrust act of 1890 was proposed by sen john sherman of ohio and later amended by the clayton antitrust act the sherman act prohibited trusts and outlawed monopolistic business practices making them illegal in an effort to bolster competition within the marketplace 7the act contained three sections the first section defined and banned different types of anti competitive conduct the second section addressed the end results considered to be anti competitive and the third and final section extended the provisions in the first section to include the district of columbia and any u s territories but the language used in the sherman act was deemed too vague this allowed businesses to continue engaging in operations that discouraged competition and fair pricing these controlling practices directly impacted local concerns and often drove smaller entities out of business which necessitated the passing of the clayton antitrust act in 1914 while the clayton act continues the sherman act s ban on anti competitive mergers and the practice of price discrimination it also addresses issues that the older act didn t cover by outlawing incipient forms of unethical behavior for example while the sherman act made monopolies illegal the clayton act bans operations intended to lead to the formation of monopolies 37