Question

The Clayton Act of 1914

Answer 1

At 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.

In 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. President Woodrow Wilson signed the initiative into law on Oct. 15, 1914.

The 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 against the Clayton Act. They may also seek and get a court order against any future anticompetitive practice.

In 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 were all legal under federal law.

There are 26 sections to the Clayton Act. Among them, the most notable include:

• The second section, which deals with the unlawfulness of price discrimination, price-cutting, and predatory pricing.
• Exclusive dealings or the attempt to create a monopoly, which is addressed in the third section.
• The fourth section, which states the right of private lawsuits of any individual injured by anything forbidden in the antitrust laws.
• Labor and the exemption of the workforce, which are covered in the sixth section.
• The seventh section, which handles mergers and acquisitions and is often referred to when multiple companies attempt to become a single entity.

Key takeaways:

• The Clayton Antitrust Act, passed in 1914, continues to regulate U.S. business practices today.
• Intended to strengthen earlier antitrust legislation, the act prohibits anticompetitive mergers, predatory and discriminatory pricing, and other forms of unethical corporate behavior.
• The Clayton Antitrust Act also protects individuals by allowing lawsuits against companies and upholding the rights of labor to organize and protest peacefully.
• There have been several amendments to the act, expanding its provisions.