The Clayton Antitrust Act of 1914 built on the Sherman Antitrust Act of 1890 to regulate business activities in the US. It prohibited price fixing and discrimination, regulated mergers, and prevented individuals from directing competing companies. Unions were exempted. The Federal Trade Commission oversees the act to prevent monopolies and promote fair competition.
The Clayton Antitrust Act, passed in 1914 by the United States Congress, was one of a series of laws developed in the United States to address fair market competition and the need for business regulation in response to the economic booms of the industrial age. The Sherman Antitrust Act of 1890 was the first such law. The Clayton Antitrust Act built heavily on this earlier law to provide greater regulation of business activities in the United States.
Several topics were covered in the Clayton Antitrust Act. The law officially prohibited price fixing and price discrimination, ensuring that products and services were sold fairly throughout the market and that companies could not enter into price fixing agreements with each other to reduce other companies. Furthermore, it provided a regulatory framework for overseeing mergers and sales, creating a way for the government to intervene in cases where monopolies might develop beforehand, rather than intervening after the fact to deal with an already established monopoly.
Under the Clayton Antitrust Act, individuals were not allowed to act as directors of two or more competing companies. Other activities deemed anti-competitive in nature were also addressed by this act of Congress, with the goal of promoting competition. Fair competition in the marketplace is believed to help develop fair pricing and at the same time foster innovation, as companies must constantly develop new and attractive products to attract customers.
A notable aspect of the law was that it specifically excluded trade unions. This was designed to provide workers with the right to organize and negotiate collectively and had the effect of ensuring that peaceful labor actions such as strikes and boycotts were legal. The exemption of unions from the law also meant that unions could not be targeted as sources of “unfair competition” and were shut down.
The Federal Trade Commission (FTC) is responsible for overseeing the Clayton Antitrust Act and other regulations relating to trade and business in the United States. Throughout the 20th century, the development of monopolies and restrictions on competition were a constant concern among regulators, who used a variety of law enforcement tools, including filing actions to break monopolies or to prevent them from forming in the first place. This is believed to prevent the concentration of power in the hands of a very few companies, which would then be able to set prices and shape the market at will.
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