CLAYTON ANTITRUST ACT

law enacted in 1914 by the United States Congress to clarify and strengthen the Sherman Antitrust Act (1890). The vague language of the latter had provided large corporations with numerous loopholes, enabling them to engage in certain restrictive business arrangements which, though not illegal per se, resulted in concentrations that had an adverse effect on competition. Thus, despite the trust-busting activities of both the Roosevelt and Taft administrations under the Sherman Act, it appeared to a congressional committee in 1913 that big business had continued to grow bigger and that the control of money and credit in the country was such that a few men had the power to plunge the nation into a financial panic. When Pres. Woodrow Wilson asked for a drastic revision of existing antitrust legislation, Congress eagerly accommodated by passing the Clayton measure. Whereas the Sherman Act declares monopoly illegal, the Clayton Act defines in some detail varied types of illegal business practices that are conducive to the formation of monopolies or that result from them. Certain forms of holding companies and interlocking directorates are forbidden, as are discriminating freight agreements and the distribution of sales territories among so-called natural competitors. Two sections of the Clayton Act were later amended by the RobinsonPatman Act (1936) and the CellerKefauver Act (1950) to fortify its provisions. The RobinsonPatman amendment made more enforceable Section 2, which relates to price and other forms of discrimination among customers. The CellerKefauver Act strengthened Section 7, prohibiting one firm from securing either the stocks or physical assets (i.e., plant and equipment) of another firm when the acquisition would reduce competition. The amendment, furthermore, extended the coverage of antitrust laws to all forms of mergers whenever the effect would substantially lessen competition and tend to create a monopoly. Earlier legislative measures had simply restricted horizontal mergersthose involving firms that produce the same type of goods. In contrast, the CellerKefauver Act restricts even mergers of companies in different industries, that is, conglomerate mergers. See also Sherman Antitrust Act.