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What is the Clayton Antitrust Act?

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  • Written By: Mary McMahon
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  • Last Modified Date: 30 November 2016
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The Clayton Antitrust Act, passed in 1914 by the United States Congress, was one in a series of laws developed in the United States to address fair market competition and the need for regulation of business 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 more regulation of business activities in the United States.

Several different topics were covered in the Clayton Antitrust Act. The Act officially banned price fixing and price discrimination, ensuring that products and services were sold fairly across the market and that companies could not enter into price fixing agreements with each other to undercut other companies. In addition, it provided regulatory framework for overseeing mergers and sales, creating a way for the government to intervene in cases in which monopolies might develop beforehand, rather than stepping in after the fact to address an already established monopoly.

Under the terms of the Clayton Antitrust Act, people were not allowed to act as directors of two or more companies operating in competition. Other activities deemed anticompetitive in nature were also address by this Act of Congress, with the goal of promoting competition. Fair market competition is believed to foster the development of fair prices while also promoting innovation, as companies must constantly develop new and appealing products in order to attract customers.

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One notable aspect of the law was that it specifically excluded labor unions. This was designed to provide workers with the right to organize and bargain collectively, and had the effect of ensuring that peaceful labor actions such as strikes and boycotts would be legal. The exemption of unions from the Act also meant that unions couldn't be targeted as sources of "unfair competition" and closed down.

The Federal Trade Commission (FTC) is responsible for overseeing the Clayton Antitrust Act and other legislation which pertains to trade and doing business in the United States. Throughout the 20th century, the development of monopolies and restrictions on competition were an ongoing concern among regulators, which used a variety of tools to enforce the law, including bringing suit to break up monopolies or to prevent them from forming in the first place. It is believed that this prevents power from being concentrated in the hands of very few companies, which would then be able to set prices and shape the market at will.

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Emilski
Post 4

I think that the Clayton Anti-Trust Act is an act that is somewhat controversial simply due to the fact that there are some exceptions given to existing monopolies.

All the anti-trust laws that came out during this time were enacted to try and eradicate corruption and to reform business practices. By granting legal monopolies the federal government seemed to be saying that some monopolies were completely fine and necessary completely contradicting the attitudes at the time.

Maybe it is because it is impossible to take a firm stance on all monopolies and some types of business professions need monopolies to be better regulated, like in professional sports, but people see this as a source of controversy and completely goes against the ideas of fair and equal business practices.

cardsfan27
Post 3

Antitrust law is an interesting thing considering the exceptions that are made.

The idea of monopolies, at least in the eyes of a capitalistic government like the United States, is that they are very bad and completely go against choice and fairness in the area of business and consumerism. Yet there are exceptions made to the laws against monopolies and the government fully supports them. The greatest example to one of these exceptions has already been mentioned and that is Major League Baseball.

The reason why Major League Baseball is given a legal monopoly is because it is such a unique profession that very few people can be able to do for a living. Also, due to the great regulation

associated with Major League Baseball, as opposed to other independent baseball leagues, it is far and above all other leagues and makes the players all want to play in Major League Baseball and not another league.

Due to the unique nature of Major League Baseball and its success compared to other baseball leagues, the United States government had no choice but to grant them a legal monopoly. This is probably for the best because if it were not a monopoly the business of baseball would lose regulation and suffer just to comply with law and perceived fairness.

JimmyT
Post 2

@jcraig - To answer your question, the government allows some monopolies to occur for various reasons, although it is a rare thing.

When the Clayton Anti-Trust Act was created Major League Baseball was one of the few businesses that was allowed to remain a monopoly and this was done due to Major League Baseball's connection to national heritage and how they were a sports league, which was a big league and naturally attracted the best ball players.

This is interesting considering that around the time the Clayton Anti-Trust Act emerged a rival baseball league, the Federal League, emerged to challenge Major League Baseball. Some people think this league came about due to assuming Major League Baseball had to comply with

the Clayton Anti-Trust Act, however, this was not at all the case and it was simply another league that tried to challenge the monopoly.

The Federal League would only last a few years and could never thrive due to Major League Baseball's relationship with the government and them being considered a legal monopoly exempt from the Clayton Anti-Trust Act.

jcraig
Post 1

I have hear of the Clayton Anti-Trust Act as well as the Sherman Anti-Trust Act and have always assumed that both of these laws simply outlawed monopolies as a whole throughout the United States.

I am pretty sure that the Sherman Anti-Trust Act was created to more or less break up Standard Oil into several smaller companies and effectively end the monopoly and that the Clayton Anti-Trust Act was just another act to further enhance the government's actions against preventing monopolies.

However, there are monopolies that exist nowadays, such as Major League Baseball and most other sports related leagues and I have to wonder have to wonder how this is possible considering the government's actions in the past taken against monopolies.

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