The Clayton Act Translated
The Clayton Act was passed about 20 years after the Sherman Antitrust Act was passed. The main purpose of the Clayton Act was to make the Sherman Act easier to enforce.
The Clayton act made substantive changes to federal antitrust laws. First, it made price discrimination illegal if that discrimination substantially lessons competition or creates a monopoly. Second, a merger of two or more companies cannot lessen competition.
The Clayton Act made both substantive and procedural modifications to federal antitrust law. Substantively, the act seeks to capture anticompetitive practices in their incipiency by prohibiting particular types of conduct, not deemed in the best interest of a competitive market. There are 4 sections of the bill that proposed substantive changes in the antitrust laws by way of supplementing the Sherman Antitrust Act of 1890. In those sections, the Act thoroughly discusses the following four principles of economic trade and business. Third, it prohibits a person from being the director of two or more competing corporations – similar to the adage that a person cannot faithfully sere two masters at the same time.
The act is enforced civilly by the Federal Trade Commission as well as the Antitrust Division of the United States Attorneys office who has both civil and criminal jurisdiction.
These laws apply to individuals as well as small and mid-size businesses just as much as they do to multi-national corporations. Individuals and small businesses are frequently targeted in antitrust investigations and prosecutions. The potential financial penalties in these cases can be significant as can the potential time in custody.
It is imperative that you retain legal counsel as soon as possible if you or your business is being investigate in connection with any kind of allegations regarding anti-competetive business practices.
15 USC 14 – The Clayton Act Defined
It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.