CLAYTON ACT
A federal law enacted in 1914 as an amendment to the SHERMAN ANTI-TRUST ACT (15 U.S.C.A. § 1 et seq. [1890]), prohibiting undue restriction of trade and commerce by designated methods.
The Clayton Act (15 U.S.C.A. § 12 et seq.
[1914]) was originally enacted to exempt unions
from the scope of ANTITRUST LAWS by refusing
to treat human labor as a commodity or an article
of commerce. Today, it is used primarily to
prohibit the suppression of free competition by
making illegal four business practices: price discrimination,
which is the sale of the same product
to comparably situated buyers at different
prices; tying and exclusive dealing contracts,
which are the sale of products on condition that
the buyer stop dealing with the seller’s competitors;
corporate mergers, the acquisition of competing
companies by one company; and
interlocking directorates, the members of which
are common members on the boards of directors
of competing companies.
These practices are illegal when they might
substantially lessen competition or tend to create
a MONOPOLY in any line of commerce. By
making the suppression of free competition
unlawful the Clayton Act supplements the provisions
of the Sherman Act, which outlaws
monopolies.
