The Clayton Act, passed in 1914, addresses the major complaint that the Sherman Act was written too generally; it was designed to promote competition and a free market system.
Key Ideas of the Clayton Act of 1914
• Price discrimination: It is unlawful to change the price of products based on the purchaser where it may lessen competition or create a monopoly.
• Tying and Exclusive Dealing: A company cannot sell products to a purchaser with the stipulation that they cannot deal with its competitor, which could lessen competition.
• Private Lawsuits: Enforcement of the act by private parties having the ability to sue and obtain damages
• Labor Exemption: Permitted unions to organize
• Mergers: Forbid monopolies, mergers are unlawful when they either create a monopoly or make it much easier for the remaining firms in the market to fix prices.
Section 2 of the Clayton Act prohibits certain types of price discrimination, and was the first federal statute to do so. Section 7 of the Clayton Act prohibits mergers and acquisitions that would either lessen competition or potentially create a monopoly.
The FCC cannot excuse mergers from antitrust review, but under the Clayton Act, the FCC along with the Justice Department can “act on transactions among common carriers engaged in wire or radio communications.”