What is the Clayton Anti Trust Act

The U.S. antitrust laws from 1890

The antitrust laws of the USA are the world's oldest restrictions of competition for the industry, which decisively influenced analogous measures in other countries. In European economic policy, however, such regulations only became more effective after the Second World War. US antitrust laws got off to a hesitant start under Republican President Benjamin Harrison (1889-1893). The background to this was an increasing process of concentration in the US economy at the end of the 19th century, which had led to the formation of large corporations (trusts).

Under pressure from the public and a broad anti-trust movement, a law supported by Harrison supporter John Sherman (1823-1900) was passed in 1890, which for the first time prohibited the formation of monopolies and restrictions on competition. The Sherman Antitrust Act of 1890 made "every contract, combination or conspiracy in restraint of trade or commerce" illegal. Violations were threatened with a fine of $ 5,000 or one year in prison. However, in the decades that followed, the law was rarely applied by the US courts. Only President Theodore Roosevelt (1901-1909) pushed for greater competition control and thereby earned the name of a "trust buster".

It was only under President Woodrow T. Wilson (1913-1921) that further legislative measures pushed back the formation of trusts in 1914. The Federal Trade Commission Act, as a new and independent agency, entrusted the Federal Trade Commission in Washington (D.C.) with the execution and enforcement of the antitrust laws. If the instructions of the controlling body were ignored, the "Antitrust Division" of the US Department of Justice had to intervene, which acted as a further supervisory body in this sense. However, some branches of the economy remained exempt from this antitrust control and were subject to separate supervisory conditions. The "Clayton Antitrust Act" in 1914 also banned specific manifestations of monopoly formation such as price discrimination, exclusive agreements and tied deals.

The law also made such mergers of companies illegal, which would result in "to substantially lessen competition", i.e. "to substantially reduce competition". The "Clayton Antitrust Act" was supplemented and confirmed in 1936 by the "Robinson-Patman Act", which opposed price understatement by business chains, and in 1950 by the "Celler-Kefauver Act", which tightened the ban on mergers. The "Antitrust Procedures and Penalities Act" of 1974 increased the criminal offense provisions to be applied to violations of the antitrust laws. The fine was increased to one million dollars for corporations and half a million dollars for individuals. The handling of antitrust laws was relaxed under President Ronald Reagan (1981-1989) in the 1980s. Corporate mergers were now more likely to be allowed, while price cartels continued to be considered a violation.

The Reagan administration failed, however, with the intended relaxation or even substantial change in the antitrust laws, which therefore form the legally binding supervisory regulations for the US economy to this day.

The Presidents of the United States of America