October 15, 1914 – Clayton Antitrust Act is Signed Into Law

The end of the nineteenth century was a period when the general public decided that economic power had become too consolidated in the hands of a few “trusts” in key industries, like oil, steel, and tobacco. Smaller companies argued that the large trusts or “monopolies” had an unfair competitive advantage over them. Congress soon began to hear demands for antitrust legislation.

Congress passed the first antitrust law, the Sherman Act, in 1890. It outlawed “every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade.” The Sherman Act also made it a crime “to combine or conspire . . . to monopolize any part of the trade or commerce among the several states.”

As the Constitutional Rights Foundation points out,

In the decade following passage of the Sherman Act, the generally pro-business presidents did little to enforce it. In fact, during this period, more mergers occurred and more trusts were formed than ever before.”

Thus, in 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act, which created the FTC, and the Clayton Act. With some revisions, these are the three core federal antitrust laws still in effect today.

Henry De Lamar Clayton of Alabama introduced the Clayton Antitrust Bill to regulate massive corporations. The bill passed the House of Representatives with a vast majority on June 5, 1914, and it was signed by President Woodrow Wilson on this day in history.

The Clayton Antitrust Act of 1914 (Pub.L. 63–212, 38 Stat. 730), codified at 15 U.S.C. §§ 12–27, 29 U.S.C. §§ 52–53), was intended to add further substance to U.S. antitrust law.

As the FTC site on antitrust laws explains:

The Clayton Act addresses specific practices that the Sherman Act does not clearly prohibit, such as mergers and interlocking directorates (that is, the same person making business decisions for competing companies). Section 7 of the Clayton Act prohibits mergers and acquisitions where the effect “may be substantially to lessen competition, or to tend to create a monopoly.” As amended by the Robinson-Patman Act of 1936, the Clayton Act also bans certain discriminatory prices, services, and allowances in dealings between merchants. The Clayton Act was amended again in 1976 by the Hart-Scott-Rodino Antitrust Improvements Act to require companies planning large mergers or acquisitions to notify the government of their plans in advance. The Clayton Act also authorizes private parties to sue for triple damages when they have been harmed by conduct that violates either the Sherman or Clayton Act and to obtain a court order prohibiting the anticompetitive practice in the future.”

An important difference between the Clayton Act and its predecessor, the Sherman Act, is that the Clayton Act contained safe harbors for union activities. Section 6 of the Act (codified at 15 U.S.C. § 17) exempts labor unions and agricultural organizations, saying “that the labor of a human being is not a commodity or article of commerce, and permit[ting] labor organizations to carry out their legitimate objective.” Therefore, boycotts, peaceful strikes, peaceful picketing, and collective bargaining are not regulated by this statute. Injunctions could be used to settle labor disputes only when property damage was threatened.