Clayton Act Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Clayton Act, written in plain English, along with examples of how it is used.
What is Clayton Act?
The outlaw of price fixing and actions which could lead to creating a monopoly. The Clayton Act is an amendment to the Sherman Act.
History and Meaning of Clayton Act
The Clayton Act is a federal law in the US that was passed in 1914 to amend the Sherman Antitrust Act of 1890. The law was designed to strengthen the Sherman Act, which focused on preventing and penalizing illegal business practices that limited competition. The Clayton Act's main purpose was to prevent the creation of monopolies and unfair business practices by prohibiting price discrimination, tying arrangements, exclusive dealing, mergers, and interlocking directorates. The Act also established the Federal Trade Commission (FTC) to enforce antitrust laws and investigate unfair trade practices.
Examples of Clayton Act
- If a company uses predatory pricing to drive competitors out of the market, they would be in violation of the Clayton Act.
- If two competing businesses merge to form a monopoly, it would be a violation of the Clayton Act.
- If a seller requires buyers to purchase additional products to obtain the main product, it would be considered a tying arrangement and a violation of the Clayton Act.
- If a company or individual attempts to monopolize a particular market, they would be in violation of the Clayton Act.
Legal Terms Similar to Clayton Act
- Sherman Antitrust Act - A federal law that prohibits monopolies and other business practices that limit competition.
- Robinson-Patman Act - A federal law that prohibits price discrimination that favors some buyers over others.
- Federal Trade Commission Act - A federal law that established the FTC as an independent government agency to protect consumers and enforce antitrust laws.
- Hart-Scott-Rodino Antitrust Improvements Act - A federal law that requires companies to report large mergers and acquisitions to the government for review before they can be completed.