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Clayton Act
This essay is published for informational purposes only. It is not legal advice, nor is it intended as a substitute for the advice of your attorney.
The Clayton Antitrust Act commonly referred to as The Clayton Act is a federal law passed in 1914 in order to prevent anti-competitive practices, meaning practices not in the best interest of a competitive marketplace. The Clayton Antitrust Act attempts to prohibit certain actions that lead to anti-competitiveness and covers a broad range of anti-competitive issues. For example, the Clayton Act prohibits price discrimination, exclusive dealing arrangements with single suppliers, price cutting intended to freeze out competitors, interlocking directorates, or mergers and acquisitions that tend to lessen competition among other prohibitions.
The Clayton Act amended and expanded the enforcement provisions of the Sherman Antitrust Act, and it provides further clarification and substance to the Sherman Antitrust Act. Anti-competitive activities including price discrimination, price fixing and unfair business practices are addressed in the Act. Among its most important features, the Clayton Act defines exclusive dealing and tying clauses, mergers that result in monopolies, and interlocking directorates as unfair and anti-competitive business practices. Interlocking directorates involve a situation in which there are common members on the boards of directors of competing companies. Certain provisions of the Clayton Act are enforced by the Federal Trade Commission while other provisions are enforced by the Antitrust Division of the U.S. Department of Justice.
Edited by Michael C. Dennis. Mr. Dennis is a consultant specializing in improving the quote to cash process.