Clayton Act 38 Stat. 730 (1914)

Author:David Gordon
Pages:425-426
 
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Page 425

Mistakenly hailed by Samuel Gompers as labor's MAGNA CARTA, the Clayton Act represented a new generation's attempt to deal with trusts. Acclaimed for its specificity, the new act in reality contained crucial ambiguities as vague as the SHERMAN ANTITRUST ACT it was intended to supplement. WOODROW WILSON ' SANTITRUST policy included both the FEDERAL TRADE COMMISSION ACT and the Clayton Act; in his view the latter would leave the Sherman Act intact while specifying conduct henceforth prohibited. Framed by Representative Henry Clayton, chairman of the House Judiciary Committee, the antitrust bill pleased no one: labor objected to the absence of an explicit guarantee of immunity for unions, many congressmen found the list of restraints of trade incomplete, and agrarian radicals believed that the bill betrayed Democratic pledges. In the face of this opposition, Wilson abandoned the Clayton bill in Congress. The HOUSE, unhappy over the vagueness of the Sherman Act and wishing to leave businessmen no loopholes, sought as specific a bill as possible. The SENATE objected, but a compromise was reached naming only a few, particularly pernicious, practices which were declared unlawful "where the effect may be to substantially lessen competition or tend to create monopoly"?hardly a model of certainty. Four provisions of the Clayton Act contain this operative phrase. Section 7 prohibited the acquisition of stock by one corporation of another or mergers, but, by neglecting to forbid acquisitions of assets as well as stock, it provided a loophole not plugged until 1950. The act also placed strict limitations on interlocking directorates (section 8), and outlawed price discrimination (section 2) and exclusive dealing and tying contracts (section 3). The Federal Trade Commission would enforce these provisions by procedures paralleling those in the FTC Act. In addition, the act rendered individual officers personally liable for corporate violations, permitted private individuals to secure INJUNCTIONS and to file treble damage suits, and allowed final judgments in government suits to be considered prima...

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