1. Broadening of Antitrust Scope: The Clayton Act expanded the scope of antitrust laws by prohibiting specific business practices that could potentially lead to monopolies or reduce competition. These included price discrimination, tying arrangements, exclusive dealing contracts, and mergers that could substantially lessen competition.
2. Price Discrimination: Prior to the Clayton Act, price discrimination was not explicitly addressed by antitrust laws. The Clayton Act introduced Section 2, which made it illegal for companies to engage in price discrimination among different buyers of like-grade and quality products where competition was substantially lessened.
3. Tying Arrangements and Exclusive Dealing: Another significant aspect of the Clayton Act was Section 3, which prohibited tying arrangements and exclusive dealing contracts. Tying arrangements involve making the sale of one product conditional upon the purchase of another, while exclusive dealing contracts restrict a buyer from purchasing goods from competitors.
4. Mergers and Acquisitions: The Clayton Act introduced Section 7, which regulated mergers and acquisitions. This section prohibited mergers and asset acquisitions that substantially reduced competition or created monopolies. It also defined the term "corporation" broadly, including holding companies, subsidiaries, and even individuals that controlled other companies.
5. Strengthened Enforcement: The Clayton Act introduced enhanced enforcement provisions to facilitate the prosecution of antitrust violations. It allowed individuals and the government to seek injunctive relief against potential violations and provided for both criminal and civil penalties.
6. Role of the Federal Trade Commission (FTC): The Clayton Act played a crucial role in the establishment of the FTC in 1914. The FTC was created as an independent agency charged with enforcing the Clayton Act and other antitrust laws. The FTC has the authority to investigate suspected antitrust violations, issue cease-and-desist orders, and pursue administrative or judicial proceedings against violators.
The Clayton Antitrust Act strengthened the antitrust laws and filled the gaps left by the Sherman Act, making it a significant milestone in U.S. antitrust law and regulation. It provided clearer guidelines and tools for regulators and courts to address specific anticompetitive practices, ensuring that competition remained robust in the American economy.