What: A U.S. federal law that sought to strengthen and clarify the Sherman Antitrust Act of 1890. It aimed to curb the power of monopolies and trusts by prohibiting a range of anti-competitive practices, including price discrimination, interlocking directorates (where the same individuals serve on the boards of competing companies), and mergers that substantially lessen competition. The Act established the Federal Trade Commission (FTC) to enforce its provisions.
Impact: Why Significant?:
Strengthened Antitrust Enforcement: The Clayton Act provided more specific definitions of illegal business practices than the Sherman Act, making it easier to prosecute monopolies and trusts.
Creation of the FTC: The establishment of the FTC provided a dedicated agency to investigate and prevent unfair business practices, significantly increasing the government’s ability to regulate the economy.
Limited Corporate Power: By prohibiting certain anti-competitive behaviors, the act aimed to promote fairer competition and prevent large corporations from dominating markets. While not entirely successful in eliminating monopolies, it did create a more robust regulatory framework.
Progressive Era Reform: The Clayton Act was a key piece of legislation in the Progressive Era, reflecting the broader movement to curb the power of big business and promote social and economic justice.
Long-Term Impact: The Clayton Act, along with the Sherman Act and subsequent legislation, continues to shape antitrust law in the United States today, influencing how mergers and acquisitions are reviewed and how businesses are regulated.