Mergers and the Clayton Act

The many changes in American institutions and thought during the period of rapid growth of the economy around the turn of the century resulted in the enactment of the Clayton Act twenty-four years after Congress passed the Sherman Act in 1890. The Clayton Act supplemented, but did not replace, the Sherman Act as the basic Congressional statement of federal antitrust policy. The Sherman Act was couched in the general language of the old common law prohibitions against restraint of trade and monopolization, but the 1914 antitrust statute provided for prohibitions of four specific business practices: price discrimination, tying contracts, interlocking directorates, and intercorporate stockholding. This chapter will provide general background to the action taken by Congress in 1914 to supplement the Sherman Act policy on corporate combinations and to its decision to prohibit intercorporate stockholding as one means to that end.

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