THE CLAYTON ACT. I. EXCLUSIVE-DEALING AND TYING CONTRACTS: ACQUISITIONS
The previous chapters have dealt almost entirely with the case-law under the Sherman Act, though a few cases under the Federal Trade Commission Act have been mentioned. We turn now to the Clayton Act, which was passed in 1914.
The evidence given in the big cases in the period leading up to this legislation -- particularly the Oil and Tobacco cases -- had shown certain recurrent ways in which the monopoly power of the 'trusts' was built up. They had secretly gained control of ostensibly independent companies by acquiring stock and voting it through holding companies; they had 'tied up' important sources of supply or channels of distribution through various types of exclusive contract; they had brought to heel inconvenient competitors by local price-cutting campaigns, often carried on through 'fighting companies'. The feeling grew that it ought to be possible to prohibit these trust-building or monopolizing devices specifically: the hope was that, given such a prohibition, no new 'trusts' of the Standard Oil type would appear and the Sherman Act would meanwhile secure the break-up of those already in being. The preamble to the original Clayton bill explained that its purpose was:
'to prohibit certain trade practices which ... singly and in themselves are not covered by the [Sherman Act] ... and thus to arrest the creation of trusts, conspiracies and monopolies in their incipiency and before consummation.'1
There were, however, two opposed theories of how this should be done. In the House of Representatives the favoured plan was to specify the devices in question -- acquisition of stock in competing companies,____________________