Passed in 1914, the Clayton Act is federal legislation aimed at preventing certain unfair business practices. The Act regulates activities that may harm competition, such as price discrimination, mergers and acquisitions, requirement contracts, exclusive dealing contracts, and interlocking directorates.
How Broad Is the Clayton Act?
The Constitution limits the application of the Act to any activities related to interstate commerce. Some Clayton Act regulations include:
- Mergers are prohibited under the Act if they "lessen competition, or tend to create a monopoly"
- Exclusive Dealing contracts are prohibited if they have the effect of lessening competition
- Interlocking Directorates no person may serve as director of two corporations that are competing in the same industry
What Are the Penalties for Violating the Clayton Act?
Any individual found guilty of a Clayton Act violation may face a fine of up to $11,000 and imprisonment.