# Clayton Antitrust Act **Signed:** October 15, 1914 by [[Woodrow Wilson]] The statute that gave [[Antitrust]] its prohibitions. Where the [[Sherman Antitrust Act]] banned "restraint of trade" in the abstract and left courts to fill it in, Clayton named specific practices and applied an **incipiency** standard — conduct is unlawful where its effect *may be* to substantially lessen competition, without waiting for the monopoly to form. - **§2** — price discrimination between purchasers (rewritten by the [[Robinson-Patman Act]] in 1936) - **§3** — tying and exclusive dealing - **§7** — anticompetitive acquisitions (stock only until the [[Celler-Kefauver Act]] closed the asset loophole in 1950); the provision under which nearly all modern merger cases are brought - **§8** — interlocking directorates among competitors - **§6** — the labor exemption: "**The labor of a human being is not a commodity or article of commerce**" Section 6 was a direct response to [[Loewe v. Lawlor]], in which individual union members' homes were attached to satisfy an antitrust judgment. Samuel Gompers called it labor's Magna Carta; *Duplex Printing Press v. Deering* (1921) largely nullified it until the Norris-LaGuardia Act of 1932. ## Why 1914 The [[Sherman Antitrust Act]] had been law for twenty-four years and the Supreme Court had just broken up [[Standard Oil]] (1911) — while announcing, in the same opinion, a "rule of reason" that left every future case to judicial discretion. The 1912 election was fought partly over what to do about it: Roosevelt's New Nationalism proposed to regulate big business, [[Woodrow Wilson]]'s New Freedom, drafted with [[Louis Brandeis]], proposed to prevent it. Clayton and the [[Federal Trade Commission Act]], passed three weeks apart, were the New Freedom's answer — one statute naming the practices, one agency to police them. Henry Clayton's original bill was tougher than what passed; the Senate softened nearly every section with the qualifier "where the effect may be to substantially lessen competition," which became the statute's defining phrase. ## How it is used now Section 7 is the workhorse. Every merger challenge — [[Brown Shoe v. United States]], [[United States v. Philadelphia National Bank]], the 2023 [[Merger Guidelines]], the [[Live Nation Antitrust Case]] — is a Section 7 case, and the [[Hart-Scott-Rodino Act]] (1976) bolted pre-merger notification onto it so that the government reviews deals before they close rather than unwinding them after. Section 4 gives private plaintiffs treble damages and attorney's fees, which is why most antitrust litigation in the United States is private; [[Reiter v. Sonotone]] (1979) confirmed that consumers, not only businesses, can sue under it. Section 8's ban on interlocking directorates was nearly dormant until the [[Antitrust Division]] revived it in 2022–23, forcing directors off boards at Pinterest, Nextdoor and a dozen other companies. ## The labor clause Section 6 is the part that reads like a manifesto, and it was: the AFL had spent a decade under antitrust injunctions, and after [[Loewe v. Lawlor]] the members of a hatters' union had their homes attached to satisfy a treble-damages judgment. The clause declared that labor is not "a commodity or article of commerce" and that unions are not "illegal combinations." Samuel Gompers called it labor's Magna Carta, and was wrong for eighteen years: *Duplex Printing Press v. Deering* (1921) read the exemption to cover only a union's dealings with its own employer, leaving secondary boycotts exposed, until the Norris-LaGuardia Act (1932) stripped the federal courts of the injunction power. The modern version of the fight is [[Monopsony]] — whether Section 7 reaches a merger that lowers wages rather than raises prices, which the 2023 Guidelines say it does. ## See Also - [[Sherman Antitrust Act]] · [[Federal Trade Commission Act]] · [[Celler-Kefauver Act]] · [[Robinson-Patman Act]] · [[Hart-Scott-Rodino Act]] - [[Antitrust]] · [[Merger Guidelines]] · [[Monopsony]] · [[Antitrust Division]] · [[FTC]] - [[Brown Shoe v. United States]] · [[United States v. Philadelphia National Bank]] · [[Reiter v. Sonotone]] · [[Loewe v. Lawlor]] · [[Standard Oil]] - [[Woodrow Wilson]] · [[Louis Brandeis]] · [[US Antitrust and Monopoly Timeline]]