Celler-Kefauver Act

PASSED BY THE U.S. CONGRESS in 1950, the Celler-Kefauver Act strengthened previous antitrust legislation by amending sections and adding provisions to the Clayton Antitrust Act of 1914. It made the Clayton Act's anti-merger provisions more applicable and it outlawed more types of illegal intercorporate holdings, mergers, and acquisitions.

The original antitrust legislation, the Sherman Antitrust Act of 1890, was utilized heavily during Theodore Roosevelt and William Howard Taft administrations. The legislation prohibited any action by private firms that would prevent the regulatory action of the U.S. market system. It encouraged a market system with a significant number of rivals in each industry, ensuring market competition. Empowered by the act, the U.S. attorney general is permitted to bring lawsuits against companies suspected of monopolizing. The act accounted for the historic antitrust cases against American Tobacco and Standard Oil, resulting in these massive companies being divided into smaller ones.

The Sherman Act was met with controversy and difficulty. Plagued with vague language, the act often proved ineffective because of loopholes, which arose from the language difficulties. For example, the act only outlaws “monopolizing” explicitly in print, but does not ban the existence of a “monopoly,” resulting in drawn-out legal battles over the interpretation of these terms.

In 1914, the U.S. Congress attempted to ameliorate the problematic Sherman Act by amending it with the Clayton Antitrust Act. The Clayton Act, composed by U.S. Representative Henry De Lamar Clayton from Alabama, clarified the interpretation difficulties by amending language and added specific examples of illegal actions by companies. Local targeted price-cutting, a type of price discrimination, was outlawed by the Act, along with horizontal mergers and acquisitions, and exclusive dealership agreements.

Soon after the enactment of the Clayton Act, the U.S. Congress established the Federal Trade Commission (FTC) with the passage of the Federal Trade Commission Act of 1914. Authorized to enforce federal legislation, the FTC utilized the antitrust legislation to continue to curb or regulate monopolistic companies. The Clayton Act, however, did not solve all of the difficulties surrounding antitrust legislation. It was necessary for price-discrimination practices to be defined further by the Robinson-Patman Act of 1936 and for powers to prevent illegal mergers and acquisitions to be expanded by the Celler-Kefauver Act of 1950.