Clayton Antitrust Act

PASSED BY THE U.S. CONGRESS in 1914, the Clayton Antitrust Act supplemented and strengthened the Sherman Antitrust Act of 1890. Addressing specific anti-competition practices and problems within the Sherman Act, the Clayton Act's clarifications allowed the federal government to better deal with companies which had monopolies over certain U.S. industries.

The Sherman Act's powers were utilized heavily during the presidencies of Theodore Roosevelt and William Taft in the early 1900s. The act prohibited any action by private firms that would avoid or prevent the natural regulatory action of the U.S. market system. It worked to encourage a healthy and decentralized market structure based upon industry rivalries and competition.

Authorized by the Sherman Antitrust Act in order to maintain competition, the U.S. attorney general is permitted to bring lawsuits against companies that have monopolistic characteristics and attempt to dominate the market in a non-competitive manner. Other companies or parties can bring suit against monopolistic companies as well, and may receive compensation from violators of the Sherman Act. However, the Sherman Act had proved to be relatively unsuccessful in preventing large companies from dominating their industries, especially after the Roosevelt and Taft presidential terms. Vague language plagued the Sherman Act, allowing lawyers for the powerful companies to find a number of loopholes in the legislation. Consequently, the Act's language could be interpreted in different ways.

For example, lengthy disputes revolved around the interpretation of the differences between monopolizing, which was banned by the Sherman Act, and the existence of a monopoly, which is not banned explicitly in the act. As a result, these companies were still able to enter into restrictive business agreements that were not outlawed by legislation or precedent, continuing to create massive concentrations of wealth. The companies' massive treasuries allowed them to dominate their industries, to buy out other smaller companies, and to have the resources necessary to fight the federal government and its antitrust legislation.