The Clayton Antitrust Act, passed in 1914 by the United States Congress, was one in a series of laws developed in the United States to address fair market competition and the need for regulation of business in response to the economic booms of the industrial age. The Sherman Antitrust Act of 1890 was the first such law. The Clayton Antitrust Act built heavily on this earlier law to provide more regulation of business activities in the United States.
Several different topics were covered in the Clayton Antitrust Act. The Act officially banned price fixing and price discrimination, ensuring that products and services were sold fairly across the market and that companies could not enter into price fixing agreements with each other to undercut other companies. In addition, it provided regulatory framework for overseeing mergers and sales, creating a way for the government to intervene in cases in which monopolies might develop beforehand, rather than stepping in after the fact to address an already established monopoly.
Under the terms of the Clayton Antitrust Act, people were not allowed to act as directors of two or more companies operating in competition. Other activities deemed anticompetitive in nature were also address by this Act of Congress, with the goal of promoting competition. Fair market competition is believed to foster the development of fair prices while also promoting innovation, as companies must constantly develop new and appealing products in order to attract customers.
One notable aspect of the law was that it specifically excluded labor unions. This was designed to provide workers with the right to organize and bargain collectively, and had the effect of ensuring that peaceful labor actions such as strikes and boycotts would be legal. The exemption of unions from the Act also meant that unions couldn't be targeted as sources of "unfair competition" and closed down.
The Federal Trade Commission (FTC) is responsible for overseeing the Clayton Antitrust Act and other legislation which pertains to trade and doing business in the United States. Throughout the 20th century, the development of monopolies and restrictions on competition were an ongoing concern among regulators, which used a variety of tools to enforce the law, including bringing suit to break up monopolies or to prevent them from forming in the first place. It is believed that this prevents power from being concentrated in the hands of very few companies, which would then be able to set prices and shape the market at will.