Clayton Anti-trust Law In the late 1800’s there were some big names in the economy. Two of the biggest trusts out there where the Carnegie Steel and John D. Rockefeller’s Standard Oil Company. These two companies and a few others dominated the economy and controlled not only the prices, but the market share for their products. In response, the Sherman Anti-trust Act was passed around 1890 to limit the control. The Sherman Act however, did not cover everything that businesses needed it to cover. In 1914, Woodrow Wilson instructed Congress to pass a new set of antitrust laws called the Clayton Act. (Swenson, 2) The Sherman Act was first passed to ensure that no company “shall monopolize, attempt to monopolize or conspire with another to
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Price discrimination “occurs when a seller charges different prices to competing buyers for identical goods or services…Section two prohibits direct and indirect price discrimination that cannot be justified by differences in production costs, transportation costs, or cost differences due to other reasons” (Lancaster, 2). This was a popular issue because it caused certain companies to charge higher prices because they were receiving the goods for a higher price, while others received theirs for less. It was an unfair tactic that the Clayton act outlawed. Also included in the price discrimination section two of the act, was “giving favorable credit terms, delivery, or freight charges to only some buyers can also lead to allegation of price discrimination” (3). Basically section two of the Clayton Act wanted to make sure everyone had an equal part in the business world and there were no unfair practices favoring certain people over others.
Another section of the Clayton Act was the third section which dealt with exclusive dealing contracts and tying arrangements. An exclusive dealing contract is “one in which a seller forbids the buyer from purchasing products from the seller’s competitors. For example, imagine that most soft drinks are produced by one firm, that most soft drink are marketed by one other firm, and that the producer signs an exclusive dealing contract with the retail seller” (Abernathy, 12). In a tying arrangement, “the seller