Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Assistant Attorney General Baer commemorates Clayton Act centennial at ABA symposium, (Dec 4, 2014)

By Greg Hammond, J.D.

Department of Justice Antitrust Division Assistant Attorney General, William J. Baer, delivered the keynote address today at the American Bar Association Clayton Act 100th Anniversary Symposium in Washington, D.C. In his prepared remarks, entitled “Origins of the Species: The 100 Year Evolution of the Clayton Act,” Baer explored the Clayton Act’s original substantive provisions, the drafters’ goals, and how the Act has developed over the course of the last century.

According to Baer, the 1914 Act contained four main substantive provisions—Sections 2, 3, 7, and 8—which contained two main features: (1) specific problematic practices, such as price discrimination in Section 2, exclusive dealing and tie-ins in Section 3, holding companies in Section 7, and interlocking directorates in Section 8; and (2) a ban on these practices where their effect might substantially lessen competition. “The drafters’ stated goal was to find an alternative to the broad prohibitions of the Sherman Act,” Baer said. Further, “the intent was to consider likely future effect—not just palpable impact—in determining whether these practices were illegal.”

The four main statutory prohibitions did not last very long, Baer said. Specifically, he noted that Section 2 morphed into the Robinson-Patman Act of 1936; Section 3 claims are alleged alongside claims under Section 1 of the Sherman Act; and Section 8 claims are relatively rare. “Section 7, on the other hand, evolved into a cornerstone of current antitrust enforcement,” Baer said, “largely due to the 1950 Celler-Kefauver amendment, which expanded Section 7’s reach substantially.”

Today, Section 7 of the Clayton Act remains central to modern antitrust enforcement. The Celler-Kefauver Act, also known as the “Antimerger Act,” gave courts wide latitude to find mergers illegal, and the Philadelphia National Bank presumption simplified the required proof for many cases. Under the presumption, “a merger which produces a firm controlling an undue percentage share of the relevant market, and results in a significant increase in the concentration of firms in that market is so inherently likely to lessen competition substantially that it must be enjoined in the absence of evidence clearly showing that the merger is not likely to have such anticompetitive effects,” Baer said.

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) also critically improved Section 7 of the Clayton Act, setting forth three procedural innovations: (1) enforcement agencies must be notified of any large transaction before it takes place; (2) the merging parties must provide information to allow the agencies to analyze a merger’s competitive effects; and (3) the HSR Act prohibits the consummation of a merger for a certain period of time to give a reviewing agency the opportunity to conduct a competitive-effects analysis and, if necessary, file a complaint to block the merger.

“The drafters of the original Clayton Act thought our nation’s antitrust laws needed two improvements—first, a heightened sensitivity to especially anticompetitive practices, and second, the ability to prohibit practices when their effects are reasonably likely to be anticompetitive,” Baer stated. “To a large extent both the Sherman Act and the revised Clayton Act embody these key tenets of the Clayton Act from a century ago. And that more than justifies today’s commemoration.”

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