Sherman Act,1890

Clayton Act, 1914

Federal Trade Commission,1914

Kishore P
Sherman Anti-trust act
• The Sherman Anti-trust Act of 1890 was the first measure passed by the U.S.
Congress to prohibit trusts. It was named for Senator John Sherman of Ohio
• Several states had passed similar laws, but they were limited to intrastate
businesses. The Sherman Antitrust Act was based on the constitutional power
of Congress to regulate interstate commerce.
• The Sherman Anti-Trust Act passed the Senate by a vote of 242-0, April 8, 1890,
• A trust is an arrangement by which stockholders in several companies
transfer their shares to a single set of trustees. In exchange, the stockholders
receive a certificate entitling them to a specified share of the consolidated
earnings of the jointly managed companies.
• Toward the end of the 19th century, trusts come to dominate a number of
major industries, destroying competition. For example, on January 2, 1882,
the Standard Oil Trust was formed. Attorney Samuel Dodd of Standard Oil
first had the idea of a trust. A board of trustees was set up, and all the
Standard properties were placed in its hands. Every stockholder received 20
trust certificates for each share of Standard Oil stock.
• All the profits of the component companies were sent to the nine trustees,
who determined the dividends. The nine trustees elected the directors and
officers of all the component companies. This allowed Standard Oil to
function as a monopoly since the nine trustees ran all the component
companies.
• The Sherman Anti-Trust Act authorized the federal government to institute
proceedings against trusts in order to dissolve them. Any combination "in
the form of trust or otherwise that was in restraint of trade or commerce
among the several states, or with foreign nations" was declared illegal.
Persons forming such combinations were subject to fines of $5,000 and a
year in jail. Individuals and companies suffering losses because of trusts
were permitted to sue in federal court for triple damages.
• The act was designed to restore competition, but it was loosely worded and failed to define
such critical terms as "trust," "combination," "conspiracy," and "monopoly." Five years
later, the Supreme Court dismantled the act in United States v. E. C. Knight Company (1895).
The Court ruled that the American Sugar Refining Company, one of the defendants in the case,
had not violated the law even though the company controlled about 98% of all sugar refining in
the United States. The Supreme Court reasoned that the company’s control of manufacture did
not constitute a control of trade.
• The E. C. Knight ruling seemed to end any government regulation of trusts. In spite of this,
during President Theodore Roosevelt’s "trust busting" campaigns at the turn of the century, the
Sherman Anti-Trust Act was used with considerable success. In 1904, the Supreme Court
upheld the government’s suit to dissolve the Northern Securities Company in Northern
Securities Co. v. United States. By 1911, President Taft had used the act against the Standard
Oil Company and the American Tobacco Company. In the late 1990s, in another effort to ensure
a competitive free market system, the federal government used the Sherman Anti-Trust Act,
then over 100 years old, against the giant Microsoft computer software company.
Sherman Act Relevant Provisions
• Sec. 1.
Every contract, combination in the form of trust or other- wise, or conspiracy, in restraint of
trade or commerce among the several States, or with foreign nations, is hereby declared to be
illegal.
• Sec. 2.
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with
any other person or persons, to monopolize any part of the trade or commerce among the
several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on
conviction thereof; shall be punished by fine not exceeding five thousand dollars, or by
imprisonment not exceeding one year, or by both said punishments, in the discretion of the
court.
• Sec. 7.
Any person who shall be injured in his business or property by any other person or
corporation by reason of anything forbidden or declared to be unlawful by this act, may sue
therefor in any circuit court of the United States in the district in which the defendant resides
or is found, without. respect to the amount in controversy, and shall recover three fold the
damages by him sustained, and the costs of suit, including a reasonable attorney's fee.
What Is the Clayton Antitrust Act?
• The Clayton Antitrust Act is a piece of legislation, passed by the U.S. Congress and signed
into law in 1914, that defines unethical business practices, such as price fixing and
monopolies, and upholds various rights of labor.
• The Federal Trade Commission (FTC) and the Antitrust Division of the U.S. Department of
Justice (DOJ) enforce the provisions of the Clayton Antitrust Act, which continue to affect
American business practices today.
• At the turn of the 20th century, a handful of large U.S. corporations began to dominate
entire industry segments by engaging in predatory pricing, exclusive dealings, and mergers
designed to destroy competitors.
• In 1914, Rep. Henry De Lamar Clayton of Alabama introduced legislation to regulate the
behavior of massive entities. The bill passed the House of Representatives with a vast
majority on June 5, 1914. Then the Senate passed its own version, and a final version, based
on deliberation between House and Senate, passed the Senate on Oct. 6 and the House on
Oct. 8. President Woodrow Wilson signed the initiative into law on Oct. 15, 1914.
• The act is enforced by the FTC and prohibits exclusive sales contracts, certain types
of rebates, discriminatory freight agreements, and local price-cutting maneuvers. It also
forbids certain types of holding companies
• the Clayton Act also allows private parties to take legal action against companies and seek
triple damages when they have been harmed by conduct that violates the Clayton Act. They
• In addition, the Clayton Act specifies that labor is not an economic commodity. It
upholds issues conducive to organized labor, declaring peaceful strikes, picketing,
boycotts, agricultural cooperatives, and labor unions as legal under federal law.
• Sections of the Clayton Antitrust Act
There are 27 sections to the Clayton Act.
Among them, the most notable include:
• Section 2, which deals with the unlawfulness of price discrimination, price cutting,
and predatory pricing.
• Section 3, which addresses exclusive dealings or the attempt to create a monopoly.
• section 4, which states the right of private lawsuits of any individual injured by
anything forbidden in the antitrust laws.
• Section 6, which covers labor and the exemption of the workforce.
• Section 7, which handles mergers and acquisitions and is often referred to when
multiple companies attempt to become a single entity.
• Clayton Antitrust Act Amendments
• The Clayton Act is still in force today, essentially in its original form.
However, it was somewhat amended by the Robinson-Patman Act of
1936 and the Celler-Kefauver Act of 1950. The Robinson-Patman Act
reinforces laws against price discrimination among customers. The
Celler-Kefauver Act prohibits one company from acquiring the stock
or assets of another firm if an acquisition reduces competition. It
further extends antitrust laws to cover all types of mergers across
industries, not just horizontal ones within the same sector.
• The Clayton Act was also amended by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. This amendment requires that
companies planning big mergers or acquisitions make their
intentions known to the government before taking any such action
Sherman act vs Clayton act
• The Sherman Antitrust Act of 1890 was proposed by Sen. John Sherman of Ohio and
later amended by the Clayton Antitrust Act. The Sherman Act prohibited trusts and
outlawed monopolistic business practices, making them illegal in an effort to bolster
competition within the marketplace
• the language used in the Sherman Act was deemed too vague. This allowed businesses
to continue engaging in operations that discouraged competition and fair pricing.
These controlling practices directly impacted local concerns and often drove smaller
entities out of business, which necessitated the passing of the Clayton Antitrust Act in
1914.
• While the Clayton Act continues the Sherman Act’s ban on anti-competitive mergers
and the practice of price discrimination, it also addresses issues that the older act
didn’t cover by outlawing incipient forms of unethical behavior. For example, while the
Sherman Act made monopolies illegal, the Clayton Act bans operations intended to
lead to the formation of monopolies.
• Clayton act protected labor unions
• Notice of merger and acquisition is required under Clayton ACt
Federal Trade Commission act 1914, FTI
Investigative Authority
• The Commission may “prosecute any inquiry necessary to its duties in any part of
the United States,” FTC Act Sec. 3
• Specific Investigative Powers
The Commission’s specific investigative powers are defined in Sections 6, 9, and 20 of
the FTC Act, 15 U.S.C.
Secs. 46, 49, and 57b-1, which authorize investigations and various forms of
compulsory process. In addition, the premerger notification provisions in Section 7A of
the Clayton Act, 15 U.S.C.
Sec. 18a, prohibit consummation of covered acquisitions until the parties provide the
Commission with the requested information.
• Section 9 of the FTC Act authorizes the Commission to “require by subpoena the
attendance and testimony of witnesses and the production of all such documentary
evidence relating to any matter under investigation.” 15 U.S.C.
• Sec. 49. Any member of the Commission may sign a subpoena (pursuant to a
Commission-issued resolution for compulsory process in the matter), and both
• Premerger Notification
In merger investigations, the Commission also relies on Section 7A of the Clayton
Act, 15 U.S.C.
Sec. 18a, which was added by the Hart-Scott-Rodino Act of 1976. Under Section
7A, parties to covered mergers or acquisitions must notify the FTC and the
Department of Justice before consummating the proposed acquisition and wait a
specified number of days before consummation.
• Pharmaceutical Agreement Filings
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
requires that brand name drug manufacturers and generic drug applicants file
certain agreements with the Federal Trade Commission and the Department of
Justice within 10 business days of execution of the agreement and imposes
penalties for noncompliance. Under the Patient Right to Know Drug Prices Act of
2018
ENFORCEMENT AUTHORITY
• Consumer Protection
• Section 5(a) of the FTC Act provides that “unfair or deceptive acts or
practices in or affecting commerce . . . are . . . declared unlawful.”
• Competition
• The Commission enforces various antitrust laws through its Bureau of
Competition. The two most significant statutory provisions are Section 5(a)
of the FTC Act and the Clayton Act. Section 5(a) of the FTC Act, 15 U.S.C.
Sec. 45(a), prohibits, inter alia, “unfair methods of competition.”
• Unfair methods of competition include any conduct that would violate the
Sherman Antitrust Act or the Clayton Act. Among other things, the Clayton
Act prohibits corporate acquisitions that may substantially lessen
competition (Section 7, 15 U.S.C. Sec. 18) and also bars certain forms of
price discrimination (Section 2 of the Robinson Patman Act, 15 U.S.C. Secs.
13-13b).
Rulemaking Authority
• Under Section 18 of the FTC Act, 15 U.S.C. Sec. 57a, the Commission
is authorized to prescribe “rules which define with specificity acts or
practices which are unfair or deceptive acts or practices in or affecting
commerce” within the meaning of Section 5(a)(1) of the Act. These
rules are known as “trade regulation rules.”
• Once the Commission has promulgated a trade regulation rule, anyone
who violates the rule “with actual knowledge or knowledge fairly
implied on the basis of objective circumstances that such act is unfair
or deceptive and is prohibited by such rule” is liable for civil penalties
for each violation
UK Competition Law

Kishore P
Goals of Competition Law in EU
• The Two primary goals of EU competition law are the integration of
domestic market(kind of political goal) and the protection of
competition.
• The other goals include protection of small and medium enterprises,
protection of interest of workers, environment and so on.
• In reality, the protection of competition in EU is for dominance.

• The Treaty on the Functioning of the European Union (TFEU) is one of

two treaties forming the constitutional basis of the European
Union (EU), the other being the Treaty on European Union.
• Monopolies and Restrictive Practices Act,
1948 (repealed);
• Monopolies and Mergers Act, 1965 (repealed);
• Fair Trading Act 1973;
• Restrictive Practices Court Act, 1976 (repealed);
• Resale Prices Act,, 1976 (repealed);
• Restrictive Trade Practices Act, 1976 (repealed);
• Restrictive Trade Practices Act, 1977 (repealed);
• Competition Act, 1980 (almost all the provisions are
repealed)
• The Competition Act, 1998
• Chapter I
Section 2 (Prohibition)Agreements etc. preventing, restricting or distorting competition.
Section 3 excluded agreements
Section 4 Individual exemption for creating monopolistic agreements if such agreements
are for benefit of consumer
Section 12 notification (Request for director to examine the agreements)
Section 13, 14 guidance and decision by director

• Chapter II - Abuse of dominant power

• Chapter III – Investigation and enforcement

Section 25 power to investigate, 27 power to investigate without warrant
(Dawn ride)
• Part III of the Act deals with ‘Monopolies’ and consists of four sections,
that is, from Section 66 to 69.

• The Fair Trading Act, 1973 has extended as well as integrated the United
Kingdom competition law by controlling monopolies, mergers, takeovers,
resale prices, and restrictive trade agreements.

• This Act established a regulatory authority, namely the Office of Fair

Trading (OFT) with powers to supervise all aspects of competition policy
along with specific responsibilities to oversee matters affecting
consumers’ interests.
ENTERPRISES ACT, 2002
• Part 3: provides for a new merger regime, covering the definition of a qualifying
merger,
• the duty of the OFT to make references to the Competition Commission (CC);
• how references are determined; the procedures that relate to certain public
interest cases and other special cases; powers of enforcement; undertakings and
orders; and various supplementary matters, such as information and publicity
requirements and powers to require information.
• The introduction of criminal sanctions for individuals who engage in hard-core
cartels.
• The OFT will be given a new power to apply for the court to disqualify directors
involved in breaches of competition law.
• The main provisions are Consumer reform, Competition reform, Insolvency
reform. Enterprise Act 2002, as amended by the Enterprise and Regulatory
Effect of Brexit on Competition law:
• The Trade and Cooperation Agreement between the EU and the UK provides for a mutual
commitment to enforce anticompetitive agreements and abuses of dominance
• EU competition law will no longer apply in the UK but UK undertakings will continue to be
subject to EU competition law if they trade within the EU
• UK undertakings may be subject to parallel investigations if their alleged anticompetitive
conduct affects both the EU and UK markets
• UK competition law (Chapters I and II of the Competition Act 1998) will essentially remain
unchanged in the short term
• In the medium to long term, UK competition law might diverge gradually from EU
competition law
• UK regulators and UK courts have a discretion to depart from EU competition law case law
• EU block exemption regulations, including the block exemption for vertical agreements, have
been incorporated into UK law and will continue to apply as “retained EU law”
• The Vertical Block Exemption Regulation is due to expire on 31 May 2022 and the CMA will
consider whether to renew, revoke or review the “retained” vertical block exemption
regulation
• The UK legal framework for territorial restrictions might change as the CMA might adopt a
• UK competition before Brexit
• a) EU Competition Law
• Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit
anti-competitive conduct and abuses of a dominant position that affect the European Single
Market.
• Article 101(3) provides an exemption from competition rules for certain types of agreements
that benefit consumers and the economy.
• b) UK Competition Law
• Chapters I and II of the Competition Act 1998 contain equivalent provisions to Articles 101
and 102 TFEU and apply to anti-competitive conduct and abuse of a dominant position, which
have an effect in the UK. Chapters I and II are closely modelled upon Article 101 and 102 TFEU
• Prior to 31 January 2020, the Competition and Markets Authority (CMA) had jurisdiction to
investigate and enforce infringements of both EU and UK competition law. Council Regulation
1/2003 provides that, when applying national competition law, national competition
authorities of the Member States must apply Articles 101 and 102 TFEU in parallel, if it is
suspected that those provisions have also been infringed.
• Section 60 of the Competition Act 1998 (now revoked) provided that, in so far as possible, the
CMA and UK courts must interpret UK competition law in a manner that is consistent with EU
competition law. Section 60 also provided that the CMA and UK courts must have regard to
the case-law from the EU Courts and to the decisional practice of the European Commission.
• UK competition law after Brexit
• a) EU-UK Trade and Cooperation Agreement
• On 24 December 2020, the EU and the UK announced an agreement
on their future relationship. The EU-UK Trade and Cooperation
Agreement –TCA- includes a commitment by both parties to maintain
effective competition laws to address anti-competitive agreements
and abuses of a dominant position. The TCA also contains provisions
for developing arrangements for future co-operation between the EU
and the UK authorities.
• The wording of the TCA is closely modelled upon Articles 101 and 102
TFEU and the equivalent UK provisions in the Competition Act 1998.
• The competition law provisions in the TCA are however broadly
framed. The UK therefore retains a large discretion to set its own
course.
• b) EU competition law will cease to apply in the UK
• On 1 January 2021 (i.e. the end of the transition period provided by the
Withdrawal Agreement) Articles 101 and 102 TFEU ceased to apply in the UK.
• However, Articles 101 and 102 TFEU will continue to apply to anti-competitive
conduct that has an effect within the EU. UK undertakings will therefore continue
to be subject to EU competition law if their conduct affects the EU market (just as
US and/or Asian undertakings are subject to EU competition law in similar
circumstances).
• Undertakings may be subject to parallel investigations (both CMA and EU
Commission) if the anti-competitive behavior affects both trade within the UK and
cross-border EU trade. The European Commission will continue to have
jurisdiction over antitrust investigations which were initiated before 31 December
2020.
• The European Commission will no longer be able to conduct dawn raids of UK
premises or request the CMA to carry out dawn raids on its behalf. However, the
European Commission will still be able to investigate anti-competitive conduct of
UK undertakings but its powers will be limited to written requests for information.
Chapters I and II of the Competition Act 1998 continue to apply in
the UK
• The UK competition law provisions (Chapters I and II of the Competition Act 1998),
which are closely modelled upon Articles 101 and 102 TFEU, will continue to apply
in the UK.
• Prior to 1 January 2021, the CMA and UK courts were under a duty to apply UK
competition law in line with EU competition law. In particular, Section 60 of the
Competition Act 1998 imposed a duty on the CMA and UK courts to apply UK
competition law consistently with EU case law.
• The strict duty to interpret UK competition law consistently with EU competition
case law ceased to apply on 1 January 2021.
• Section 60 of the Competition Act 1998 was revoked by the Competition
(Amendment etc.) (EU exit) Regulations 2019 and replaced by a new Section 60A.
• Section 60A gives the CMA and UK Courts a discretion to depart from EU case law.
Moreover, UK courts will no longer be able to refer questions of interpretation of
EU competition law to the EU Court of Justice. Thus, there is now greater scope for
UK competition law to diverge from EU competition law in the future. However,
any divergence is likely to be gradual as Chapters I and II of the Competition Act
Section 60A of the Competition Act states that the CMA and UK courts will continue to be
bound by an obligation to ensure consistency between UK competition law and pre-
Brexit EU competition case law, but that the CMA and UK courts can depart from such
pre-Brexit EU competition case law if it is be appropriate in light of specified
circumstances. These specified circumstances are broadly defined and include:
• differences between the UK and EU markets;
• development in the form of economic activity;
• generally accepted principles of competition analysis or the generally accepted
application of such principles;
• a principle laid down, or decision made, by the European Court on or after exit day; and
• the particular circumstances under consideration.
• Despite the possibility for the CMA and UK courts to depart from EU case law, it is likely
that EU competition law will remain influential in the UK, at least in the short term.
• There are however some specific areas of UK competition law where Brexit is likely to
lead to important changes, in particular in relation to certain types of distribution
agreements.
Block Exemptions
In the EU many types of agreements benefit from a safe harbor from EU competition
law if they fulfil the criteria of the so called “EU block exemption regulations”. These
block exemption regulations will continue to apply in the UK as “retained EU law”
The expiry dates of the retained block exemption regulations will be preserved. The
UK Government has decided to retain seven of the EU block exemption regulations in
force:
• liner shipping regulation (expiring on 30 April 2020);
• transport regulation (no expiry date);
• -vertical agreements regulation (expiring on 31 May 2022);
• motor vehicle distribution regulation (expiring on 31 May 2023);
• research and development regulation (expiring on 31 December 2022);
• specialization agreement regulation (expiring on 31 December 2022); and
• technology transfer regulation (expiring on 30 April 2026).
• Private enforcement
• European Commission decisions resulting from investigations initiated
after 31 December 2020 will not be binding before UK courts in
damages claims. Follow-on claims will therefore only be possible for
Commission decisions if the proceedings were initiated before 31
December 2020.
• For standalone claims, breaches of Articles 101 and 102 will need to
be brought as claims for breach of foreign tort.
• Moreover, UK courts will no longer be bound to treat decisions by EU
Member State competition authorities as prima facie evidence for
harm suffered in the context of follow-on claims for damages.