Celler-Kefauver Act

A long time ago, in a galaxy far, far away…er, we mean over a century ago...wise, powerful men were concerned that big, greedy companies were making too much profit, and wanted to prevent them from taking advantage of the little guy. Too much shady stuff was going on, so they enacted some...acts. (We know we’re really simplifying things here, but if you read the history on federal regulation, compliance rules, and antitrust laws, it’s a snoozefest).

In 1950, the Celler-Kefauver Act was passed to further prevent unlawful mergers and acquisitions, and to minimize monopolies, thereby improving healthy competition among companies.

The result: Amazon and Wholefoods.

Wait. What?

Ok, ok, we’ll back up. In 1890, the Sherman Antitrust Act was enacted to increase economic competitiveness, as well as to eliminate trusts, which at the time were a tool used by a few to unlawfully manipulate and dominate the marketplace. Some savvy folks found big loopholes and continued their unscrupulous business practices, so in 1914, Congress decided to make some improvements by implementing the Clayton Antitrust Act.

This act strengthened the existing laws established by the Sherman Antitrust Act, and went a step further by creating provisions that allowed the little guy to sue for damages, and prevented the big guys from attempting horizontal mergers. But that didn’t stop corporate price discrimination or predatory lending, or address the companies attempting vertical or conglomerate mergers. Because of this flaw, many companies were able create monopolies, thus significantly reducing competition in our country, thus pushing the little guy...out of the picture.

Enter the Celler-Kefauver Act of 1950: No more monopolies. No more unlawful mergers. No more loopholes. No more conglomerates attempting to join forces to snuff out the little guy (except for maybe the attempt by Broadcom and Qualcomm, or Comcast and Time Warner, or Kraft and Unilever, or Pfizer and Allergan, or Honeywell and United Technologies, or CVS and...)

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Finance: What are the Clayton Act and th...72 Views

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Finance a la shmoop what are the Clayton Antitrust Act and the Sherman Antitrust

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Act? well they're all about controlling monopolies which a century ago were

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called Trust's ironic in that well they essentially stole the trust from the

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people, the common Jo, Ma and Pa Kettle well in late 19th century even more so [Ma and Pa Kettle standing together]

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than today white men generally ruled the Western

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world and were you know very clubby, Bob here in church pew seven likes to do

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business with Mike here in pew eight Bob ran a tugboat shipping line hauling [Bob sailing a tugboat]

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grain down the Mississippi, Mike here had a bunch of farms and liked to do

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business with Bob and well there's Jim here in pew six who runs the entire

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region's worth of banks then he liked loaning money to farms because well back [Jim with stack of cash]

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then they were always money good to pay their debts yeah there was a time farms

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were considered you know safe bet and the three of them formed essentially a

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vertical monopoly controlling grain distribution in the center of the [Ship travels through center of the US]

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country from creation to distribution to sales to you know all the financing and

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banking and stuff underneath it if they wanted to raise prices on the grain for

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bread well who was to stop them you know there were no competitors why were there

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no competitors, because the three had teamed up to elbow out anyone else [competitor appears and Mike elbows him away]

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who might come along and well you know cut them out of the precious resource

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flows of whatever was needed and soon the three had enough scale so that if

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they were buying resources for a million acres of farmland well, their volume

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discount pricing discount discount discount were so massive that they could

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undercut anyone who came along wanting to compete fair and square [Prices of grain appear]

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well the Sherman Antitrust Act of 1890 was the first set of anti monopoly laws

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to come down the pike like it says right there in the name the act was anti

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trusts it was passed to bust up any unfairly organized legal arrangements or [Sherman Antitrust Act strikes company]

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would-be monopolies which would prevent from taking advantage of unknowing

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consumers and provide for a competitive marketplace because then who wins and a

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consumer that's who the government's protecting right so what did this mean [Jim Bob and Mike in a farm]

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for poor old Mike Bob and Jim well now they couldn't just raise grain prices

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Willy or nilly suddenly there were strictures in place

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and our gruesome threesome had to abide by this new rule of law which meant [Jim Bob and Mike in court and judge holds up Sherman Antitrust Act]

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pricing their product fairly and reasonably whatever that meant so that

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no one was having to sell the family farm to afford to buy a loaf of

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sourdough you know for their kids and then clever lawyers defending bazillionaires

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poked so many holes in the Sherman Act it looked like one of the real [Lawyer poking holes through document]

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housewives after her latest Botox treatment so along came the Clayton

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Antitrust Act in 1914 to fill in those holes and puff up the cheeks of law as

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it were well any little loopholes discovered by the clever lawyers were [Plasters appear on Sherman Antitrust Act]

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closed and more specifics were added to the language so it was even harder for

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folks like Mike Bob and Jim to pull one over on Ma and Pa Kettle, so yeah you

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know it's a Billy Joel famously saying 'It's just a matter of trust'.... [Man in club singing]

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ask your parents

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