The Celler-Kefauver Act Amends Antitrust Legislation (Great Events from History II: Business and Commerce Series)
Article abstract: By prohibiting certain types of mergers between firms in the same industry, the Celler-Kefauver Act of 1950 led companies to form conglomerates made up of companies in unrelated industries.
Summary of Event
The Celler-Kefauver Act of 1950 amended the Clayton Act by closing a loophole that had allowed companies to avoid antitrust suits by acquiring the assets (rather than the stock) of another company. Government enforcement of the Celler-Kefauver Act encouraged companies to seek growth through a strategy of diversification. Thus, the Celler-Kefauver Act contributed to the conglomerate movement of the 1960’s.
The roots of the Celler-Kefauver Act can be traced to passage of the Clayton Antitrust Act in 1914. Section II of this law prohibited business firms from acquiring the stock of another company if the resulting merger lessened competition. The Clayton Act, however, made no mention of mergers based on the purchase of another company’s assets. During the 1920’s, American companies took advantage of this loophole to form mergers based on the acquisition of assets. The Federal Trade Commission (FTC) prosecuted the companies involved in these mergers but, in 1926, the Supreme Court ruled that the Clayton Act did not apply to acquisition of corporate assets. The Court’s interpretation made the Clayton Act an ineffective weapon against monopoly.
In 1927, the FTC asked...
(The entire section is 2034 words.)
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