One hundred years ago today, President Woodrow Wilson signed the Clayton Act, just weeks after signing the Federal Trade Commission Act. Together, these statutes gave the federal government new tools to deal with the growing threat of the trusts: a bipartisan five-member Commission to police against “unfair methods of competition,” and a new law designed to stop certain business combinations and conduct before they caused widespread harm.
Even at 100, the Clayton Act is all about the future. Unlike the Sherman Act, with its emphasis on after-the-fact prosecutions of agreements in restraint of trade, the Clayton Act reoriented antitrust analysis to spot emerging threats—those whose effects may be substantially to lessen competition or to tend to create a monopoly. The Supreme Court noted in Brown Shoe v. United States, 370 U.S. 294 (1962), “Congress used the words ‘may be substantially to lessen competition’ to indicate that its concern was with probabilities, not certainties.” Congress settled on “may be” to mean “reasonable probability” of anticompetitive effects, finding that “[a] requirement of certainty and actuality of injury to competition is incompatible with any effort to supplement the Sherman Act by reaching incipient restraints.”
As I discussed in a speech earlier this year, Congress wisely designed the Clayton Act to deal directly with the evolving nature of competition, and in particular, the likely course of future competition. The forward-looking mandate of the Clayton Act fundamentally changed antitrust enforcement because the notion of incipiency requires eyes firmly focused on the future, which both allows and requires antitrust law to adapt to changing market conditions.
For a statute that was built to last, here’s to many more years of antitrust enforcement for the benefit of consumers and competition.