Celler-Kefauver Antimerger Act

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Celler-Kefauver Antimerger Act

An American antitrust law passed in 1950 that closed a major loophole in the Clayton Act. While the Clayton Act prohibited mergers that reduced competition, it allowed companies to buy individual assets of competitors. Some companies did this to such an extent that it reduced competition, which had the potential to effectively sideline the Clayton Act. The Celler-Kefauver Act closed this loophole, giving the government the power to stop vertical mergers and asset acquisitions regarded as reducing competition. It is often simply called the Antimerger Act.

Celler-Kefauver Antimerger Act

A 1950 federal antitrust law that updated the Clayton Act by severely restricting anticompetitive mergers resulting from acquisition of assets.
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In 1950, for instance, Congress passed one of its strongest anti-monopoly laws, the Celler-Kefauver Act, which prohibited companies from acquiring each other's assets, such as patents, trademarks, and copyrights, as a means of stifling competition.
Eisenhower's Department of Justice actively enforced the Celler-Kefauver Act while prosecuting such goliaths as Kodak and the Continental Can Company, then headed by Ike's friend and fellow comrade in arms, retired General Lucius Clay.
5) As drafted in 1914, section 7 applied only to stock acquisitions of competitors, (6) and it did not establish a clear standard of illegality (7) As a consequence, section 7 remained largely "ineffective" until Congress passed the Celler-Kefauver Act in 1950.
The Celler-Kefauver Act of 1950 transformed section 7 into a more effective tool for private litigants:
These actions were followed by the passage of other enforcement acts, such as the Celler-Kefauver Act (1950), the Williams Act (1968), and the HartScott-Rodino Act (1976), that control the way businesses are allowed to combine while guarding shareholder interest.
An important aspect of the controversy involves the effect of enforcement of the merger law, Section 7 of the Clayton Act, as amended by the Celler-Kefauver Act in 1950.
Shleifer and Vishny |1990~ state that the "most likely reason for diversification |in the 1960s~ was the antitrust policy which turned fiercely against mergers between firms in the same industry when the Celler-Kefauver Act passed in 1950" and that "the failed conglomerate wave was a direct consequence of this policy".
Enforced with remarkable vigor, the Celler-Kefauver act by the 1960s had effectively closed the horizontal merger as an avenue of growth for large corporations.
Steel, Congress passed the Celler-Kefauver Act, which imposed tight controls on such combinations.
He states: "Although the Celler-Kefauver Act of 1950 gave the antitrust agencies concurrent enforcement jurisdiction, the Justice Department assumed initially that only the FTC would enforce the act.
But the impact of the Celler-Kefauver Act on merger enforcement is less than evident.
Finally, there was the Celler-Kefauver Act of 1950, which amended the Clayton Act section 7 regulation of corporate mergers.