What is the Celler-Kefauver Act?

The Celler-Kefauver Act was passed by the U.S. Congress in 1950 to strengthen antitrust legislation associated with the Clayton Antitrust Act of 1914. Specifically, the Act broadened the applicability of anti-merger provisions in the Clayton Antitrust Act.

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What does the Celler-Kefauver Act Do?

A 1950 refinement of the previous antitrust legislation that dealt mainly with mergers. The Act addresses mergers in which companies buy suppliers, including the suppliers of competitors, to guarantee production. This can be an anti-competitive practice if it unduly cuts off supply to competitors. The law intends to regulate mergers that would lead to the creation of a monopoly or otherwise significantly reduce competition. 

The Clayton Act already contained a text that addressed horizontal mergers, but the Celler-Kefauver Law added vertical mergers and conglomerate mergers to the growing list of possible antitrust violations. It is important to note that vertical and conglomerate mergers are not illegal under the Celler-Kefauver Actt unless they significantly reduce competition. 

Like other antitrust laws, actions that reduce competition are not always easy to classify. The benefit of a vertical merger is that it streamlines production and can stabilize supply. So, as long as there are other supplies in the market that allow other companies to access raw materials, this type of merger is not prohibited. 

The old antitrust legislation established controls over certain mergers and acquisitions, but only in the case of the purchase of shares in circulation. Thus, antitrust rules could be largely circumvented by buying only the assets of the target company. The Celler-Kefauver Act prevents this provisional measure, thus reinforcing the antitrust rules in the United States.

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