Celler-Kefauver Act – Definition

Cite this article as:"Celler-Kefauver Act – Definition," in The Business Professor, updated December 19, 2018, last accessed August 8, 2020, https://thebusinessprofessor.com/lesson/celler-kefauver-act-defined/.

Back To: BUSINESS TRANSACTIONS, ANTITRUST, & SECURITIES LAW

The Celler-Kefauver Act Defined

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.

A Little More on the Celler-Kefauver Act

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.

References for the Celler-Kefauver Act

http://www.businessdictionary.com/definition/Celler-Kefauver-Act.html
https://www.investopedia.com/terms/c/the-celler-kefauver-act.asp
https://en.wikipedia.org/wiki/Celler%E2%80%93Kefauver_Act

Academic Research on  the Celler-Kefauver Act

  • A Decade of Administration of the CellerKefauver Antimerger Act, Handler, M., & Robinson, S. D. (1961). Columbia Law Review, 61(4), 629-679. This study examines the performance of the Celler-Kefauver Act a decade after it is implemented. The study looks specifically at Columbia and how the act has influenced the creation of other acts. It observes that, enforcement of the law started slow but has picked up with both the Federal Trade Commission and the Department of Justice being more involved in enforcing the act into law.
  • Quantitative Substantiality and the CellerKefauver Act-A Look at the Record, Handler, M. (1955). Mercer L. Rev., 7, 279.  This paper examines the performance of the Celler-Kefauver act and whether it is doing what it was created to do. The paper notes that while the act has good sections on merger and acquisitions, it concentrates more on other sections such as education.
  • Constructing state autonomy: the federal trade commission and the CellerKefauver Act, Luchansky, B., & Gerber, J. (1993). Sociological Perspectives, 36(3), 217-240. This paper examines the role played by state agencies in controlling trade and business. It looks at the passing of the Celler-Kefauver act and how the Federal Trade Commission has expanded its regulatory mandate since the act was passed. The paper goes on to note that FTC acted as a social movement when it defined mergers as social problems. In conclusion, the paper gives more examples where state agencies acted as social movements.
  • Notes on the 1984 Merger Guidelines: Clarification of the Policy or Repeal of the CellerKefauver Act?, Miller, R. A. (1984). Antitrust Bull., 29, 653. This paper examines the merger guidelines of 1984 and how they affected policies already set by DoJ and other government agencies. It looks at new literature introduced and how it affects the Celler-Kefauver act.
  • CellerKefauver Act: Sixteen Years of Enforcement, The, Mueller, W. F. (1969). J. Reprints Antitrust L. & Econ., 1, 111. This study examines the enforcement of the Celler-Kefauver act 16 years after its implementation. It studies the involvement of the DoJ and the Federal Trade Commission and how they have helped shape mergers. It also projects the future of the act and what should be done to enforce it better such as concentrating more on mergers than on other sections of the act.
  • The CellerKefauver Act and the Quest for Market Certainty, Celler, E. (1964). ABAJ, 50, 559. This paper looks at complaints made to the government by Merss Lewyn and Mann in connection to the Celler-Kefauver act and how it is enforced. The two complainants state that their cases have not been heard and there are discrepancies in how the act is enforced. The study analyzes all the complaints and suggestions raised by the two.
  • The determinants of aggregate-merger activity—Before and after CellerKefauver, Benzing, C. (1991). Review of Industrial Organization, 6(1), 61-72. This paper uses regression analysis in the study of factors that influenced aggregate-merger activities before and after Celler-Kefauver act. It suggests that interest rates positively relate to merger activities before Celler-Kefauver and negatively after Celler-Kefauver. It also notes that the rate of unemployment before Celler-Kefauver was linked to mergers but after Celler-Kefauver, unemployment rates are not related to mergers. It concludes that after the implementation of the Celler-Kefauver, merger activities were efficiently controlled.
  • A Decade of the CellerKefauver Anti-Merger Act, Steele, C. J. (1960). Vand. L. Rev., 14, 1049. This paper analyzes the failures of the Sherman act of 1890 and the Clayton act of 1914. It notes how the two could not control mergers until a monopoly was realized. It also analyzes the performance of the Celler-Kefauver act ten years as its implementation into law. The paper notes that, the Celler-Kefauver act has streamlined business by regulating mergers.
  • Merger Policy and the CellerKefauver Act, Hurley, J. J. (1963). Louis ULJ, 8, 379. This study analyzes the enforcement of the Celler-Kefauver act and how the Federal Trade Commission and some courts protects competitors and not competition as the act stipulates. It also examines how policies have been developed to make the act better and regulate mergers better.
  • Corporate mergers and the business cycle, Becketti, S. (1986). Economic Review, 71(5), 13-26. This paper looks at the effect of corporate mergers on how business operate. It looks at different mergers, their effects on the economy and how different businesses dominate industries.
  • Public policy toward mergers in the dairy processing industry, Mueller, W. F., Hamm, L. G., & Cook, H. L. (1976). North Central regional research publication. This paper looks at the effects of the Celler-Kefauver act on the dairy processing industry. It notes that the act did not prevent industrial reorganizations. It also notes that the policy made the industry more competitive.

Was this article helpful?