Question

The federal government has passed various laws addressing mergers. What did the Clayton ActClayton Act ​do? The Clayton ActClayton Act
a. prohibited restraint of trade comma including price fixing and collusionprohibited restraint of trade, including price fixing and collusion.
b. prohibited any merger that would reduce competitionprohibited any merger that would reduce competition.
c. prohibited charging buyers different prices if the result would reduce competitionprohibited charging buyers different prices if the result would reduce competition.
d. established the Federal Trade Commissionestablished the Federal Trade Commission.
e. prohibited firms from buying stock in competitorsprohibited firms from buying stock in competitors.

Answer 1

Answer:

b. prohibited any merger that would reduce competition

Explanation:

The "Clayton Act" of 1914 was meant to prohibit "price-fixing," monopolies and other unethical practices when it comes to business. So, this makes choice a incorrect because it "prohibits the restraint" of such practices. This also makes choice c incorrect because Clayton Act allowed the activity of charging buyers different prices in order to increase competition. This also makes choice e incorrect because the act was meant to provide the firms the freedom to buy their stocks from anyone (even from competitors).

Letter d is incorrect because the "Federal Trade Commission" enforced the "Clayton Act" and not vice-versa.

Choice b is correct because the act prohibited any collusion or merger that would attempt to reduce the competition. The act was meant to increase competition and not on its reduction.

So, this explains the answer.