Relevant legislation and statutory standards
Merger Control in the US is governed at the federal level primarily by Sections 7 and 7A of the Clayton Act. The first federal attempt to address anti-competitive conduct by competing firms was the Sherman Act in 1890, which prohibits, among other things, certain contracts, combinations and conspiracies between or among competitors in restraint of trade. However, the Sherman Act proved inadequate to deal with the competitive consequences of mergers and acquisitions, and in 1950 Congress amended the Clayton Act of 1914 to better cope with such transactions.
One of the Sherman Act’s weaknesses lay in its inability to prohibit combinations, such as mergers, in which the competitive harm was uncertain. Thus Section 7, the heart of the Clayton Act’s merger control provision, prohibits those transactions ‘where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such an acquisition … may be substantially to lessen competition, or to tend to create a monopoly’.
The Clayton Act was further amended in 1976 by the Hart-Scott-Rodino Antitrust Improvements Act (‘the HSR Act’), to require pre-merger notification of certain mergers and acquisitions of voting securities and assets (the HSR Act is also known as Section 7A of the Clayton Act).