DEFINITION of 'The Celler-Kefauver Act'

A 1950 refinement of previous antitrust legislation dealing primarily with mergers. The Celler-Kefauver Act targets mergers where companies purchase suppliers, and occasionally competitor's suppliers, in order to secure production. The Clayton Act already contained language addressing horizontal mergers, but the Celler-Kefauver Act added vertical mergers and conglomerate mergers to the growing list of possible antitrust violations.

BREAKING DOWN 'The Celler-Kefauver Act'

Vertical and conglomerate mergers aren't illegal under the Celler-Kefauver Act unless they significantly reduce competition. Similar to other antitrust acts, actions that reduce competition aren't always easy to classify under Celler-Kefauver. Both types of mergers raise the barriers for entry by making competitors internalize more production to match the cost savings that come from economies of scale. However, as long as there is at least a couple other companies capable of keeping up, barriers can be raised as high as the duo or trio can handle.

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