From Social Control to Financialization
Chapter 5: Failure of federal policy to achieve social control
The Sherman Act was a response to mergers occurring to restrain competition. Its application was limited by a narrow interpretation of interstate commerce and the judicially created Rule of Reason. The Clayton Act and the Federal Trade Commission Act were intended to address problems with the Sherman Act but did not reduce mergers. The current focus on efficiency makes challenges to horizontal mergers infrequent and still more so for vertical consolidations. Proposals to strengthen antitrust enforcement suggest reverting to an unachievable era of small firms competing on price. Federal laws seeking to address financial fraud also have failed. Reliance on financial disclosure suggests that shareholders will discipline errant corporations by selling their stock. Even if it does so, it does not protect other constituencies, such as employees.
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