Which act prohibits mergers that may substantially lessen competition?

The Clayton Act of 1914, specifically Section 7, is designed to prevent mergers and acquisitions that could substantially lessen competition or create a monopoly. This legislation addresses the concerns about corporate mergers that could lead to market dominance and ultimately harm consumer welfare. By prohibiting such mergers, the Clayton Act aims to maintain competitive markets and protect consumers from the potential negative effects of reduced competition, such as higher prices, lower quality products, and less innovation.

The significance of the Clayton Act lies in its focus on the potential future impact of mergers, rather than only dealing with existing monopolistic practices, which is the primary concern of the Sherman Act. This proactive approach allows regulators to intervene before potentially anti-competitive mergers are executed. Thus, the Clayton Act plays a crucial role in antitrust law by promoting market integrity and fairness.