California Antitrust Law: Everything You Need to Know

The antitrust laws of the State of California have many similarities to their federal and other state counterparts but do have some marked differences of note.7 min read

by John H. Dresslar

General Overview

The following summary of California's antitrust laws is designed to provide attorneys with a brief and general introduction to the most prominent many of those laws. Any practitioner facing an issue that potentially involves California antitrust or competition law is advised to seek experienced counsel and/or to refer to California Antitrust Law, a 450-page, a regularly supplemented book published by the Antitrust and Trade Regulation Law Section of the State Bar of California.

165px;" class="adsbygoogle">The antitrust laws of the State of California have many similarities to their federal and other state counterparts but do have some marked differences of note. As I've noted elsewhere, California's Cartwright Act in many respects parallels (and is interpreted in pari materia with) Section 1 of the Sherman Act, with some specific exceptions noted below. However, the Cartwright Act has no direct analog to the antimonopoly provisions of Section 2 of the Sherman Act, although many monopolistic practices may be challenged by other antitrust statutes or more general tort claims, such as causes of action for interference with prospective business advantage (and of course the ever popular RICO). Further, California's competition statutes go far beyond the limited competition strictures of the Sherman and Clayton Acts, prescribing (for example) the use of loss leaders and locality discrimination in ways that federal antitrust laws do not address.

This summary is divided into the following sections:

  • Market Definition Issues
  • Cartwright Act
  • Horizontal Violations
  • Vertical Restraints
  • Unfair Practices Act
    • - Locality Discrimination
    • - Below Cost Sales
    • - Loss Leader Sales
    • - Affirmative Defenses
    • - Secret Rebates
    • - Antitrust Injury and Damages
  • Unfair Competition Statute Generally Applicability of Federal and Sherman Act Case Authority to California Statutes

Market Definition Issues

California antitrust law has not developed a complete body of decisions on market definition issues and relies largely upon federal case authority. See Corwin v. Los Angeles Newspaper Service Bureau, Inc. (1971) 4 Cal.3d 842, 855.


Horizontal Violations

Like its federal counterpart in Sherman Act 1, California's antitrust statute - Bus. & Prof. Code 16720 - bars any agreement among competitors that would serve to fix prices or allocate customers or markets, albeit by way of a more detailed list of transgressions that is set out in the Sherman Act's general prohibitions against "restraints of trade". For recent court interpretations of what may constitute such proscribed horizontal agreements and arrangements, the reader is directed to the following cases: Rosack v. Volvo Corp. of America (1982) 131 Cal.App.3d 741; Mailand v. Burckle (1978) 20 Cal.3d 367; Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709.

Tying Arrangements

Again like its federal counterpart in Section 3 of the Clayton Act, California's antitrust laws - Bus. & Prof. Code 16720, 16727 - ban tying arrangements. However, those statutes may apply to services where the Clayton Act would not apply. Cases applying the tying laws are: Kim v. Servosnax, Inc. (1992) 10 Cal.App.4th 842; Suburban Mobil Homes, Inc. v. Amfac Communities, Inc. (1980) 101 Cal.App.3d 541.

Vertical Restraints

General Rules Governing Pricing Restraints

A buyer who buys a product or service generally may set the price at which it resells the product or service to others. A seller, in the absence of an anticompetitive purpose or effect, may independently

(1) announce minimum resale prices and decide to sell or not to sell to a dealer who has not adhered to those prices; and

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