California Civil Jury Instructions (CACI) (2017)

3400. Horizontal and Vertical Restraints (Use for Direct Competitors) - Price Fixing—Essential Factual Elements

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3400.Horizontal and Vertical Restraints (Use for Direct
Competitors)—Price Fixing—Essential Factual Elements
[Name of plaintiff] claims [name of defendant] was involved in price
fixing. Price fixing is an agreement to set, raise, lower, maintain, or
stabilize the prices or other terms of trade charged or to be charged for
a product or service, whether the prices agreed on were high or low,
reasonable or unreasonable. To establish this claim, [name of plaintiff]
must prove all of the following:
1. That [name of defendant] [and [name(s) of alleged
coparticipant(s)]] agreed to fix [or]
[set/raise/lower/maintain/stabilize] prices [or other terms of
trade] charged or to be charged for [product/service];
2. That [name of plaintiff] was harmed; and
3. That [name of defendant]’s conduct was a substantial factor in
causing [name of plaintiff]’s harm.
New September 2003
Directions for Use
This instruction is intended to apply to both actual and potential competitors. For
cases involving vertical restraints, use this instruction but see additional special
vertical restraint instructions contained in this series (CACI No. 3409, Vertical
Restraints—Termination of Reseller, and CACI No. 3410, Vertical
Restraints—Agreement Between Seller and Reseller’s Competitor).
In addition to price, price fixing includes any combination that “tampers with price
structures.” Like its federal counterpart, the Cartwright Act would seem to prohibit
combinations that fix aspects of price such as costs, discounts, credits, financing,
warranty, and delivery terms. Therefore, if this case concerns the fixing of an
aspect of price, other than price itself, this instruction and those that are related to
it should be adapted accordingly.
Sources and Authority
• Trusts Unlawful and Void. Business and Professions Code section 16726.
“Trust” Defined. Business and Professions Code section 16720.
• Private Right of Action for Antitrust Violations. Business and Professions Code
section 16750(a).
• “ ‘ “To state a cause of action for conspiracy, the complaint must allege (1) the
formation and operation of the conspiracy, (2) the wrongful act or acts done
pursuant thereto, and (3) the damage resulting from such act or acts.” ’ Thus,
the Supreme Court applied the pleading requirements for a civil conspiracy
action under common law to a statutory action under the Cartwright Act for
antitrust conspiracies.” (Cellular Plus, Inc. v. Superior Court (1993) 14
Cal.App.4th 1224, 1236 [18 Cal.Rptr.2d 308], quoting Chicago Title Insurance
Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 316 [70 Cal.Rptr.
849, 444 P.2d 481].)
• “A complaint for unlawful price fixing must allege facts demonstrating that
separate entities conspired together. Only separate entities pursuing separate
economic interests can conspire within the proscription of the antitrust laws
against price fixing combinations.” (Freeman v. San Diego Assn. of Realtors
(1999) 77 Cal.App.4th 171, 188–189 [91 Cal.Rptr.2d 534], internal citations
• “The Cartwright Act prohibits every trust, defined as ‘a combination of capital,
skill or acts by two or more persons’ for specified anticompetitive purposes. The
federal Sherman Act prohibits every ‘contract, combination . . . or conspiracy,
in restraint of trade.’ The similar language of the two acts reflects their common
objective to protect and promote competition. Since the Cartwright Act and the
federal Sherman Act share similar language and objectives, California courts
often look to federal precedents under the Sherman Act for guidance.” (Chavez
v. Whirlpool Corp. (2001) 93 Cal.App.4th 363, 369 [113 Cal.Rptr.2d 175],
internal citations omitted.)
• “The Cartwright Act, like the Sherman Act, prohibits ‘combinations’ for the
purpose of restraining trade. ‘[A] combination means a concert of action by
individuals or entities maintaining separate and independent interests.’ ” (Roth v.
Rhodes (1994) 25 Cal.App.4th 530, 543 [30 Cal.Rptr.2d 706], internal citations
• “Two forms of conspiracy may be used to establish a violation of the antitrust
laws: a horizontal restraint, consisting of a collaboration among competitors; or
a vertical restraint, based upon an agreement between business entities
occupying different levels of the marketing chain.” (G.H.I.I. v. Mts, Inc. (1983)
147 Cal.App.3d 256, 267 [195 Cal.Rptr. 211], internal citations omitted.)
• “ ‘Horizontal combinations are cartels or agreements among competitors which
restrain competition among enterprises at the same level of distribution. They
are ordinarily illegal per se. Vertical restraints are imposed by persons or firms
further up the chain of distribution of a specific product (or in rare cases,
further down the chain) than the enterprise restrained. Vertical non-price
restraints are tested under the rule of reason; that is, the plaintiff must prove
that the restraint had an anticompetitive effect in the relevant market in order to
prevail.’ ” (Exxon Corp. v. Superior Court (1997) 51 Cal.App.4th 1672,
1680–1681 [60 Cal.Rptr.2d 195], internal citations and footnote omitted.)
• “In general, a Cartwright Act price fixing complaint must allege specific facts in
addition to stating the purpose or effect of the price fixing agreement and that
the accused was a member of or acted pursuant to the price fixing agreement.”
(Cellular Plus, Inc., supra, 14 Cal.App.4th at p. 1237.)
• “[A] conspiracy among competitors to restrict output and/or raise prices [is]
unlawful per se without regard to any of its effects . . . .” (Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 851 [107 Cal.Rptr.2d 841, 24 P.3d 493].)
• “ ‘Among the practices which the courts have heretofore deemed to be unlawful
in and of themselves are price fixing, division of markets, group boycotts, and
tying arrangements.’ ‘The “per se” doctrine means that a particular practice and
the setting in which it occurs is sufficient to compel the conclusion that
competition is unreasonably restrained and the practice is consequently
illegal.’ ” (Oakland-Alameda County Builders’ Exchange v. F. P. Lathrop
Construction Co. (1971) 4 Cal.3d 354, 361–362 [93 Cal.Rptr. 602, 482 P.2d
226], internal citations omitted.)
• “It has long been settled that an agreement to fix prices is unlawful per se. It is
no excuse that the prices fixed are themselves reasonable.” (Catalano Inc. v.
Target Sales, Inc. (1980) 446 U.S. 643, 647 [100 S.Ct. 1925, 64 L.Ed.2d 580].)
• “Under both California and federal law, agreements fixing or tampering with
prices are illegal per se.” (Oakland-Alameda County Builders’ Exchange, supra,
4 Cal.3d at p. 363.)
• “These rules apply whether the price-fixing scheme is horizontal or vertical; that
is, whether the price is fixed among competitors or businesses at different
economic levels.” (Mailand v. Burckle (1978) 20 Cal.3d 367, 377 [143 Cal.Rptr.
1, 572 P.2d 1142], internal citations omitted.)
• “Under the authorities . . . the agreement between plaintiffs and defendants and
between defendants and Powerine were unlawful per se. It is, therefore, not
necessary to inquire whether these arrangements had an actual anticompetitive
effect.” (Mailand, supra, 20 Cal.3d at p. 380.)
• “The alleged antitrust violation need not be the sole or controlling cause of the
injury in order to establish proximate cause, but only need be a substantial
factor in bringing about the injury.” (Saxer v. Philip Morris, Inc. (1975) 54
Cal.App.3d 7, 23 [126 Cal.Rptr. 327], internal citation omitted.)
• “The plaintiff in a Cartwright Act proceeding must show that an antitrust
violation was the proximate cause of his injuries. The frequently stated
‘standing to sue’ requirement is merely a rule that an action for violation of the
antitrust laws may be maintained only by a party within the ‘target area’ of the
antitrust violation, and not by one incidentally injured thereby. An ‘antitrust
injury’ must be proved; that is, the type of injury the antitrust laws were
intended to prevent, and which flows from the invidious conduct which renders
defendants’ acts unlawful. Finally, a plaintiff must show an injury within the
area of the economy that is endangered by a breakdown of competitive
conditions.” (Kolling v. Dow Jones & Co. (1982) 137 Cal.App.3d 709, 723–724
[187 Cal.Rptr. 797], internal citations and footnote omitted.)
• “We acknowledge that a plaintiff . . . must often rely on inference rather than
evidence since, usually, unlawful conspiracy is conceived in secrecy and lives
its life in the shadows. But, when he does so, he must all the same rely on an
inference implying unlawful conspiracy more likely than permissible
competition, either in itself or together with other inferences or evidence.”
(Aguilar, supra, 25 Cal.4th at p. 857, internal citations omitted.)
• “The exact parameters of ‘antitrust injury’ under section 16750 have not yet
been established through either court decisions or legislation.” (Cellular Plus,
Inc., supra, 14 Cal.App.4th at p. 1234.)
• “Should an antitrust conspirator be permitted to raise as a defense that the direct
purchaser passed on some or all of the overcharge to indirect purchasers
downstream in the chain of distribution? [¶¶] We conclude that under the
Cartwright Act, as under federal law, generally no pass-on defense is
permitted.” (Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758, 763 [111
Cal.Rptr.3d 666, 233 P.3d 1066].)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 591–607
6Antitrust Laws and Trade Regulation, Ch. 105, California, § 105.02[1] (Matthew
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.168[2] (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.77[2] (Matthew Bender)
1 Matthew Bender Practice Guide: California Unfair Competition and Business
Torts, Ch. 1, Elements of Unfair Competition and Business Torts Causes of Action,
1.05[4][a], Ch. 5, Antitrust, 5.04, 5.08, 5.09[1], 5.12