CACI No. 3403. Horizontal Restraints (Use for Direct Competitors) - Group Boycott - Per Se Violation - Essential Factual Elements
Judicial Council of California Civil Jury Instructions (2023 edition)
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3403.Horizontal Restraints (Use for Direct Competitors) - Group
Boycott - Per Se Violation - Essential Factual Elements
[Name of plaintiff] claims that [name of defendant] agreed not to deal with
[him/her/nonbinary pronoun/it] [or to deal with [him/her/nonbinary
pronoun/it] only on specified terms]. To establish this claim, [name of
plaintiff] must prove all of the following:
1. That [name of defendant] [and [name of alleged coparticipant[s]]]
agreed to [specify claimed refusal to deal, e.g., “refuse to sell to
[name of plaintiff]”];
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 applies to agreements between competitors that are directly intended
to affect competition facing them. In determining whether to give this per se
instruction or the rule of reason instructions, it is important whether the challenged
combination was horizontal (between competitors), vertical (between sellers and
buyers), or some combination of the two. Horizontal combinations are subject to per
se instructions; vertical combinations to the rule of reason instructions. Those
combinations falling in between must be carefully scrutinized to determine whether
their principal purpose is to restrain competition between competitors or to
downstream resellers by the seller.
Sources and Authority
• Trusts Unlawful and Void. Business and Professions Code section 16726.
• “Trust” Defined. Business and Professions Code section 16720(c).
• “The antitrust laws do not preclude a party from unilaterally determining the
parties with which, or the terms on which, it will transact business. However, it
is a violation of the antitrust laws for a group of competitors with separate and
independent economic interests, or a single competitor with sufficient leverage,
to force another to boycott a competitor at the same level of distribution.”
(Freeman v. San Diego Assn. of Realtors (1999) 77 Cal.App.4th 171, 195 [91
Cal.Rptr.2d 534], internal citation omitted.)
• “It is well settled that the antitrust laws do not preclude a trader from
unilaterally determining the parties with whom it will deal and the terms on
which it will transact business. An antitrust case must be based upon
conspiratorial rather than unilateral conduct. Thus, only group boycotts are
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unlawful under the Sherman and Cartwright Acts.” (G.H.I.I. v. MTS, Inc. (1983)
147 Cal.App.3d 256, 267-268 [195 Cal.Rptr. 211], internal citations omitted.)
• “ ‘Group boycotts, or concerted refusals by traders to deal with other traders,
have long been held to be in the forbidden category. They have not been saved
by allegations that they were reasonable in the specific circumstances, nor by a
failure to show that they “fixed or regulated prices, parcelled out or limited
production, or brought about a deterioration in quality.” Even when they
operated to lower prices or temporarily to stimulate competition they were
banned. For . . . such agreements, no less than those to fix minimum prices,
cripple the freedom of traders and thereby restrain their ability to sell in
accordance with their own judgment.’ ” (Oakland-Alameda County Builders’
Exchange v. F. P. Lathrop Construction Co. (1971) 4 Cal.3d 354, 365 [93
Cal.Rptr. 602, 482 P.2d 226], 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
omitted.)
• “ ‘[T]there are certain agreements or practices which because of their pernicious
effect on competition and lack of any redeeming virtue are conclusively
presumed to be unreasonable and therefore illegal without elaborate inquiry as to
the precise harm they have caused or the business excuse for their use.’ Among
these per se violations is the concerted refusal to deal with other traders, or, as it
is often called, the group boycott.” (Marin County Bd. of Realtors v. Palsson
(1976) 16 Cal.3d 920, 930-931 [130 Cal.Rptr. 1, 549 P.2d 833], internal citation
omitted.)
• In Marin County Bd. of Realtors, supra, the Supreme Court explained that there
is a distinction between “direct boycotts aimed at coercing parties to adopt
noncompetitive practices and indirect boycotts which result in refusals to deal
only as a by-product of the agreement.” (Marin County Bd. of Realtors, supra,
16 Cal.3d at p. 932.)
• Not all group boycotts are evaluated as per se violations: “This limitation on the
per se rule is particularly applicable to trade association agreements not directly
aimed at coercing third parties and eliminating competitors. In cases involving
such agreements, courts have generally applied the rule of reason test.” (Marin
County Bd. of Realtors, supra, 16 Cal.3d at p. 932.)
• “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
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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.)
• “The exact parameters of ‘antitrust injury’ under section 16750 have not yet been
established through either court decisions or legislation.” (Cellular Plus, Inc. v.
Superior Court (1993) 14 Cal.App.4th 1224, 1234 [18 Cal.Rptr.2d 308].)
Secondary Sources
1 Witkin, Summary of California Law (11th ed. 2017) Contracts, §§ 602-621
6 Antitrust Laws and Trade Regulation, Ch. 105, California, § 105.02[3] (Matthew
Bender)
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.168[5] (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.77[5] (Matthew Bender)
1 Matthew Bender Practice Guide: California Unfair Competition and Business
Torts, Ch. 5, Antitrust, 5.08, 5.09[3], 5.14
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