California Civil Jury Instructions (CACI)

3406. Horizontal and Vertical Restraints - "Agreement" Explained

An agreement exists if two or more persons or companies combine or join together for a common purpose. No written document or specific understanding is necessary for an agreement to exist. For [name of defendant] to be part of an agreement, [he/she/it] must have known [he/she/it] was joining in an agreement, even if [he/she/it] was not aware of all of its aspects.

[An agreement also may exist if a [person/company] unwillingly participates—that is, if another person coerces [him/her/it] to join the agreement against [his/her/its] wishes.]

[To prove the existence of an agreement, [name of plaintiff] must show more than a similarity between [name of defendant]'s conduct and the conduct of others. Independent business judgment in response to market forces sometimes leads competitors to act in a similar way because of their individual self-interests. That conduct alone is not enough to prove an agreement. However, similar behavior, along with other evidence suggesting joint conduct, may be used to decide whether there was an agreement.]

In deciding whether [name of defendant]'s conduct was the result of an agreement, you may consider, among other factors, the following:

(a) The nature of the acts;

(b) The relationship between the parties;

(c) Whether the conduct was contrary to the best interests of some of the persons or companies in question;

(d) Whether the conduct lacked a legitimate business purpose; and

(e) Whether the conduct occurred following communications concerning the subject of the conduct.

Directions for Use

The third paragraph should be read only where a horizontal agreement is involved.

Sources and Authority

Business and Professions Code section 16720(a) provides, in part: "A trust is a combination of capital, skill or acts by two or more persons for any of the following purposes: To create or carry out restrictions in trade or commerce. . . ."

"The Cartwright Act, like the Sherman Act, requires an illegal 'combination' or 'conspiracy' to restrain trade." (Kolling v. Dow Jones and Co., Inc. (1982) 137 Cal.App.3d 709, 720 [187 Cal.Rptr. 797], internal citations omitted.)

" '[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.)

"[A] necessary 'conspiracy' or 'combination' cognizable as an antitrust action is formed where a trader uses coercive tactics to impose restraints upon otherwise uncooperative businesses. If a 'single trader' pressures customers or dealers into pricing arrangements, an unlawful combination is established, irrespective of any monopoly or conspiracy, and despite the recognized right of a trader to determine with whom it will deal." (G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 268 [195 Cal.Rptr. 211], internal citations omitted.)

"In United States v. International Harvester Co., 274 U.S. 693, 47 S.Ct. 748, 71 L.Ed. 1302 (1927), the Court acknowledged as lawful, competitors' practice of independently, and as a matter of business judgment, following the prices of an industry leader. '[T]he fact that competitors may see proper, in the exercise of their own judgment, to follow the prices of another manufacturer, does not establish any suppression of competition or show any sinister domination.' " (Wilcox v. First Interstate Bank of Oregon (9th Cir. 1987) 815 F.2d 522, 526.)

"[P]arallel changes in prices and exchanges of price information by competitors may be motivated by legitimate business concerns." (City of Long Beach v. Standard Oil Co. (9th Cir. 1989) 872 F.2d 1401, 1406.)

"Price information published without 'plus factors,' which indicate an agreement, is judged under the rule of reason. If the exchange of price nformation constitutes reasonable business behavior the exchange is not an illegal agreement. In order to prevail, 'plaintiff must demonstrate that the allegedly parallel acts were against each conspirator's self interest, that is, that the decision to act was not based on a good faith business judgment.' " (Supermarket of Homes, Inc. v. San Fernando Valley Bd. of Realtors (9th Cir. 1986) 786 F.2d 1400, 1407, internal citations omitted.)

Secondary Sources

1 Witkin, Summary of California Law (9th ed. 1987) Contracts, §§ 575- 590

2 Antitrust and Trade Regulation Law Section, State Bar of California, California Antitrust Law (2d ed. 2001), §§ 9.04, 10.04

3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, § 40.160[2] (Matthew Bender)

49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition (Matthew Bender)

(New September 2003)