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California Courts Are Beginning To Reexamine Their Outdated Decisions Addressing Vertical Price and Other Distributional Restraints Under The Cartwright Act Mulcahy, James M.

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Thirty-five years ago, the California Supreme Court held that vertical price fixing is per se unlawful under California’s antitrust statute. 1 Since then, however, modern economic analysis and federal antitrust jurisprudence have evolved dramatically away from the antiquated common law “restraints on alienation” approach to per se condemnation. For the past thirty years, the California Supreme Court has not had the opportunity to re-evaluate the ancient – and now repudiated – mechanical labeling of private conduct affecting prices as “price fixing,” in per se violation of state antitrust law, even though the actors’ conduct may have “no [established] invidious purpose or harmful economic consequences, and even though the economic results of the conduct may be of net benefit to consumers.” 2

This article suggests that the time has come for California courts to re-evaluate and modernize their prior judicial precedents, particularly in the areas of (a) both minimum and maximum vertical resale price maintenance; and (b) dual distribution. But, this is not an original thought: within the past four months, two California federal district courts, and the Los Angeles County Superior Court have addressed these issues and the stare decisis effect of prior judicial decisions under California antitrust law. 3

California courts, of course, are free to interpret California’s antitrust statute in accordance with state policies which provide the underlying rationale for the legislation. And, there is much current debate about the effect that current federal jurisprudence does – or should – have in the interplay between California state and federal antitrust law.

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