Today's General Counsel: Below-Cost Pricing Law in California

November.01.2013

​Orrick Antitrust and Competition Of Counsel Howard Ullman authored an article titled, "Below-Cost Pricing Law in California," that appears in the October/November edition of Today's General Counsel.

Most national and international companies do business in California. Like other states, California has laws prohibiting below cost pricing of goods and services, but California’s features unique plaintiff-friendly provisions that can in theory expose your company to more liability than the laws of other states. For example, no proof of harm to competitors is required, only intent to harm. California law also prohibits the use of loss leaders – articles or products sold at less than cost to promote other merchandise, mislead prospective purchasers or injure competitors.

This article looks at how California’s law differs from the federal Robinson-Patman Act, how it defines “below cost” for enforcement purposes, and some affirmative defenses that are available, including a showing that below cost pricing was for perishable goods, to close out stock or for goods that were damaged or deteriorated.

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