ABC International Traders, Inc. v. Matsushita Electric Corp. of America

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 1249 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 1250 [EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 1251 OPINION Business and Professions Code section 17045 , 1 part of California's Unfair Practices Act (hereafter the UPA; see § 17000), prohibits a seller from secretly allowing a purchaser special "unearned discounts" that injure "a competitor" and tend to destroy "competition." The question before us is whether the competition referred to is limited to competition among sellers of the particular good or service, or includes economic competition among buyers as well. More concretely, does a disfavored buyer adequately plead a cause of action against a seller for violation of section 17045 by alleging the seller's secret discrimination injured the buyer and tended to destroy competition among buyers, or must the disfavored buyer allege injury to one or more of…

I concur in the opinion of the court prepared by Justice Werdegar. It addresses all the questions presented in this cause, and answers them correctly. Of course, issues remain for resolution in the future. On its face, or only slightly underneath, Business and Professions Code section 17045 requires unfair competition, injury to a competitor, and a tendency to destroy competition. It implicitly defines "unfair competition" as secret discrimination by a seller between or among its buyers. It similarly defines "injury to a competitor" as harm to a competitor of either the seller or a favored buyer. By contrast, it does not define a "tendency to destroy competition." Whether the phrase should be understood so as to further "[c]onsumer welfare," which is "a principal, if not the sole, goal of antitrust laws" ( Cianci v. Superior Court (1985) 40 Cal.3d 903 , 918 [ 221 Cal.Rptr. 575 , 710 P.2d 375 ]), and to prevent "output restriction," which is "one of their principal targets" ( State of California ex rel. Van de Kamp v. Texaco, Inc . (1988) 46 Cal.3d 1147 , 1183 [ 252 Cal.Rptr. 221 , 762 P.2d 385 ] (conc. and dis. opn. of Mosk, J.)) — as it apparently should be — is a question for…

The declared purpose of the Unfair Practices Act is to "safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition." (Bus. Prof. Code, § 17001.) In pursuit of that goal, the act prohibits the "secret payment or allowance of rebates, refunds, commissions, or unearned discounts . . . to the injury of a competitor and where such payment or allowance tends to destroy competition. . . ." (Bus. Prof. Code, § 17045 ; hereafter all undesignated statutory references are to the Business and Professions Code.) Given the ordinary rules of English usage, this prohibition is implicated only by competitive injury to a competitor of the one prohibited. Such a result is abhorrent to the majority. It suggests that some victims of commercial discrimination might have no remedy under the act. The quixotic desire to do good, be universally fair, and make everybody happy is understandable. Indeed, the majority's zeal is more than a little endearing. There is only one problem with this approach. We are a court. As a court, we are constrained to work with the tools available and to play by the rules. When the task is statutory construction, our inquiry…