The California Unfair Practices Act , which is found at Section 17000 of the California Business and Professions Code, deals with certain pricing practices, such as charging different prices to competing customers below cost pricing. Generally, the California Unfair Practices Act prohibits the following types of pricing practices
According to the Business and Professions Code, it is prohibited to sell a product below its cost for the purpose of destroying competition or injuring competitors, hence the term below cost pricing.
According to CACI 3301, in case the plaintiff claims that the defendant engaged in unlawful sales below cost he must be able to prove all of the following elements to establish this claim.
Loss leaders are defined as selling below cost with the intention to induce the purchase of other merchandise, divert business from competitors, or mislead purchasers.
According to CACI 3302 in case the plaintiff claims that the defendant offered to sell, sold, offered the use of product or service as an unlawful loss leader, he must be able to prove the following elements to establish this claim:
According to California Business and Professions Code Section 17049, the word “price” should be read sufficiently broadly to include collateral contracts, special rebates, or any device of any nature whereby such sale below cost is in fact or substance affected.
According to CACI 3303 “cost” means all costs of doing business, including variable costs that tend to change with sales, such as sales commissions, and also fixed costs that don’t tend to change with sales, such as light and heat. Costs of doing business can include:
In unfair competition cases, the plaintiff can’t recover punitive damages. https://youtu.be/u0ylwefv4WI