Discuss the following:
1. In today’s economy, there are powerful companies who in all appearances control massive segments of different markets. Using the NEXIS-Uni Legal Database or the FTC website below, research and provide one company and case in the last five years that has (or might have) have engaged in anti-competitive behavior. Explain why the activity is anti-competitive OR, if the case was litigated and the court found otherwise, why not? (Do not write on Amazon, Google, Facebook, Qualcomm, Samsung or Apple – try to find a local company in your home state).
2. Identify and explain what Horizontal restraint of trade is and Vertical restraint of trade from the chapter reading and provide what type of action your example above exhibits. Substantiate your response.
Cereceres v. City of Baldwin Park, 2020 Cal. App. Unpub. LEXIS 6902
· In 2016, voters in California approved Proposition 64, a bill that allowed the Legislature enactment of the Medical and Adult-Use Cannabis Regulation and Safety Act.
· Proposition 64 allows for cultivation, distribution, transport, storage, manufacturing, processing, and sales of medical and recreational cannabis that must be controlled and regulated.
· The City of Baldwin Park adopted a development agreement with Rukli, Inc. (taxicab company), a license to transport cannabis in that City. It will require all other cannabis licenses in the City to use Rukli, Inc. to transport cannabis.
· The Appellant has a petition and argued that the City uses zoning to grant Rukli a monopoly.
· Rukli Inc was granted the exclusive right to operate a cannabis transportation business by the City officials because it was deemed the safer route by using one distributor. Rukli tracks all deliveries and works closely with law enforcement to ensure no illegal activity is occurring.
Trial Court (Outcome)
· The Judgement is affirmed. The Respondent the City is awarded its costs on appeal. Therefore, the Act approved does not prohibit Anti-Competitive conduct by cities (1).
· I have mixed feelings about this case. On the one hand, the City knows it is safer to use one distributor instead of other organizations. However, I do agree that this situation can appear to be monopolizing. Using only one company, such as Rukli Inc., as a cannabis distributor eliminates any other competition in this industry (transportation and distribution), especially in a big city like Los Angeles.
In the class readings, two types of trades discussed are horizontal restraint and vertical restraint of trade. First, horizontal restraint of trade is designed to lessen competition among a firm’s competitors (2). I believe horizontal restraint trade was used in my case. The City only approved one distributor of cannabis, which automatically eliminates other competition. Last, you have vertical restraint of trade, which involves getting products from their creation to their ultimate consumer (2). An example of this type of trade is price discrimination, which is the same product sold at different prices depending on the market and location.
1. Cereceres v. City of Baldwin Park, 2020 Cal. App. Unpub. LEXIS 6902, 2020 WL 6157825 (Court of Appeal of California, Second Appellate District, Division FourOctober 21, 2020, Opinion Filed).
2. Marianne Jennings. (2018). Business: Its Legal, Ethical, and Global Environment (11th ed.). Cengage