♪ [music playing] >> all rise please. department one of the orange county court is now in session. the honorable russell a. boss is the judge presiding. >> your honor, we feel that the plaintiff in this case has utterly failed to establish the necessary grous on which it would be entitled a judgment. we think there are two basic reons for is. fit of all-- ounsel, do you he any her tnesses or edence you wish to produce at this time? ♪ [music playing] >> do you swear to tell the truth the whole truth and nothing but the truth so help you god? >> i do. >> you may be seated. please state your full name, spelling your last name for the record. ♪ [music playing]

tamer for the record. raregualth eym poutmetionlagoatstrewith sngecue asg, utilities, anghway weigs and ures. lol regulas deal wi licsind zoning. athe influee of goverent atll levs perva.. but this h not alwal wi licbeen the case. enit in hist books,meric's earleconomy was t on t prile known lez-faire.

aiez faire" is french for "let do," or as we would say, "hands." d that's a fairlyccurate description of how our coury's ony rked ithose days buness was run by busissme govement wasun b tician the two gr usuly ftach her alone. consumers were ignod. e ru othnd was eaemptor wchns ethe buye." d for rkers,he w n re proteioeier por wain the hands anement. t e cessesf the indu revoln brt chs inricasoc- onof theprou being thgrth ogulati. [nrato befe the wa m than0 percent meri were self-employed. the dominant form of biness organization was thsmall oprietorship. therwawispad public dtrust

of many types of organizations. labor unio, for instance, were treated asrimil consracies; d en corporations vwed thertainamou osuicn. r waorte power crsed signifan the public bamconcerned abt thactities anere was general outc for feral action core redpassinmconcerned e interstercacties and the sherman antitrust act. 'alrodud idabblic 'll hea complaierman veedapetitrust act. and inficiency; ouho thcosts of complng th gernmt gulaon ntbu tlower oducanou ict is toperate a siness underncreing, and frequentlyonflicting

relations. ineffit and steppi their authorit coumerro he other han. aracze tsa a the ct is athe ds,i oog st eveeuthorit dwi govement rulatio although for very different reons inome cas. bueven thoh thha bn moves tord dereguln ta aas, it's prably niab that governme gution ire tst.

t expensec. iulatiotouches usws h en to regulate business dealings. the sherman act focuses on trusts and attempts to monopolize. the clayton act covers price discrimination, exclusive dealings, tie-in contracts, mergers, and interlocking directorates. the federal trade commission act deals with unfair methods of competition and uair and deceptive trade practices. government regulation has also reached into tharea consumer prottion by regulatin leling, and packaging pcts, nsum cret, reg of cre prottion anngconsumlatin leling, d collection practice in the a eonmeal proctn, the governnt regulates air pollution, water pollution,

noise pollution, and pesticides. another area of government regulation is la thisertains to s, cking, and boycotts; the right to strike; labor activities that unions d management are forbidden to practice; an employee bill of rights and reporting requements for unn tivities; discrimination in employment onhe basis of race, religion, color, national origin, sex, or age;mployee heal and safety in the workplace; retirement and security income, including old age survivors, disability, insurance, and medicare; the operation of private pension funds; unemploynt compensation; and wages earned and paid,

including child labor, maximum hours, and minimum wages. clearly, government regulation has a sspa on tondu of busine. h, 'ra that anyone concerned with the reliohip between business and government undeta the sources of gornment regulatpower. >> theriry source for government regulation d allm clausen the cotition that's themerce au, wh cess the power eg commce bween for exampl the labor laws, e ir labortandards act, all ofhotem from the comm clause, because they were federal regutions designed toave a ifm syem of labor law. the islso, in the constitutio raofhememethermit regution toave a ifm syem of labor law. of busesand also aord businesse protection.

for example, t first amdmisn amenent th pmits busins' freem of speech shat their er sec or their advtising can rulat t re pmitted potical spee, lvemt politic campgns. >> in addio've got provn the fifth and thmes that ovide heernm shall ensure due process of law and equal protection of l--or under the law. and in using the commerce clse to regula commerce among the stat, d in regulating due process and equal protection, thgovernment has been able, over the years, to inject its regulation, its regulatory powers into various aspects of commerce. [nrator] >> looking back through history, we can identify all of these as soues of power r vernment regulation. what's escily interesting is how t influence of e

exp-ntra people wod as a pewing o s,p-ntra asar ati conce thas ding thevt thruck tm wn as ustitutl, sayingunss a bes was dictlyve comm thruck tm wn a- oth words, unle biness was shippi from californito new york-- congressould not regulate anything tt thatusiness did. and it was a vernarr interpretation; d historically, that's what resulted in roosevelt's cot-paing plan, wherhe wted to add juices to thsupreme court to try and change the interpretation of the commerce clause.

as binses grew and thimpact of business on interstate commerce grew, the courinrpretation fiexnsion , im the istsiss tt weve t crts ith cs ul e del law tm causthfuit fm anda o thsissad invved, to delopnd ilement gulatory poly on b

the federal anstate levels. this vehicle is e adnitivege as new rul and regations were established safy and he, nela ageenl ot were also created to implement these regulations. esf esen the cupation safety anal admintratio the nsumroduct safety administti, and the roental ection a we c eregniz the esenregulaon inuch areas of commerce as transportatn, utiliti, communications, consumer products, heth and sy, vationinments, pas and copyghts and trademarks. thadministti agencies spearset by congress,

whmeeyre nt bnc ofoverent. thave only as ch authory as congress detes tm. in other wor, they ansr congress for their couct. congss establishes a basic oda, d hozes agenc cart out. e cans ru angutions i ofhotyd args when ee thosles d s haeen the porsf agencelimiby cons' y toheo'r w ency's the porsf agencelimiby cons' y cond andy e fift and 14th amendments to the constitution, which require that due process of lawnd equal protection unr thlabeiv eperson actis age sisfy esconstitutionria.

gulaate ntils, tident d the urtsar busi was "of ris d e trtsag av ct aed dit d n ris uleserpetive s d evt the reatc powe the hdsf firms.

d ncn ofer the ma arusteglaon thategulatncn ofer sseang the t, e aytot, d thfederal ade co enhola paed aut century, [nartor] i m mrolitanre to se area, there are many hungry people to feed. the necessary food comes mainly from four major supermarket chains: willoughbys, hardnots, gleaners, and mercers. eachf these has locations in seval states, and all are unionized, whh has an impact on tir wagstructe. and acustom unionized, isly whh has an impact and thieasi competive business environment, the supermarkets have found themselves operatinat a decreingly low profit margin. they've bed each other fo year

tryingo get an edge on the others and stay one stephead ste ve led all fo oth to oscable si: an' on li this. ste ve led all fo oth to oscable kofce si: and so at a national convention grocery retailers held severalonths ago, the chief execute officers of each company casually met. and as inevitably happens at the get-tothers, the talk tned to the thrill of competition and the agony of lower profit margins at the end of their conveation, there was no handshake deal, nobody agreed to set prices, and body en se especially serious out the ole thg. in fact, many those attending weeen tellg jokes as they left the meeting. but the was a kind of unspoken agree that it would beetr for alncerif cerin oducgrpsouemain but the was a kind of wiinpeciriange agree

the same specials. a cal conserer advocate ickly took notice of all this. she did son shping there th rspl fd haru sciy she did son shping there he trhe a l was t coeratad sou all ov the count out thinab was t coeratad sou of the sma bs to staed o s because there reo largcombinations

of bins that werpric tting, conspiring fix pces, and thereby dring the all busissrson out or notven givi them ceo rv in tert lelg the pling fiel congress passeerman act, whichs sill an act that's designed to pre combination d conspiraes rtrain trad the shern achas tw seionsctn one d ction two. >> sectionne prohibits any contract, combination, or conspiracy in restrain of trade. now the court, in looking at this, subseently decided ctra aoand prucern restrain "a,'veadct trade. gehaitem't b it soherter ded th

lain it's prohibited by the law. we also have, within this area, the per se violations-- things that are so improper from an economic model that they are prohibited without reason, without any opportunies to defend them. included in this area would be market divisions, pre fixing, horizontal or verticaarrangements ong the firms that would prohibit competiti between firms. >> section two of the shern act is tti thatontrols polization -either ietween firms.

to monopolize or t aual t ofonopizin dfoexampl tre havbeen mes in the past where a company controlling a large percent of the sports shoe rket dels a gazine and th runs spting s evuaon and happe rthhe bt. so that noing just a bett product obung a tt map ah toelbusein a scheme so that they pture the market without s inteed tcr. and kwhatctions the grocery chains pe to ha taken. the qution, of crse,is did te the sherman act? >> the grocers here would undoubtedly argue that while they did get together for some casual shop talk, there is no direct evidence that ty agreed to fix prices. that could be an obstacle to the government,

because the sherman act does require evidence of an actual agreement to fix prices. >> but horizontal price-fixing occurs when competitors agree, either explicitly or implicitly on what prices they'll offer their goods and services. rties rarely put price-fixing agreements in writing, but courts can infer such agreements by the mere conduct of the parties. >> the conduct could permit such an inference in this case. there was an actual meeting, the prices of the goods were similar, if not identical, and the specials were very similar. on the other hand, the grocers might argue that since prices did not rise, that the evils that the sherman act was designed to prevent have not, in fact, taken place. >> but once competitors stop competing, experience shows that prices do rise in the long run. that's why price-fixing agreements are illegal, even without immediate price hikes.

[narrator] >> the four grocery chains were, in fact, in violation inonice-in intate commerce. now l'ok at very diert situatn- liwoo's ar inonicand aftshop,commerce. brainc omelody littlewood herself. it seed like e rft idea to ko thyo d, ak it seed like e rft idea to ko iul tea. torove tth thassee for the sh. i'd so comup win verting plan. wee xt step s to fa sourcef suly arrato r>> it was here that melody littlewood ran into probms.

she ew ectly w wantedining de sectn pnts, bshes, se, canves ing s-to kw what bhe nt to ca vandbe'li noon 's r personav inpp supplif l. >> i waseally crazy about thr paints of paints unless the customer also ordered a complete line splie

eventuerio omer but wade to, ain control some the combinations thatould result in int of trade. the claytoact contls several different thin. endment,the nson-patmn the claytoact contls srice discrimination.n. and this amendment was designed to prevent f's ju splmi futi ot.sroct inerif auyy , ' pro wsplmi lume dcotsmitted. ut you cannot sc p among competing buyers.

to do so is a violation. the clayton act prohibits exclusive dealing contracts or tie-in arrangements, whereby a custom is forced to buy everything from a particular supplier, or where a customer is forced to buy an unpopular prt in order to get a very popular product. the clayton t has a provision that prohibits mergers, where the effect may be to substantially lessen competition in any line of trade or commerce. and the clayton act prohibits interlocking directorates. a person cannot serve as a director for two or more firms if a merger between those firms would be a violation of basic antitrust law. [narrator] >> in theory, at least, the

>> this case demonstrates how a seemingly innocent business practice can run afoul of the antitrust laws. while it may seem reasonable for a supplier to want to cover transactional costs by requiring minimum orders, the question is whether this is an unlawful tie-in arrangement. >> it clearly is a tie-in arrangement. in order to purchase the one product she really wanted, littlewood had to buy the entire line of vanderberg supplies. but whether or not the arrangement is illegal depends on vanderberg's intent and the effect of the arrangement on competition. >> in order to determine intent, the court would look to several factors, including whether vanderberg required all of its customers to adhere to tie-in arrangements, whether it used such arrangements with other products, and how long such practices had been in use. >> and with respect to competition, the court would examine what percentage of the relevant market

vanderberg controlled and the actual effect of this arrangement on that market. >> so--but if a court finds that vanderberg intended to monopolize the market and the tie-in arrangement had that effect, then it could be found to be in violation of the clayton act. ctree c't i ofcun, s see vdegent ofourse, thierence in pecti ihalynie

in the cflt ve bs dy gr coempo ecoc anpotife regulaon makdiffict r th tmpete tpwhe its ai d consumers.abusi emplos