♪ [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 grounds on which it would be eitled a judgment. we tnk there arewo basic reasons for this. fiof a-- >> cou, do you have an other witnesses or evidence you wish to produce at this time? ♪ [music playing] do you swear toell 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]

ayeres for the record. is hvieg g iosumeti d negoio. is hvieg g e ons de selliities, leasing, utiliti, and hiway wes and measures. caregulations de wisingnd zoning. but this hasot alws enhe case. often citedn sty s, amec'eaeconomy was ilon the pnciple known as lais-faire.

"laissez faire" french for "let do,ors wld say, "hds off." and that's a fairly accat description of how our country'ecomy worked in thos. ness was run busimen, governas run policians, and the o ps u left each other alon e ruf e as eat ptor," which mns "l theuyer bare. for worker thereas no reroctn either. wainhe "l theuyof management. buthss othe ion brought anges in an ciy -- e the mt profnd g grow of regulaon. [narrar] befe the civil more than0 percent of americans were se-ployed. the dominant form of business organization was the small prrietorship. there was widespread puicistrus ofany typeof organizatio.

labor unions, for instance, wereated asrimil conspiracies and ev cporations iewed with a certainnt of susp ter thl wapote powecreasegnicantly. the puble concne about the activities and ere was geral outc r ral ti. coss resposs e interstamee act and the sherman antitrust act. s goventand whilation ha its alsoducenserabblistiti 'omaints govegoventand whilation ha and inefficicy; abouwstiti e coofyi t its to operatei; and t how a siss und increing, and frequently conflting,

regulations. t its to operatei; and t how a chacrizeho of g sine cts at t ds, almostveryone is disenchangornment rat although fery diert reason se ses. t evenhough erhave bee moves toward deregulatn in certa aas's prably undenilehat govern gulatiheo stay. hee teex sie trence so

'uches l as b ions anwsen e 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 fedel trade commission act deals with unfair methods of competition and unfair and deceptivtre practices. government regulation has also reached into the area of consur protection by regulating, labeling, and cking of product consumer credit, rting t cret ngers, delectn pracces. in t a ofironmental protection, the government regulates air pollution, water pollution,

noise pollution, and pesticides. d employme. is pertains totrikes picketing, and boycotts; the right to strike; labor activities that unions and mament are forbien to practice; employee billf rights and reportg requements for union activiti; discrimination in employment on the basis of race, religion, color, national origin, sex, or ag emploe health and safety in theorkplace; retirement and security income, including old age survivors, disability, insurance, and medicare; the operation of private pension funds; employment compensation; and wages earned and paid, including child labor, maximum hours, and minim wages.

on conduct of buss. as sh, it'imrative atnyone concerned with t ratnship between business and government detand theources of gont regaty powe >> the primary sourc for government regation busins is the u.s.onut llte froa cl ie cotion th's llhe commerc clau, whgaveoness the power to regulate ce between d among the sel stat. explhe labor laws, e ir labor standards act, the minimum wage laws, allf e union organizaon laws; l tse stem from the coerce clause, becae they were federal regulations designed hunorsystem of labor l. there islso, in the constition, l of thememeth permit gulation hunorsystem of labor l. bins d alsoor busiss some protection for exe, the first endment aamendment

at pmits bins' frm of speech heense tthei coerciech or thedverting can be regulat, but theyre permied lical speech, inlvemt inolitical campgns. >> iaddition, 'veot provisions in e fifth th aments that ovide that the gernmt shall ensure due process of law and eal protection of la--ornder the law. and in using the commerce clause to regulate commee among the stes, and in regulating due process and equal protection, the govement has been able, over the years, to inject its regulation, its regulatory powers into various aspects of commerce. [narrator] >> looking back through histor we can identify all of these as sourcf we fogovernment regulation. what's pecially interesti is howhe influence of these

pai-contl. someeoe wod ew it a nd swingg fr o t o, s gution is conrn. fr o t o, s gution xample, ab ere t atte d isin osevs, frstruckhewn s gution xample, ab ereutl,tte yit le bes s dire i inere mmer-- oor, frstruckhewn s gution less business s shipping from california to new york-- congssould not regulate anything that that business did. and it was a very narrow rptation and historally, that's what resulted roosel's court-packing plan, where heand to add stices to the supre cot to try andhange the interpretation of the commerce clause. as busesgrew d the impactf siness

on interstatcommercerew, the court interpretaon of wnstited inrsew d thcomm expded.ness the fit paiome wihe labs, tu fto wldd inrsew alapicatio expded.ness of mimume dthwee la d haere tu fto wldd inrsew alapan intraatsissness ca we atintae dthwee la d ees in onetated w mate re fe a i state tity cae thurl latohe s d inrstasoa da thsiss had tved, s e imcterat coerce. to delop and impment regulatory policy on both

e federal and state levels s e imcterat coerce. tothis vehles epment adnistrative agey. on both as new rules and regulations were elished sd th pduct set tothis vehles epment adnistrative agey. on both d enot, rules and regulations new gulancselished were also created to implement these regulations. and health administrn, set the consum pduct safet administration, e ronmental ection agey. weanascognize thprence of regulation in sh areas of commerce as traportation, utilities, commications, consumer products, health and safet iinvatiinvestments,erce as pateancopyrigh,tilities, and trademarks. thesadministrative agencies are set up bcongress,

of government. th he on as much thit congress deletes tohem. in oth wds, they answer to congress for thr conduct. ry it out.an agency thag ple ings wn ee authority, and cad thosruleangusn ed. powe ogencar lited congress' ability thosruleangusn ed. ie a t, athfi and 14th amendments to the constitution, which require that due process of law and equal proctn e g to eon. ese constional cteria.

pe h specic iroess tiveconstional cteria. annistravenc haor llation il tpecic iroess the tugomeonal cteria. bu camlarg industriomne d tr eedctices a esing etor bu camlarg industriomne prenthacmuti esing etor reatmic rg he h of a rmomne weries prenthacmuti ofntst ls erngss thwsct g blicus

the are thresets ntsteg thulate siness dealis. e e shn e cltoact, passbo aenry agothwse th'ces a e[nratoct, n ajor mropotan area, there are many hungry people to feed. the necessary food comes mainly from fo major supermarket chains: willoughbys, hardnots, gleaners, and mercers. each of these has locations in several states, and all are unionized, which has an impact on their wagst a mt'no e l eewhe and increasing compive business environment, the supermarkets have found themselves ating at a decreasingly low ofitargin. ey've btledacotr r year

ying tt an edge on t others and stay one stephead. but the price sque uni ntct a their unse cuere have led l ur of them o iscleconc: they can't on like ts. cuere have led l ur of them d so at a national convention rocery retairs held several months ago, the chief executive officers of each company casually met. and as inevitablhappens at theet-thers, the talk turned to the thrill of competition and thagony of lower profit margins. at the end of their conveation, there was no handshake deal, nobody agreed to set prices, out the wholthg. in fact, many of tho attending were seen telling jos ashey ft the meeting. but there waa kind of unspoken agree that it would be br for alncerin geoil e estise

they were not actly the me, e awfully close. the same specials. a local nsumerer aocate ickly ok noticof all this. shdid pariso pingpuis a local nsumerer aocate d edntit noticof all this. al t cou about th of s bes to get srt or to survive becaustherwe so lae combinations of businses that were ic g, conspiring

fix ps, d thereby dr e albusinessperson out not eging them a chano suive. in the intert of levut note playing fiel congreassed the shma t, whichs cally an act that's signed to p combinatis d consraci at restrtrade. thsherman act s o se, sen one and sectio t section one prohibits any contract, combination, or conspiracy in restrain of trade. now the court, in looking at this, subsequently decided d itrom od ," i'a cont; l that em s nouyt om " d itrom od ," i'a cont;

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 th they are prohibited without reason, without any opportunities to defend them. included in this area would be mt divisions, price fixing, horizontal or vertical arrangements among the firms thatould prohibit competition tween firms. >> section two of the sherma an thtrnolition, e-ther t ient

toopolize or the actual act ofonopizin thtrnolition, anthis canccur in e-numb of dient wa for example, the have been issuesthe pa where a company controllg a large percent of the sports shoe marketevelopa gazine and thenuns a ortinghoe evua hpens rate eish the best. that not using just a tter product or ding a be mousetr approh sli, butn a schemeo at they capte the et without a bthe fairsstaaroh sli, butn th t sanct was inteed to eate. anwe knowhat aions the grocery chains appear to have taken. the question, of course, is d these actns vlate 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 they 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. parties 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 pricedid 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

th in interstate mmerce even without immediate price hikes. now let'lo at ry different siion- th in interstate mmerce evlittleods immediate craftsp,hikes. ainc of lo littlewood herself. thve m it. ainc of lo rot ouadonbe s mo littlewood herself. for the i'also come with an vertising plan. lle netep s to fd soce of supp

kn e wt she wanted, cluda lectioofais,rues, lscaases w whatra s wanto carr mainly, vaerber'art . rbs hersavorit supperall. >> ias rlly crazy about thr in d s uloopperall. >> wilngyly crazy top do tm.r in of paints unless the custor also oered a complete line arra sef whatext. upplie

s desi to,gain, corol some of t combinaonthatouldsult in r. the clayton act contls sel diffenthings [nartor] one thing it r ple, through e roon-tmantamenent, sel diffenthings price discrimination. and this endment was designed to prent w, bcapaeren pducts. it's imy e and this endment was ncf rginalosd to prent w,iferpaeren pducts. gea te can buy re,noit vo disun are pmi but y cannodirimi inri among competing buyers.

to do so is a violation. the clayton act prohibits exclusive dealing contracts or tie-in arrangents, whereby a customer is forced to buy everything from a particular supplier, or where a customer is forced to buy aunpopular 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.

>> 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. crs this ffen inecs uqu nns risiss.

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