Procedural Posture

Plaintiff pharmaceutical company sued defendant, a biopharmaceutical company with which plaintiff had a licensing agreement for development of plaintiff's product, alleging under the Cartwright Act that there was a conspiracy between defendant and a company with which defendant was merging (acquiring company). The Superior Court of San Mateo County, California, granted summary judgment for defendant, and plaintiff appealed.

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Overview

The court of appeal held that even if the two merging companies were capable of conspiring, for purposes of the Cartwright Act, Bus. & Prof. Code, § 16700 et seq., in the period between execution of the acquisition agreement and the consummation of the merger, no viable Cartwright claim was presented because there was no evidence of any premerger meeting of the minds specifically to restrain the trade of plaintiff's product. The complaint alleged that the acquiring company unilaterally decided to acquire defendant in order to further its own goal to dominate the market. Because this alleged anticompetitive purpose was attributed only to the acquiring company and to individuals and not to defendant, there was no combination of capital, skill or acts by two or more persons for the purpose of preventing competition. The court also observed that the rationale of case law under the Cartwright Act—that the Cartwright Act was not intended to apply to situations in which, by virtue of purchase and sale, or merger, one or more of the entities ceased to exist—seemed to apply where parties in the process of merging reached agreement to do that which the combined entity could freely do.

Outcome

The court affirmed the judgment.