CACI No. 3301. Below Cost Sales - Essential Factual Elements
Judicial Council of California Civil Jury Instructions (2025 edition)
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3301.Below Cost Sales - Essential Factual Elements
[Name of plaintiff] claims that [name of defendant] engaged in unlawful
sales below cost. To establish this claim, [name of plaintiff] must prove all
of the following:
1. [That [name of defendant] [offered to sell/sold] [product/service] at
a price that was below cost;]
1. [or]
1. [That [name of defendant] gave away [product/service];]
2. That [name of defendant]’s purpose was to injure competitors or
destroy competition;
3. That [name of plaintiff] was harmed; and
4. That [name of defendant]’s conduct was a substantial factor in
causing [name of plaintiff]’s harm.
If [name of plaintiff] proves that [name of defendant] [[offered to sell/sold]
[product/service] at a price that was below cost/ [or] gave away [product/
service]] and that [name of defendant]’s acts harmed [name of plaintiff],
you may assume that [name of defendant]’s purpose was to injure
competitors or destroy competition. To overcome this presumption, [name
of defendant] must present evidence of a different purpose. [Name of
defendant] has presented evidence that [his/her/nonbinary pronoun/its]
purpose was [specify other purpose]. Considering all of the evidence
presented, you must decide whether [name of plaintiff] proved that [name
of defendant]’s purpose was to injure competitors or destroy competition.
New September 2003; Revised June 2011
Directions for Use
The word “price” as used here should be read sufficiently broadly to include
“special rebates, collateral contracts, or any device of any nature whereby such sale
below cost is in substance or fact effected.” (Bus. & Prof. Code, § 17049.) To the
extent the circumstances of the case warrant it, the word “price” in the instruction
may be supplemented or supplanted by other such price-related terms.
For instructions on “cost,” see CACI No. 3303, Definition of “Cost,” CACI
No. 3304, Presumptions Concerning Costs - Manufacturer, CACI No. 3305,
Presumptions Concerning Costs - Distributor, and CACI No. 3306, Methods of
Allocating Costs to an Individual Product.
Business and Professions Code sections 17071 and 17071.5 create a rebuttable
presumption of the purpose or intent to injure competitors or destroy competition.
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The presumption requires the defendants to go forward with evidence that would
establish an affirmative defense or otherwise rebut the presumption of wrongful
intent. (See People v. Pay Less Drug Store (1944) 25 Cal.2d 108, 114 [153 P.2d 9].)
The plaintiff is entitled to an instruction on the presumption. (See Bay Guardian Co.
v. New Times Media LLC (2010) 187 Cal.App.4th 438, 465 [114 Cal.Rptr.3d 392.)
For possible affirmative defenses, see CACI No. 3331, Affırmative Defense to
Locality Discrimination, Below Cost Sales, and Loss Leader Sales Claims - Closed-
out, Discontinued, Damaged, or Perishable Items, CACI No. 3332, Affırmative
Defense to Locality Discrimination, Below Cost Sales, Loss Leader Sales, and
Secret Rebates - Functional Classifications, and CACI No. 3333, Affırmative
Defense to Locality Discrimination, Below Cost Sales, and Loss Leader Sales
Claims - Meeting Competition.
Sources and Authority
• Below-Cost Sales Prohibited. Business and Professions Code section 17043.
• “Article or Product” Defined. Business and Professions Code section 17024.
• Presumption of Intent to Injure Competitors or Destroy Competition. Business
and Professions Code section 17071.
• Actual Damages or Injury Not Required. Business and Professions Code section
17082.
• “The purpose of the Unfair Practices Act (UPA) is ‘to safeguard the public
against the creation or perpetuation of monopolies and to foster and encourage
competition, by prohibiting unfair, dishonest, deceptive, destructive, fraudulent
and discriminatory practices by which fair and honest competition is destroyed
or prevented.’ It forbids most locality discriminations, the use of loss leaders,
gifts, secret rebates, boycotts, and ‘deceptive, untrue or misleading advertising.’
It also prohibits the sale of goods and services below cost.” (Pan Asia Venture
Capital Corp. v. Hearst Corp. (1999) 74 Cal.App.4th 424, 431-432 [88
Cal.Rptr.2d 118], internal citations omitted.)
• “Section 17043 uses the word ‘purpose,’ not ‘intent,’ not ‘knowledge.’ We
therefore conclude that to violate section 17043, a company must act with the
purpose, i.e., the desire, of injuring competitors or destroying competition.” (Cel-
Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20
Cal.4th 163, 174-175 [83 Cal.Rptr.2d 548, 973 P.2d 527].)
• “Proof that a defendant sold or distributed articles or products below cost will be
‘presumptive evidence of the purpose or intent to injure competitors or destroy
competition.’ ” (Pan Asia Venture Capital Corp., supra, 74 Cal.App.4th at p.
432, internal citation omitted.)
• “[W]e conclude that the section 17071 presumption is properly categorized as
one that affects the burden of proof rather than merely the burden of persuasion.
‘A presumption affecting the burden of proof shifts the burden of persuasion on
an ultimate fact to the party against whom the presumption operates upon a
finding of the predicate facts.’ ‘A presumption meant to establish or implement
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some public policy other than facilitation of the particular action in which it
applies is a presumption affecting the burden of proof.’ As we view section
17071, the presumption is indicative of an effort by the Legislature to implement
the public policy of facilitating proof of unlawful purpose of below-cost sales
which injure a competitor by shifting the burden of proof to the party more in
possession of relevant evidence demonstrating the true intent associated with the
pricing scheme.” (Bay Guardian Co.,supra, 187 Cal.App.4th at p. 464, internal
citations omitted.)
• “ ‘[T]he allocation of evidentiary burdens [under section 17071 is] as follows:
“Assuming proof of injury to a competitor has been made, California law allows
plaintiffs to establish a prima facie case with proof of prices below average total
cost. The defendant then has the burden of negating the inference of illegal
intent or establishing an affirmative defense.” . . . [Citation.]’ The presumption
‘may be rebutted by establishing one of the statute’s affirmative defenses, such
as meeting competition, see Cal.Bus. & Prof.Code § 17050, or by showing that
the sales “were made in good faith and not for the purpose of injuring
competitors or destroying competition.” [Citation.]’ ‘After proof of the sales
below cost and injury resulting therefrom, there is no undue hardship cast upon
the defendants to require them to come forward with evidence of their true intent
as against the prima facie showing, or with evidence which will bring them
within a specified exception in the act.’ Once the presumption is rebutted, ‘the
burden shifts back to the moving party to offer actual proof of injurious intent.’ ”
(Bay Guardian Co.,supra, 187 Cal.App.4th at pp. 464-465, internal citations
omitted; but see Haycock v. Hughes Aircraft Co. (1994) 22 Cal.App.4th 1473,
1492 [28 Cal.Rptr.2d 248] [Evid. Code § 606 indicates that a presumption
affecting the burden of proof imposes upon the party against whom it operates
the burden of proof as to the nonexistence of the presumed fact].)
• “The section 17071 presumption, being one that in both nature and consequence
alters the burden of proof, did ‘ “not disappear in the face of evidence as to the
nonexistence of the presumed fact . . . .” [Citations.]’ Therefore, the fact that
defendants denied any purpose to harm competition, and produced some
evidence of good faith efforts to compete in the marketplace, did not negate
plaintiff’s right to an instruction on a presumption affecting the burden of proof
of unlawful purpose. Defendants may have offered rebuttal evidence, but they
did not negate the presumption by conclusive proof that negated unlawful
purpose as a matter of law or compelled a finding on the issue in their favor
based on this record.” (Bay Guardian Co.,supra, 187 Cal.App.4th at p. 465,
original italics.)
• “Determination of the defendant’s cost has always been treated as an issue of
fact.” (Pan Asia Venture Capital Corp., supra, 74 Cal.App.4th at p. 432.)
• “While, similar to other cases, damages cannot be awarded in antitrust cases
upon sheer guesswork or speculation, the plaintiff seeking damages for loss of
profits is required to establish only with reasonable probability the existence of
some causal connection between defendant’s wrongful act and some loss of the
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anticipated revenue. Once that has been accomplished, the jury will be permitted
to act upon probable and inferential proof and to ‘make a just and reasonable
estimate of the damage based on relevant data, and render its verdict
accordingly.’ ” (Suburban Mobile Homes, Inc. v. AMFAC Communities, Inc.
(1980) 101 Cal.App.3d 532, 545 [161 Cal.Rptr. 811], internal citations omitted.)
• “Even the objectives of the [federal and state] laws, though certainly similar, are
not identical. The Sherman Act and Robinson-Patman Act (15 U.S.C. § 13(a))
seek to prevent anticompetitive acts that impair competition or harm competitors,
whereas the UPA reflects a broader ‘[l]egislative concern not only with the
maintenance of competition, but with the maintenance of “fair and honest
competition.” [Citations.]’ We disagree with defendants’ characterization of the
UPA as legislation that was merely ‘intended to protect the public, not individual
competitors.’ The UPA has been described by our high court ‘as a legislative
attempt “to regulate business as a whole by prohibiting practices which the
legislature has determined constitute unfair trade practices.” ’ ” (Bay Guardian
Co.,supra, 187 Cal.App.4th at p. 457, original italics, internal citations omitted.)
• “In light of the distinctions we discern, some glaring, some subtle, between
section 17043 and the federal or other state predatory pricing laws, and
particularly in light of the conspicuous focus of section 17043 upon the mental
state of defendants’ purpose rather than ultimate impact of below-cost pricing,
we decline to imply a recoupment element in the statute where none has been
expressed.” (Bay Guardian Co.,supra, 187 Cal.App.4th at p. 459, internal
citations omitted.)
Secondary Sources
1 Witkin, Summary of California Law (11th ed. 2017) Contracts, §§ 623-629
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.153 (Matthew Bender)
49 California Forms of Pleading and Practice, Ch. 565, Unfair Competition,
§ 565.52 (Matthew Bender)
23 California Points and Authorities, Ch. 235, Unfair Competition, § 235.22 et seq.
(Matthew Bender)
1 Matthew Bender Practice Guide: California Unfair Competition and Business
Torts, Ch. 5, Antitrust, 5.46[3], 5.47[2]
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