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What types of practices are prohibited by California’s unfair practices act?

UPDATED: May 2, 2012

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The Unfair Practices Act forbids four specific pricing practices:

  • Sales below cost — sales of a product or service below the seller’s cost (including overhead) undertaken with the purpose of injuring competitors or destroying competition;
  • Loss leaders — sales of a product or service below the seller’s cost (including overhead) under certain circumstances (for example, to induce sales of a different product or service) undertaken with the purpose of injuring competitors or destroying competition;
  • Locality discrimination — charging different prices for the same product or service in different locations, with the intent to injure competitors or destroy competition; and
  • Secret rebates — secret payments of rebates or commissions to one customer but not another, where such payments injure a competitor and tend to destroy competition.

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