State of California Ex Rel. Van De Kamp v. Texaco , 46 Cal. 3d 1147 ( 1988 )

Opinion

LUCAS, C. J.

The California Attorney General sued under the Cartwright Act (Bus. & Prof. Code, § 16720 et seq.) and the Unfair Practices Act (id., § 17000 et seq.) to enjoin defendants Texaco, Inc., (Texaco) et al., from acquiring the California assets of Getty Oil Company (Getty) pursuant to a merger between the two companies.¹

The trial court sustained defendants’ demurrer without leave to amend, and dismissed the complaint. In the Court of Appeal, the Attorney General asserted the lower court erred in concluding that neither the Cartwright Act nor the Unfair Practices Act applies to an acquisition or merger, and that the action is preempted by the supremacy clause (U.S. Const., art. VI, cl. 2) by virtue of a consent decree issued by the Federal Trade Commission (FTC). Additionally, the Attorney General asserted, the lower court erred to the extent it held the action is preempted by the commerce clause (id., art. I, § 8, cl. 3).

The Court of Appeal held the action preempted by federal antitrust law under the supremacy clause, and affirmed judgment for defendants on that ground. We affirm the judgment of the Court of Appeal, but we do not reach the preemption questions because we hold that neither cited state law regulates a merger.

I. Facts and Procedure

Texaco and Getty entered into a merger agreement under which Texaco would acquire Getty, and thereby become the second largest petroleum company in the United States. Pursuant to 15 United States Code section 18a, the firms notified the FTC and the United States Justice Department of their agreement, and the FTC proceeded to investigate whether the proposed merger would violate federal antitrust law. Thereafter the FTC filed and accepted comments on a provisional consent order concerning both firms. Based in part on comments from, inter alia, the California Attorney General, the FTC issued a complaint under section 7 of the Clayton Act (15 U.S.C. § 18), detailing the potential anticompetitive effects of the proposed merger. At the same time, the FTC entered into an agreement, in the form of a consent order, with Texaco. The consent order bound Texaco to divest itself of certain Getty assets located throughout the country; offer pipeline access to former Getty customers; and refrain from acquiring wholesale distribution firms in various states. Regarding California assets, the order required Texaco to sell crude oil of specified grade to certain former Getty customers for five years.

The Attorney General was unsatisfied with the consent order, however, and filed the present action, which essentially copies the FTC’s complaint based on section 7 of the Clayton Act. The Attorney General’s complaint asserted the merger may in several specific respects substantially lessen competition in the state market for crude oil and related products. In other words, the complaint claimed the merger posed an incipient threat to competition.

II. Application of the Cartwright Act to a Merger

A. Words of the Statute

The Cartwright Act (or Act) (Stats. 1907, ch. 530, pp. 984-987) states, “Except as provided in this chapter, every trust is unlawful, against public policy and void.” (Bus. & Prof. Code, § 16726.) The Act defines “trust” as “a combination of capital, skill or acts by two or more persons for any of the following purposes: (a) To create or carry out restrictions in trade or commerce. . . . (e) To make or enter into or execute or carry out contracts, obligations or agreements of any kind or description, by which they . . . [a]gree to pool, combine, or directly or indirectly unite any interests that they may have connected with the sale or transportation of any . . . article or commodity, that its price might in any manner be affected.” (Id., § 16720, subds. (a) & (e)(4), italics added.) The Act makes agreements in violation of its provisions void and unenforceable (id., § 16722), and subject to injunction (id., § 16754.5) and civil actions for damages (id., § 16750). Another section makes violation of the Act subject to fine or imprisonment, or both. (Id., § 16755, subd. (a).)

The Attorney General asserts that a merger is “precisely” a “combination of capital,” hence the statute covers mergers. It is questionable, however, whether the statutory meaning of “combination” is so broad. As defendants suggest, the word combination might well contemplate a situation in which separate entities that maintain separate and independent interests, act in concert—“combine”—for a certain purpose, but which thereafter perdure, i.e., continue to maintain their separate identities and interests.² A bona fide merger, however, is not such a relationship; in a merger the entities lose forever their separate identities, and become a new, independent entity.

Accordingly, we question whether the words of the statute support the Attorney General’s assertion that it was intended to apply to mergers. On the other hand, we cannot confidently know, without further inquiry, that defendants’ interpretation is the intended one. In this situation, it is appropriate to look beyond the statute’s terms to discover its intent. (E.g., Solberg v. Superior Court (1977) 19 Cal.3d 182, 198 [137 Cal.Rptr. 460, 561 P.2d 1148].)

B. Purpose of the Statute

The Attorney General first asserts that his interpretation of the statute, and of the word “combination” in particular, best comports with the asserted “manifest purpose” of the statute: protecting competition. (Marin County Bd. of Realtors, Inc. v. Palsson (1976) 16 Cal. 3d 920, 928 [130 Cal.Rptr. 1, 549 P.2d 833].) His point, however, begs the question. Beyond doubt, the Act was intended to protect and foster competition. The question is, to what lengths did the drafters intend to go to accomplish that goal? Did they intend to regulate any form of business transaction that may affect competition? Or did they intend merely to regulate certain types of collusive arrangements between ongoing, separate businesses? As the following discussion discloses, we conclude the drafters did not intend the Act to regulate a merger.

C. Derivation of the Statute

In the past, we have attributed various (and sometimes conflicting) roots to the Cartwright Act. We have (i) asserted that it was patterned after a proposed alternative bill to what became the Sherman Act (15 U.S.C. §§ 1-7) (Palsson, supra, 16 Cal.3d 920, 926; Cianci v. Superior Court (1985) 40 Cal.3d 903, 919 [221 Cal.Rptr. 575, 710 P.2d 375]); (ii) suggested that it was modeled after the Sherman Act itself (e.g., Palsson, supra, 16 Cal.3d at p. 925); and (iii) stated that it codified the common law (e.g., Corwin v. Los Angeles Newspaper Service Bureau, Inc. (1971) 4 Cal.3d 842, 852 [94 Cal.Rptr. 785, 484 P.2d 953]). (See Lasky, Folklore and Myth in Judicial Opinions—Some Reflections Inspired by Texaco-Getty (1987) 20 U.C.Davis L.Rev. 591.) As discussed below, the first position—or at least a variation of it—is most historically correct, and it discloses most clearly the probable intent of the drafters.

1. The Texas Antitrust Act, and Its Progeny

a. Senator Reagan’s Bills of 1888 and 1890

As noted above, we have previously stated that the Cartwright Act was modeled after a bill that was proposed (but rejected) in the United States Senate as an alternative to what became the Sherman Act. This shorthand description of the Act’s lineage was adequate for purposes of our analysis in Palsson and Cianci (16 Cal.3d 920; 40 Cal.3d 903), but for present purposes we need to analyze in greater detail the Act’s ancestry.

The chronology is as follows: Senator Reagan of Texas introduced a short “bill to define trusts” in the United States Senate in 1888, on the same day Senator Sherman of Ohio introduced his bill. (19 Cong.Rec. 7512-7513 (1888).) The Senate did not debate the subject, however, until early 1890. In the meantime, several states passed their own antitrust acts. (Davies, Trust Laws and Unfair Competition, Dept. of Commerce, Bureau of Corps. (1916) p. 9 [hereafter Davies]; Rush, Historic Origins of Anti-Trust Legislation (1953) 18 Mo.L.Rev. 215, 246; Rubin, Rethinking State Antitrust Enforcement (1974) 26 U.Fla.L.Rev. 653, 657-658, and authorities cited in fn. 22.) Of those acts, the Maine and Kansas laws were the first. (1889 Me. Acts, ch. 266 (Mar. 7, 1889); 1889 Kan. Sess. Laws, ch. 259 (Mar. 9, 1889).)

The Kansas act, similar to the Maine law, made illegal “all arrangements, contracts, agreements, trusts or combinations . . .” for various improper purposes. (Italics added.) In the next two years, most states that enacted antitrust legislation followed the Kansas-Maine scheme. (1889 Neb. Laws, ch. 69; 1889 Iowa Acts, ch. 28; 1889 Mich. Pub. Acts, No. 225; 1889 Tenn. Pub. Acts, ch. 250; 1889 N.C. Sess. Laws, ch. 374; 1889 Mo. Laws, p. 96; 1890 N.D. Laws, ch. 174; 1890 S.D. Laws, ch. 154.) During the same period, the Texas Legislature considered a number of antitrust bills, and in late March 1889, enacted a law (1889 Tex. Gen. Laws, ch. 117) modeled after Senator Reagan’s 1888 Senate bill. (Cotner, James Stephen Hogg (1959) pp. 163-165 [biography of Texas Attorney General, a principal author of the 1889 Texas act]; Mathews, History, Interpretation and Enforcement of the Texas Antitrust Laws, in Southwestern Legal Foundation, Institute on Antitrust Laws and Price Regulations (1950) pp. 28-29 [hereafter Texas Antitrust Laws\.) The body of the Texas act was more detailed than the 1888 Reagan version, but it retained a significant aspect of that bill: unlike the Kansas-Maine approach, the Texas act simply declared “trusts” illegal, and proceeded to define “trust” as a “combination of capital, skill or acts . . .” for various specific improper purposes. (Italics added; compare 1889 Tex. Gen. Laws, ch. 117, § 1, with the 1888 Reagan bill, 19 Cong.Rec. 7512-7513 (both quoted post, fn. 14).)

Accordingly, by the time the United States Senate was ready to debate its own antitrust legislation in 1890, there were two streams of state antitrust laws³ —the Kansas-Maine format—a broadly worded law that was followed in at least nine states—and the Texas format—a more narrowly worded, specific law which at the time was followed in only one other state.⁴ In March 1890, Senator Reagan introduced an amended version of his earlier bill; this second bill followed closely the words and format of the Texas act. (Compare second Reagan bill, 21 Cong.Rec. 2456 (1890), with 1889 Tex. Gen. Laws, ch. 117, § 1, both quoted post, fn. 14.) In response to Senator Sherman’s criticism, Senator Reagan told the Senate: “The Senator suggests that my amendment ought to undergo the revision of a committee. I may say to the Senator that much of it is copied out of a law, not a law of Congress but one of the States, which underwent very thorough and searching discussion.” (21 Cong.Rec. at p. 2564.) It is plain from this chronology, and from comparison of the 1890 Reagan bill and the 1889 Texas act, that Reagan’s newly proffered bill was based on the Texas act (which, as noted, itself had its roots in the first version of the Reagan bill). (See Mathews, supra, Texas Antitrust Laws, p. 28; Cotner, supra, pp. 161-167.)

b. Interpretation of the Texas and Michigan Acts

The Senate rejected Reagan’s bill, and enacted a much modified version of Senator Sherman’s bill in July 1890. (26 Stats. 209; 15 U.S.C. §§ 1-7.)⁵ Section 1 of the Sherman Act resembled the Kansas-Maine format: it made illegal “[ejvery contract, combination in the form of a trust or otherwise, or conspiracy in restraint of trade or commerce among the several States . . . .” (15 U.S.C. § 1.) Section 2 of the Sherman Act had no counterpart in any of the then-existing state antitrust statutes. It provided: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of trade or commerce among the several states . . . shall be deemed guilty of a felony . . . .” (Id., § 2.)

During the next 17 years, a few states adopted versions of the Sherman Act as their own state antitrust statutes.⁶ Most, however, adopted acts more closely based on the original Kansas-Maine⁷ or Texas⁸ formats. Over the years, a number of states switched back and forth between the latter two models, and many added special provisions in a constant eifort to refine and focus the law; Texas, for example, enacted revised laws in 1895, 1899, and 1903. Overall, the trend favored the Kansas-Maine format.⁹

In addition to this legislative action, there also developed between 1896-1904, a substantial body of case law construing the various statutes—particularly the first Texas act (1889 Tex. Gen. Laws, ch. 117), and one of its progeny, the second Michigan act (1899 Mich. Pub. Acts, No. 255).

The scope and meaning of the term “combination” in the original Texas act was addressed in a number of decisions by the Texas Supreme Court. Cooperative action for a specified, anticompetitive purpose by otherwise independent, competing firms, was held to be an illegal combination.¹⁰ In Gates v. Hooper (1897) 90 Tex. 563 [39 S.W. 1079], however, the court held the 1889 Texas act did not regulate a purchase by one mercantile company of another. The court reasoned that in such a transaction the parties do not “combine,” as that term is used in the statute, because under a sale the parties do not maintain a separate, “otherwise independent and competing” relationship.

In Gates, supra, 90 Tex. 563, a merchant sold his business to a competitor. The court explained why this transaction did not result in a “combination”: “In order to constitute a trust, within the meaning of the statute, there must be a ‘combination of capital, skill or acts by two or more.’ ‘Combination,’ as here used means union or association. If there be no union or association by two or more of their ‘capital, skill or acts,’ there can be no ‘combination,’ and hence no ‘trust.’ When we consider the purposes for which the ‘combination’ must be formed, to come within the statute, ... we are led to the conclusion that the union or association of ‘capital, skill or acts’ denounced is where the parties in the particular case designed the united co-operation of such agencies, which might have been otherwise independent and competing, for the accomplishment of one or more of such purposes. In the case stated in the petition there is no ‘combination.’ The plaintiff bought defendant’s goods, together with the goodwill of his business, both of which were subjects of purchase and sale. ... By this transaction neither the capital, skill, nor acts of the parties were brought into any kind of union, association or cooperative action. The purchaser became the owner of the things sold . . . .” (Id., at p. 1080.)

When confronted with the question of whether the two Michigan acts applied to mergers, the Sixth Circuit Court of Appeals interpreted the word “combination” consistently with Gates, supra, 39 S.W. 1079. In Hitchcock v. Anthony (6th Cir. 1897) 83 Fed. 779, the court rejected a claim that a sale of one dockyard business to another dockyard company violated the first Michigan act (1889 Pub. Acts, No. 225). That act was modeled after the Kansas-Maine format, and prohibited “all contracts, agreements, understandings and combinations made” for various anticompetitive purposes. Despite the broadly worded proscription of conduct under the act, the court focused on the word, “combination.” The court wrote: “The Michigan statute cited was properly construed by Judge Severens, who tried this case below, when he said that: ‘It is aimed at combinations between parties who, having each a separate business with no interest or concern in that of the other, join together to restrict the output or enhance the prices of goods; and not to cases where one owning a property which he could devote to a given purpose or not, as he pleases, conveys it to another ....’” (Id., at P-781.)

Similarly, in A. Booth & Co. v. Davis (C.C.E.D.Mich. 1904) 127 Fed. 875, the court stated that Michigan’s second act (1899 Pub. Acts, No. 225) did not apply to the sale of one fishing business to another fishing company. This Michigan act, as noted, was modeled after the original Texas act. It made trusts illegal, and defined trust as “a combination of capital, skill or artst [¹¹] by two or more persons . . .” for specified anticompetitive purposes. The federal district court found the act was “directed only against combinations of persons or firms . . . conspiring to co-operate in violation of its provisions, and that it contains nothing prohibitive of the acquisition by a person ... or association .... All such persons . . . may carry on business . . . provided they do not . . . combine with other persons [or] firms ... to effect in any way the ends denounced in the statute.” {Id., at p. 878.) On appeal, the Sixth Circuit agreed: “We think that the intent which [would make a given] contract or combination unlawful was one in which both parties participated, and that the act was not intended to comprise a case where there was a sale and a purchase of property, after which the seller should have no interest in the property, and therefore would have no intent as to its further use.” (Davis v. A. Booth & Co. (6th Cir. 1904) 131 Fed. 31, 37-38 [construing 1899 Michigan act consistently with 1889 Michigan act].)

The few other state cases of that period addressing the issue and construing similar statutes are in accord, and they demonstrate general awareness of the cases discussed above. For example, the Missouri Supreme Court cited and applied Gates, supra, 39 S.W. 1079, in holding a tobacco manufacturing corporation’s purchase of another manufacturing corporation did not amount to a “combination.” (State v. Continental Tobacco Co. (1903) 75 S.W. 737, 747.) And, although its opinion was filed shortly after the Cartwright Act was passed in 1907, the Nebraska Supreme Court also cited Gates, supra, (together with Davis, supra, 127 Fed. 875, 131 Fed. 31, and Hitchcock v. Anthony, supra, 83 Fed. 779), for the proposition that sale of one lumberyard business to another lumber company is not itself an illegal combination. (Engles v. Morgenstern (1909) 85 Neb. 51 [122 N.W. 688, 690].) In summary, at the time the Cartwright Act was enacted there was a recognizable body of case law construing the word “combination” (in both Kansas-Maine and Texas-type acts) as not applying to the purchase of one business by another entity engaged in the same business.

c. Development of Antimerger Provisions

In the meantime—and in the face of the various courts’ narrow construction of the term “combination”—some states amended their earlier acts to adopt provisions that reached beyond the scope of all previous state acts and the Sherman Act. These newer acts, in addition to regulating “trusts” and “combinations” in restraint of trade, also regulated, inter alia, monopolies¹² and, significantly, corporate mergers.

On the subject of mergers, the third of Texas’s antitrust acts—the act of 1899—stated that “monopoly” was unlawful, and broadly defined monopoly as including “all aggregations, amalgamations, affiliations, consolidations or incorporations of . . . assets [or] property, . . . whether effected by the ordinary methods of partnership or by actual union . . . or an incorporated body resulting from the union of one or more distinct firms or corporations, or by the purchase, acquisition or control of shares or certificates of stock[¹³] . . . if. . . created or entered into for any one ... of the purposes named in this act . . . .” (1899 Tex. Gen. Laws, ch. 146, § 2.)

Similarly, the second Mississippi act provided: “No corporation shall directly or indirectly purchase or own the capital stock, or any part thereof, of any other corporation, nor directly or indirectly purchase, or in any manner acquire the franchise, plant or equipment of any other corporation, if such other corporation be engaged in the same kind of business and be a competitor therein.” (1900 Miss. Laws, ch. 88, § 5.)

The fourth (1903) Texas act made illegal any monopoly “effected by either of the following methods: [H] When the direction of the affairs of two or more corporations is in any manner brought under the same management or control for the purpose of producing, or where such common management or control tends to create a trust .... [^f] 2. Where any corporation acquires the shares or certificates of stock or bonds, franchise or other rights, or the physical properties, or any part thereof, of any other corporation or corporations, for the purpose of preventing or lessening, or where the effect of such acquisition tends to affect or lessen competition, whether such acquisition is accomplished directly or through the instrumentality of trustees or otherwise.” (1903 Tex. Gen. Laws, ch. 94, § 2 (1), (2)-)

Finally, in 1905, Arkansas amended its earlier act and enacted an anti-merger provision worded after the Texas version of 1899. (1905 Ark. Acts, No. 1, § 5.)

d. Enactment of the Cartwright Act

Against this background of increasingly sophisticated state antitrust statutes and case law, our Legislature in 1907 enacted the Cartwright Act. In doing so it settled on an act patterned closely after the original 1889 Texas act and its progeny, most notably the 1899 Michigan act.¹⁴ The Act embraced by our Legislature contained the well-known limitations on combinations in restraint of trade, but it (i) failed to include the latest invention of the evolving antitrust statutes—an antimerger provision—and (ii) embraced the term “combination,” without attempting to modify the language in order to avoid the prevailing narrow construction of that term.

In the absence of contrary indications—of which we have none—it must be assumed that our Legislature intended “combination” to have the same meaning under the Cartwright Act as that term was given under the identical words of the original 1889 Texas act and the 1899 Michigan act. We have “long recognized the principle of statutory construction that ‘[w]hen legislation has been judicially construed and a subsequent statute on the same or an analogous subject is framed in the identical language, it will ordinarily be presumed that the Legislature intended that the language as used in the later enactment would be given a like interpretation.’ ” (Belridge Farms v. Agricultural Labor Relations Bd. (1978) 21 Cal.3d 551, 557 [147 Cal.Rptr. 165, 580 P.2d 665]; see also Erlich v. Municipal Court (1961) 55 Cal.2d 553, 558 [11 Cal.Rptr. 758, 360 P.2d 334] [statute patterned after New York statute given same construction as given by New York courts].)

Contrary to the Attorney General’s suggestions, the absence of today’s computerized legal research systems in 1907 does not diminish the force of this canon. As demonstrated above, the Gates and Davis courts’ construction of the term “combination” was both widely known and followed, explicitly and implicitly, in other courts’ interpretations of the same term in cases involving acquisitions. These cases were published in the National Reporter System and the American State Reports, and were available to our Legislature through the Shepard’s Citation Service and other resources of the period.

In this case, the presumption of legislative intent (by virtue of previous judicial construction) is additionally strengthened by the history of sister state legislation—dating from eight years before the Cartwright Act—designed to regulate mergers. It is clear that the legislatures of the day both (i) recognized the problems posed by mergers, and (ii) were capable of framing legislation designed to regulate such practices. In particular, the fact that the Texas Legislature (to which our Legislature obviously looked for guidance in this area) saw it necessary to twice enact antimerger provisions, but ours did not, strongly suggests our Legislature was content to enact a law of limited scope, which did not address mergers. (See post, pp. 1167-1168.)

Finally, our Legislature’s inaction on this subject for the past 80 years is significant. Although it has amended the Cartwright Act at least 26 times between 1909 and the present, it has never enacted a merger provision.¹⁵ This stands in contrast to other states that either (i) enacted antitrust legislation with specific antimerger provisions well before the Cartwright Act was passed in 1907 (see ante, pp. 1159-1160) or (ii) have since then amended their antitrust laws specifically to address the regulation of mergers or acquisitions. (Some of these provisions were enacted shortly after the Cartwright Act: see, e.g., Okla. Stat., tit. 79, § 84 (1913 Okla. Sess. Laws, ch. 114, § 4); La. Rev. Stat. Ann., tit. 51, § 125 (1915 La. Acts, No. 11, § 5). Others are of more recent vintage: Alaska Stat., § 45.50.568 (1975 Alaska Sess. Laws, ch. 53, § 1); Hawaii Rev. Stat., § 480-7 (1961 Hawaii Sess. Laws, ch. 190, § 5); Neb. Rev. Stat., § 59-1606 (1974 Neb. Laws, LB 1028, § 13); N.J. Stat. Ann., 56:9-4 (1970 NJ. Laws, ch. 73, § 4); Wash. Rev. Code, § 19.86.060 (1961 Wash. Laws, ch. 216, § 6).)¹⁶ The Attorney General has not cited, nor have we found, a state statute similar to the Cartwright Act that has been construed as applying to mergers. (Cf. post, fn. 20.)

The foregoing history demonstrates that the drafters of the Cartwright Act must have known the limitations of what they were adopting: The operative words of their act had been construed consistently in at least three published opinions, and Texas, the parent state from which the Cartwright Act was copied, was among the states that had in the interim adopted additional, express statutory provisions clearly extending coverage of their acts to mergers. Instead of adopting one of the newer, more expansive models of antitrust statutes, our Legislature opted for the simpler, judicially construed format first enacted by Texas in 1889. Given this history, we must conclude that the drafters intended that their Act apply, as its words had been construed, only to entities that “combine,” in the sense of those who perdure (i.e., continue as separate, independent, competing entities during and after their collusive action)—and therefore that the drafters did not intend the Cartwright Act to regulate the bona fide purchase and sale of one firm by another. Any other interpretation of the drafters’ intent cannot be reconciled with the Act’s history. As we explain below, nothing presented by the Attorney General undermines this conclusion.

2. The Sherman Act

The Attorney General cites authorities stating the Cartwright Act is modeled after the Sherman Act. He then asserts that the Sherman Act has been construed as applying to mergers, and concludes that the Carwright Act should be construed as applying to mergers as well. In light of the above discussion, however, the Attorney General’s fundamental premise is flawed. Admittedly, in past statements we have suggested that the Cartwright Act is patterned after the Sherman Act. (E.g., Palsson, supra, 16 Cal.3d 920, 925, and cases cited.) As shown above, however, historical and textual analysis reveals that the Act was patterned after the 1889 Texas act and the 1899 Michigan act, and not the Sherman Act. (See ante, fn. 14.) Hence judicial interpretation of the Sherman Act, while often helpful, is not directly probative of the Cartwright drafters’ intent, given the different genesis of the provision under review. Nevertheless, even if we were to accept the Attorney General’s premise, interpretation of the Sherman Act is unhelpful to the Attorney General’s view.

As the Attorney General observes, there are cases allowing challenges to mergers under the Sherman Act. The early cases involved large railroads, the mergers of which would have amounted to an actual restraint of competition. As one commentator noted, these decisions “hinge on the size of the defendant companies.” (4 Kitner, Legislative History of the Federal Antitrust Laws and Related Statutes (1980) § 10.77, p. 291 [hereafter Kitner]; see Northern Securities Co. v. United States (1904) 193 U.S. 197 [48 L.Ed. 679, 24 S.Ct. 436]; United States v. Union Pacific Railroad Co. (1912) 226 U.S. 61 [57 L.Ed. 124, 33 S.Ct. 53]; United States v. Reading Co. (1920) 253 U.S. 26 [64 L.Ed. 760, 40 S.Ct. 425]; United States v. Southern Pacific Co. (1922) 259 U.S. 214 [66 L.Ed. 907, 42 S.Ct. 496]; see also Davies, supra, pp. 98-105.)

Defendants respond that these early cases appear to be based on section 2 of the Sherman Act, which section prohibits monopolies. (15 U.S.C. § 2, quoted ante, pp. 1155-1156; see Kintner, supra, pp. 3436-3441, quoting FTC report.) They then cite authorities stating that the Cartwright Act contains no corresponding provision.¹⁷ The high court’s most recent word on the subject, however, defeats defendants’ attempted distinction. In United States v. First Nat. Bank (1964) 376 U.S. 665 [12 L.Ed.2d 1, 84 S.Ct. 1033], the court cited Northern Securities Co., supra, 193 U.S. 197, and Union Pacific, supra, 226 U.S. 61, and held a bank merger illegal under section 1 of the Sherman Act. (376 U.S. at pp. 669-670 [12 L.Ed.2d at p. 5]; see also U.S. v. Philadelphia Nat. Bank (1963) 374 U.S. 321, 354 [10 L.Ed.2d 915, 939-940, 83 S.Ct. 1715] [“The Sherman Act, of course, forbids mergers effecting an unreasonable restraint of trade.”].)

Still, this line of authority ultimately does not assist the Attorney General’s position in this case. The cases allowing challenges to mergers under the Sherman Act require—pursuant to section 1 of that Act—that an actual “restraint of trade” be proved. (15 U.S.C. § 1, quoted ante, p. 1156.) To the extent the Cartwright Act could be said to be patterned after the Sherman Act, a merger challenge under the state Act would require the same showing, i.e., that the merger “effected” an unreasonable restraint of trade. The Attorney General, however, has alleged no such thing; as explained above, his complaint is modeled after the FTC’s initial complaint in this matter, and both complaints are clearly framed under section 7 of the Clayton Act. (15 U.S.C. § 18.) That latter Act—in contrast to the Sherman Act—allows challenges to incipient threats to competition, i.e., “[m]ergers with a probable anticompetitive effect . . . .” (Brown Shoe Co. v. United States (1962) 370 U.S. 294, 323 [8 L.Ed.2d 510, 534, 82 S.Ct. 1502].)¹⁸ In the present case, the Attorney General has alleged only that the challenged merger poses a threat to competition; he has not alleged the merger has effectuated an unreasonable restraint of competition.

We reiterate that, contrary to the Attorney General’s view, interpretation of the Sherman Act is not directly probative of the intent of the drafters of the Cartwright Act, given the different genesis of the provision under review. Nevertheless, in light of the above discussion, it appears that the Attorney General’s complaint in this case would not state a cause of action under his cited Sherman Act cases. In fact, his view would require expansion of both the Cartwright and Sherman Acts beyond the scope attributed to them by any court. Nothing in the Sherman Act or the cases applying it supports the Attorney General’s view that the Cartwright Act was intended to apply to mergers at all, much less mergers that pose, at most, an incipient threat to competition.

3. The Common Law

Defendants attempt to bolster their view of the Cartwright Act by suggesting that (i) the Act is a codification of the common law, and (ii) the common law did not impose restrictions on the outright purchase of one business by another. As we shall explain, both points are mistaken. As we also explain, however, the true state of the common law at the time of the Cartwright Act supports our conclusion about the drafters’ intent.

Although there is dictum supporting defendants’ first proposition in Rolley Inc. v. Merle Norman Cosmetics (1954) 129 Cal.App.2d 844, 846 [278 P.2d 63], and subsequent cases (e.g., Corwin, supra, 4 Cal.3d 842, 852), Rolley is based on a misunderstanding of Speegle v. Board of Fire Underwriters (1946) 29 Cal.2d 34 [172 P.2d 867], in which Justice Traynor explained that the Cartwright Act “articulates in greater detail a public policy against restraint of trade that has long been recognized at common law.” (Id., at p. 44.) Speegle stands simply for the proposition that the public policy underlying the Cartwright Act—and all early antitrust acts, for that matter—is rooted in the common law. This is not to say, however, that the Act is confined by, or as broad as, the common law; instead, the Act stands on its own, and courts must interpret its words as best they can in order to effectuate the intent, not of “the common law,” but of the Act’s drafters. Nevertheless, because the state of the common law at the time the Act was drafted may shed light on the drafters’ intent, we will review the common law on the question of “mergers.”

As suggested above, defendants assert that the common law distinguished between outright “purchase” or “acquisition,” on one hand, and “combinations” or “trusts,” on the other, and that the former were legal and enforceable whereas the latter were void and unenforceable. After reading the cases cited by defendants (e.g., Davis v. A. Booth & Co., supra, 131 Fed. 31, 37; Lumberman's Trust Co. v. Title Ins. Co. (9th Cir. 1918) 248 Fed. 212, 217-218; and Trenton Potteries Co. v. Oliphant (1899) 58 N.J.Eq. 507, 524 [43 A. 723]), we are not persuaded that defendants’ interpretation of them is correct; in our view, these cases do not apply the common law. The cited page to Davis, for example, is to the court’s statutory construction analysis of the Sherman Act, not the common law; the court did discuss the common law on the following page (131 Fed. at p. 38), but reached no clear conclusion on the issue here, and it plainly did not announce the rule advanced by defendants. Likewise, Lumberman's interprets a state constitutional provision, not a common law rule, and it draws most of its authority from statutory construction cases. Oliphant, too, is similarly influenced by statutory law. Defendants have cited no authority supporting their view that the rule they advance existed at common law.

In any event, the clear “majority view” at common law was that certain forms of mergers or acquisitions were “illegal.” As explained by Kintner, supra, “the test of the legality of a combination . . . regardless of the form it assume[d lay] in the object of the combination” (id., § 3.14, p. 118), and “where the purpose, tendency, or natural consequences of a corporate combination was to monopolize or restrain trade, the combination was illegal.” (Id., at p. 114; see also, Davies, supra, at pp. 65-69.) Accordingly, there are a number of common law cases in which mergers were held illegal. (E.g., Richardson v. Buhl (1889) 77 Mich. 632 [43 N.W. 1102, 1110] [consolidation of separate, otherwise competing, companies into one large corporation amounted to a restraint of competition, and an illegal monopoly]; People v. Chicago Gas Trust Co. (1889) 130 111. 268 [22 N.E. 798, 801-803] [same]; Distilling & Cattle Feeding Co. v. People (1895) 156 111. 448 [41 N.E. 188, 202] [same].)

Like the courts construing the Sherman Act, however, the above cited common law cases condemning mergers all involved clear, actual threats to competition, not merely incipient threats to competition. And, as explained above, the Attorney General in this case alleged at most an incipient threat.

Moreover, the Cartwright Act (like most states’ antitrust statutes) departed from the common law in a significant way. “Illegality” under the common law meant only that an agreement was void and unenforceable (United States v. Addyson Pipe & Steel Co. (6th Cir. 1898) 85 Fed. 271, 279), or subject to “prosecution by the state by quo warranto . . . .” (Distilling & Cattle, supra, 41 N.E. 188, 203; see also Rush, supra, 18 Mo. L.Rev. 215, 219, and cases cited.) Under the Cartwright Act, however, an “illegal” agreement is subject to, inter alia, civil damage awards and criminal punishment. In light of the dramatically enhanced sanctions imposed by the Act, we see no anomaly in the view that the drafters of the Cartwright Act intended to make their law applicable only to situations in which the parties improperly collude and continue as separate, independent entities, and not to situations in which, by virtue of purchase and sale, or merger, one or more of the entities ceases to exist. The drafters could reasonably have believed that the existing remedy at common law under the line of cases following Buhl, supra, 43 N.W. 1102, Chicago Gas, supra, 22 N.E. 798, and Distilling & Cattle, supra, 41 N.E. 188, was sufficient to address the anti-competitive effects posed by the latter type of transaction.¹⁹

In sum, we conclude that the Attorney General’s interpretation of the Cartwright Act—far from being consistent with the common law—would in fact require a dramatic expansion of the common law. Nothing in the common law compels the Attorney General’s interpretation of the Act.

4. Breadth of the Cartwright Act

Ultimately, the Attorney General’s view that the Cartwright Act applies to mergers is not supported by analogy to the Sherman Act or the common law. As shown above (i) the Sherman Act is not, contrary to our past statements, directly probative on interpretation of the Cartwright Act; (ii) the cases under both the Sherman Act and the common law show at most a willingness to allow challenges to mergers that actually restrain competition, and not those that pose merely an incipient threat to competition; and (iii) in any event, the remedy at common law was different in kind from that available under the Cartwright Act—invalidation of the “illegal” agreement, etc., as opposed to civil or criminal sanctions. At bottom, therefore, the Attorney General resorts to the propositions that (a) the acts of Texas, Michigan and numerous other states, and the cases interpreting those acts, are insignificant indicators of the drafters’ intent; (b) the Cartwright Act is more expansive than both of its other putative sources (Sherman Act and common law); and (c) the Cartwright Act essentially embodies the later-enacted section 7 of the Clayton Act, which as noted above allows challenges to mergers in their incipiency.

For the reasons set out above, we conclude that the 1889 Texas act and the 1899 Michigan act, the interpretation of those acts in Gates, supra, 39 S.W. 1079, and Davis, supra, 127 Fed. 875, 131 Fed. 31, and the striking similarity of the Cartwright Act to those laws, together with the enactment by three states—including Texas—of express antimerger provisions, clearly indicates that the drafters did not intend the Cartwright Act to apply to a purchase and sale agreement, or a merger, between otherwise competing firms.

Nor can we agree that the Cartwright Act is somehow broader than the Sherman Act and the common law. For this proposition, the Attorney General cites our statement in Palsson, supra, 16 Cal.3d 920, that the bill proposed in the United States Senate by Senator Reagan—on which our act was purportedly based—“was designed not to narrow the scope of the Sherman Act but to broaden it.” (Id., at p. 926.) As we have explained above, however, our shorthand description of the Act’s derivation in Pals-son, although adequate for proposes of our analysis in that case, was not completely accurate: The Cartwright Act was modeled after the original Texas act of 1889 and the Michigan act of 1899, not the Reagan bill. (See ante, fn. 14.) Even assuming, however, that our Act might be in some respects broader than the Sherman Act, we find nothing to indicate that the Act was intended to be broader than—or even equal to—the Sherman Act on the question of merger coverage.

In the same vein, the Attorney General also rests on dicta from our recent decision in Cianci, supra, 40 Cal.3d 903, to the effect that the Cartwright Act is “broader in range and deeper in reach than the Sherman Act” (id., at p. 920), and that it “reaches beyond the Sherman Act to threats to competition in their incipiency—much like section 7 of the Clayton Act . . .—and thereby goes beyond ‘clear-cut menaces to competition’ in order to deal with merely ‘ephemeral possibilities’ [citations].” (Id., at p. 918.) In view of the evidence to the contrary, Cianci’s conclusory and substantively suspect dicta²⁰ simply cannot support the Attorney General’s claim. In light of (i) the authoritative construction of identical language in similar state laws and (ii) the existence (in at least three states) of explicit merger regulations at the time of the Cartwright Act, we believe that the Legislature did not intend for the Act to reach a merger or acquisition.²¹

III. Application of the Unfair Practices Act to Mergers

The Unfair Practices Act, Business and Professions Code, section 17000 et seq., defines “unfair competition” as, inter alia, “unlawful, unfair or fraudulent business practice . . . .” (Id., § 17200, italics added.) As we have said, the statute is directed at “ ‘on-going wrongful business conduct’ . . . .” (People v. McKale (1979) 25 Cal.3d 626, 632 [159 Cal.Rptr. 811, 602 P.2d 731].) Thus the “practice” requirement envisions something more than a single transaction, as in this case; it contemplates a “pattern’ ... of conduct” (Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 108 [101 Cal.Rptr. 745, 496 P.2d 817]), “on-going . . . conduct” (id., at p. Ill), “a pattern of behavior” (id., at p. 113), or “a course of conduct.” (Ibid.) No such “practice” is alleged or shown here. The mere fact that the Attorney General asserts in his brief that defendants have engaged in certain unlawful practices in the past, and may do so in the future, is not enough. The complaint attacks only the merger, and no ongoing conduct; hence, it does not state a cause of action under Business and Professions Code section 17200.

IV. Conclusion

We conclude that neither the Cartwright Act, nor the Unfair Practices Act, was intended to apply to a merger. The judgment of the Court of Appeal is affirmed.

Panelli, J., Arguelles, J., and Eagleson, J., concurred.

1 Several days after oral argument in this case, defendant Texaco petitioned under the federal bankruptcy law for protection from creditors. Thereafter the United States Bankruptcy Court, Southern District of New York, approved by order a stipulation between the parties in this suit. The stipulation provides that the parties desire this appeal be determined by this court and that “[njeither Texaco nor the Attorney General shall use the pendency of Texaco’s [bankruptcy] case as a basis to challenge the other party’s right to proceed with the pending appeal in [this] litigation.”

2 As discussed below, this was the accepted interpretation of “combination” when the statute was enacted. (See post, part II.C.l.b.; cf., G.H.I.I. v. MTS, Inc. (1983) 147 Cal.App.3d 256, 266 [195 Cal.Rptr. 211, 41 A.L.R.4th 653] [suggesting similar interpretation]; Bondi v. Jewels by Edwar, Ltd. (1968) 267 Cal.App.2d 672 [73 Cal.Rptr. 494] [same].)

3 Although overlooked by some prominent commentators who have focused on the history of the federal antitrust laws, it has been correctly observed that “the first legislation spawned by the national antitrust movement of the late nineteenth century occurred at the state level.” (Thorelli, The Federal Antitrust Policy: Origin of An American Tradition (1955) pp. 155-157; Rubin, supra, 26 U. Fla. L.Rev at p. 657, and fn. 21.) Indeed, it appears from the debates of the Sherman Act, and the language of the Clayton Act, that Congress borrowed liberally from state statutes of the day (in addition to the common law). On the subject of mergers, for example, compare the acts of Texas (1899), Mississippi (1900), Texas (1903), and Arkansas (1905), all discussed post, pages 1159-1160, with the original language of the Clayton Act (38 Stats. 730 (1914)).

4 (1890 Miss. Laws, ch. 36.) Still, the Texas law was well publicized in this early period. The Texas bill was presented at conventions of state legislators in 1889 and 1890, and “this attention . . . resulted in several states copying [the Texas bill].” (Mathews, supra, Texas Antitrust Laws, pp. 29-30; see also Cotner, supra, at pp. 165-166.)

5 See Letwin, Congress and the Sherman Antitrust Law: 1887-1890 (1956) 23 U. Chi. L.Rev. 221, 249-255; Rubin, supra, 26 U. Fla. L.Rev. 653, 661, footnote 38; Thorelli, supra, at pages 210-214.

6 (1890 La. Acts, No. 86; 1905 Neb. Laws, ch. 162, §§ 1, 2.)

7 In addition to the initial round of states that adopted the Kansas-Maine format {ante, p. 1154), at least five more states adopted that format. (1891 111. Laws, p. 206; 1897 S.C. Acts, No. 265; 1899 Ark. Acts 41; 1907 Wis. Laws, § 1791], pp. 432-433; 1907 Ind.Acts, ch. 243.) Moreover, a number of states, some of which had previously embraced the Texas format, subsequently enacted a law using the Kansas-Maine format. (See the laws of Kansas, Texas, and Mississippi, post, fn. 9.)

8 It is widely recognized that the 1889 Texas act served as the model for a number of state acts that followed it. (Rubin, supra, 26 U. Fla. L.Rev. 653, 659; Mathews, Texas Antitrust Laws, pp. 29-30.) In addition to the initial laws of Mississippi and Ohio (see 1890 Miss. Laws, ch. 36; 1898 Ohio Laws, p. 143), the Texas act appears to have been the model for the subsequent acts of Kansas, Michigan, North Dakota, South Dakota, Nebraska, as well as forming the basis for later revisions of the Texas antitrust acts. (See post, fn. 9.)

9 Texas enacted a new act, similar in all relevant respects to its first, in 1895. (1895 Tex. Gen. Laws, ch. 83.) Mississippi, in 1900, and Texas, in 1899, switched from the Texas format to the Kansas-Maine format. (1900 Miss. Laws, ch. 88; 1899 Tex. Gen. Laws, ch. 146.) Missouri reenacted its Kansas-type act in 1891 (Mo. Laws, p. 186) and did so again in 1895 (Mo. Laws, p. 237). Texas then switched, as did five other states, from the Kansas-Maine format to the Texas format. (1903 Tex. Gen. Laws, ch. 94; 1897 Neb. Laws, ch. 79; 1897 Kan. Sess. Laws, ch. 265; 1897 S.D. Laws, ch. 94; 1899 Mich. Pub. Acts, No. 255; 1905 N.D. Laws, ch. 188.) In 1893, and again in 1897, Illinois reenacted Kansas-type laws (III. Laws, p. 89; 111. Laws, p. 298). In 1899 Kansas returned to its original format, and Missouri again reenacted a Kansas-type law (1899 Kan. Sess. Laws, ch. 293; 1899 Mo. Laws, p. 314). In 1905, Nebraska switched to a format following the Sherman Act. (1905 Neb. Laws, ch. 162.) Tennessee reenacted a law following the Kansas scheme (1903 Tenn. Pub. Acts, ch. 140), and Michigan returned to a Kansas-type law. (1905 Mich. Pub. Acts, No. 229.) Arkansas reenacted a Kansas-type law (1905 Ark. Acts, No. 1). Finally, Missouri continued to tinker with its Kansas-type law. (1907 Mo. Laws, p. 377.) At least one state enacted a law that combined attributes of the two formats. (1892 La. Acts, No. 90.)

10 The court first confronted the meaning of the term in Texas & P. Coal Co. v. Lawson (1896) 89 Tex. 400 [34 S.W. 919]. In that case, a coal company leased some of its land to a saloon owner. The contract provided the company would lease to no other saloon; that it would pay its employees by check, not money; and that the saloon would accept the checks as payment, and remit to the company two-thirds of the profits as rent. The court held this illegal under the statute because “the contract provided, not only for the union or association by the parties of their capital, but also for their united and associated action, during the entire term, in furtherance of the common object, and was, therefore, a ‘combination of capital’ and ‘acts.’ ” (Id., at p. 920.)

Similar decisions focusing on the definition of “combination” were handed down thereafter. (See Welch v. Phelps & Bigelow Windmill Co. (1896) 89 Tex. 653 [36 S.W. 71] [“The purpose of the statute was to prohibit ‘two or more persons,’ etc., from uniting or associating their otherwise independent, separate, and possibly competing ‘capital, skill, or acts’ . . .”]; Texas Brewing Co. v. Templeman (1896) 90 Tex. 277 [38 S.W. 27, 28]; Fuqua v. Pabst Brewing Co. (1896) 90 Tex. 298 [38 S.W. 29, 30].)

11 See post, footnote 14.

12 (E.g., 1899 Tex. Gen. Laws, ch. 146, §§ 2, 3, 4, 13; 1903 Tex. Gen. Laws, ch. 94, §§ 2, 4; 1900 Miss. Laws, ch. 88, § 2; 1905 Neb. Laws, ch. 162, § 2; see also 1889 Tenn. Pub. Acts, ch. 250, § 1; 1890 La. Acts, No. 86, § 3; 1907 Ind. Acts, ch. 243, § 2.)

13 Eleven years earlier, a commentator had recommended prohibiting corporations from holding or controlling, directly or indirectly, the stock of another corporation. (Stimson, Trusts (1888) 1 Harv.L.Rev. 132, 143.)

14 Comparison of selected relevant language (and enforcement provisions) from the various acts and the Reagan bills of 1889 and 1890 demonstrates that the Cartwright Act, although similar in many respects to the Reagan bill of 1890, is more similar to the Texas and Michigan acts. Comparison also discloses that the language of the Cartwright Act has very little in common with that of the Sherman Act. By way of example, some key passages are set out below, with deviation from the words and punctuation of the Cartwright Act noted by underscoring.

The Cartwright Act. As originally enacted, the Cartwright Act read: “A trust is a combination of capital, skill or acts by two or more persons, firms, partnerships, corporations or associations of persons, or of any two or more of them for either, any or all of the following purposes: []]] 1. To create or carry out restrictions in trade or commerce. ...[([] 5. To make or enter into or execute or carry out any contracts, obligations or agreements of any kind or description, . . . so as to directly or indirectly preclude a free and unrestricted competition among themselves, . . . or by which they shall agree to pool, combine or directly or indirectly unite any interests that they may have connected with the sale or transportation of any such article or commodity, that its price might in any manner be affected. . . .” (Stats. 1907, ch. 530, § 1 (1) & (5), pp. 984-985.)

The Reagan Bill of 1888. This bill read: “That a trust is the combination of capital — or skill... by two or more persons . . for . . . the following purposes: []|] First. To create or carry out restrictions on trade . . . . []]] Fourth. To create a monopoly. . ” (19 Cong.Rec. p. 7512.)

The Texas act of 1889. The original Texas act expanded the scope and specified the reach of the 1888 Reagan bill by rewriting the first sentence, and adding a fifth paragraph. It also narrowed the reach of the act by deleting the monopoly provision. It read as follows: “That a trust is a combination of capital, skill, or acts by two or more persons, firms, . . . corporations, or associations of persons, or of either two or more of them for either, any, or all of the following purposes: First—To create or carry out restrictions in trade . . . . Fifth—To make or enter into, or execute or carry out any contract_, obligation, or agreement_of any kind or description___ .to . . . preclude a free and unrestricted competition among themselves — . . . or by which they shall agree to pool, combine, or . . . unite any interest_that they may have in connection with the sale or transportation of any such article or commodity_ that its price might in any manner be affected. . . . ” (1889 Tex. Gen. Laws, ch. 117, § 1.) The acts of Mississippi and North Dakota closely follow this language. (1890 Miss. Laws, ch. 36, § 1; 1905 N.D. Laws, ch. 188, § 1.)

The Reagan bill of 1890. This second Reagan bill copied the first sentence of the above act, replaced the monopoly provision, renumbered the final sentence as paragraph six, copied the first half of that sentence from the above act, and made syntax and punctuation changes in the last half of that sentence. It read as follows: “That a trust is a combination of capital, skill, or acts by two or more persons, firms, . . . corporations, or associations of persons, or of any two or more of them for either, any, or all of the following purposes: [U] First. To create or carry out restrictions in trade . . . [[]] Fifth. To create a monopoly . . . . [1J] Sixth. To make or enter into or execute or carry out any contract, obligation, or agreement_of any kind or description — ... so as to . ■ . preclude . . . free and unrestricted competition among themselves — . . or by which they shall agree to pool, combine, or . . . unite any interest — . . . they may have connected with the sale or transportation of any such article or commodity — that its price may, in any manner, be so affected....” (21 Cong.Rec. p. 2456 (1890).) "

The Michigan act of 1899. This act modified the first sentence by adding the word “partnerships,” substituting “arts” for “acts,” and deleting some punctuation. It also deleted the monopoly provision, added an opening clause to the fifth paragraph, made plural that paragraph’s list of “contracts, obligations or agreements,” added the phrase “directly or indirectly” in two places in the middle of that sentence, and modified (consistently with the 1889 Texas act) the syntax of the final clause of the last sentence (“that its price might in any manner be affected. . . .”). It read: “That a trust is a combination of capital, skill or arts by two or more persons, firms, partnerships, corporations or associations of persons, or of any two or more of them for either, any or all of the following purposes: [fl] 1. To create or carry out restrictions in trade or commerce;. . . [H] 5. It shall hereafter be unlawful. . . [t]o make or enter into or execute or carry out any contracts, obligations or agreements of any kind or description, ... so as to directly or indirectly preclude a free and unrestricted competition among themselves,. . . or by which they shall agree to pool, combine or directly or indirectly unite any interests that they may have connected with the sale or transportation of any such article or commodity, that its price might in any manner be affected. . . .” (1899 Mich. Pub. Acts, No. 255, § 1 (1) & (5).) Michigan, in turn, appears to have followed the language of the Ohio act of 1898. (See Ohio Laws, p. 143 et seq., § 1 (1) & (5).)

(The language of the Sherman Act, by contrast, differed substantially from all of the above. See ante, pp. 1155-1156, quoting 15 U.S.C. §§ 1, 2.)

In addition to the above noted differences in language and coverage between the Reagan bills and the Cartwright Act, we also note that the two Reagan bills differed in another significant respect from the Cartwright Act, and from the acts of Texas and Michigan: Unlike the latter acts, the Reagan bills contained essentially no enforcement provision. (Compare 19 Cong.Rec. 7512-7513 (1888), and 21 Cong.Rec. 2456 (1890), with 1889 Tex. Gen. Laws, ch. 117, §§ 2-5, 7-9; 1899 Mich. Pub. Acts, No. 255, §§ 2-3, 5-6, 11; and Stats. 1907, ch. 530, §§ 2-3, 5-6, 11.) This, together with the striking similarity between the enforcement provisions of the three acts, further indicates that the Cartwright Act was modeled after the Texas and Michigan acts, and not the Reagan bills or the Sherman Act.

15 Additionally, it is clear that our Legislature is well aware of the Clayton Act, section 7 of which expressly regulates mergers. (15 U.S.C. § 18; see post, fn. 18.) In 1961 the Legislature enacted Business and Professions Code section 16727, essentially adopting section 3 of the Clayton Act (15 U.S.C. § 14), which deals with exclusive dealing arrangements.

16 The antimerger provisions of the original three states remain in effect today. (Tex. Bus.& Comm. Code Ann., § 15.05(d); Miss. Code Ann., § 75-21-13; Ark. Code Ann., § 4-75-301.)

We note that the Uniform State Antitrust Act (1974) does not contain an antimerger provision. This may reflect some commentators’ concern about the propriety of such state regulation. (See Rubin, supra, 26 U.Fla. L.Rev. 653, 731, 723, fn. 502, and authorities cited.) The drafters of at least one modern state antitrust statute specifically declined to adopt the Clayton Act, which, inter alia, regulates mergers. (See 15 U.S.C. § 18; corns., 111. Stat. Ann., ch. 38, § 60 et seq., p. 441 [drafters’ comments on 1965 111. Laws, p. 1943].)

17 (E.g., Von Kalinowsky & Hanson, The California Antitrust Laws: A Comparison With the Federal Laws (1959) 6 UCLA L.Rev. 533, 553; but see Folsom & Fellmeth, California Antitrust Law and Practice (1983) § 45, pp. 37-38; Lowell v. Mother’s Cake & Cookie Co. (1978) 79 Cal.App.3d 13, 23 [144 Cal.Rptr. 664, 6 A.L.R.4th 184]; Munter v. Eastman Kodak Co. (1915) 28 Cal.App. 660, 666 [153 P. 737] [dicta].)

We need not decide the Attorney General’s claim that the Cartwright Act reaches monopolistic practices by individual firms, because the Attorney General’s complaint does not allege a monopoly.

18 See Kintner, supra, section 10.77, page 292 (Section 7 of the Clayton Act “was designed to reach acquisitions and mergers before they accomplished their anticompetitive effects. [It] was to reach ‘incipient monopolies and trade restraints’ which would otherwise be immune from attack under the Sherman Act. Therefore, the Clayton Act speaks in terms of probabilities rather than actualities. The Government need not show that a lessening of competition has already occurred, or that it will certainly occur; instead, the Clayton Act merely requires that it is probable that competition will be substantially lessened by the transaction.”). (Italics added.)

19 The Attorney General did not challenge the merger on common law grounds, and we do not address the issue here.

20 Cianci’s dicta is evidently based on Business and Professions Code section 16720, subdivision (e)(4), which prohibits certain activity respecting “ ‘any . . . article or commodity, that its price might in any manner be affected.’ ” (40 Cal.3d at p. 918, italics added in Cianci.) This provision—including the underscored phrase—appears in the original Texas act of 1889, and most acts following it. (See 1889 Tex. Gen. Laws, ch. 117, § 1; e.g., 1890 Miss. Laws, ch. 36, § 1; 1897 Kan. Sess. Laws, ch. 265, § 1; 1897 Neb. Laws, ch. 79, § 1; 1898 Ohio Laws, p. 143, § 1(5); 1899 Mich. Pub. Acts No. 255, § 1(5); N.D. Laws, ch. 188, § 1.) We are aware of no case construing this language as suggested by Cianci’s dicta.

21 To the extent it is inconsistent with our conclusion, we disapprove dicta in Munter, supra, 28 Cal.App. 660, 666.