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SB-1381 Unfair practices: sale of dairy products below cost.(1999-2000)

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SB1381:v96#DOCUMENT

Senate Bill No. 1381
CHAPTER 164

An act to amend Section 61384 of, and to repeal Sections 61371, 61371.5, 61372, 61373, 61375, 61375.5, 61376, 61377, 61378, 61378.5, and 61379 of, the Food and Agricultural Code, relating to dairy products.

[ Filed with Secretary of State  July 21, 2000. Approved by Governor  July 21, 2000. ]

LEGISLATIVE COUNSEL'S DIGEST


SB 1381, Costa. Unfair practices: sale of dairy products below cost.
Existing law, except as specified, makes it a misdemeanor to engage in various unfair practices in the marketing of milk, cream, or other dairy products, including the sale by any wholesale customer, manufacturer, or distributor of milk, cream, or other dairy product at less than “cost,” as defined.
This bill would repeal all of the above provisions setting forth unfair practices, except that, with respect to the provision prohibiting the sale by any wholesale customer, manufacturer, or distributor of milk, cream, or other dairy product at less than cost, the bill would instead extensively revise the definition of “cost,” as specified, and make the provision also applicable to any retailer ; set forth activities that are not prohibited by the provision; and require the Secretary of Food and Agriculture to establish, by regulation, specified procedures necessary or appropriate to facilitate the application or enforcement of the provision. By revising an existing crime, this bill would impose a state-mandated local program upon local government. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

The people of the State of California do enact as follows:


SECTION 1.

 Section 61371 of the Food and Agricultural Code is repealed.

SEC. 2.

 Section 61371.5 of the Food and Agricultural Code is repealed.

SEC. 3.

 Section 61372 of the Food and Agricultural Code is repealed.

SEC. 4.

 Section 61373 of the Food and Agricultural Code is repealed.

SEC. 5.

 Section 61375 of the Food and Agricultural Code is repealed.

SEC. 6.

 Section 61375.5 of the Food and Agricultural Code is repealed.

SEC. 7.

 Section 61376 of the Food and Agricultural Code is repealed.

SEC. 8.

 Section 61377 of the Food and Agricultural Code is repealed.

SEC. 9.

 Section 61378 of the Food and Agricultural Code is repealed.

SEC. 10.

 Section 61378.5 of the Food and Agricultural Code is repealed.

SEC. 11.

 Section 61379 of the Food and Agricultural Code is repealed.

SEC. 12.

 Section 61384 of the Food and Agricultural Code is amended to read:

61384.
 (a) The sale by any retailer, wholesale customer, manufacturer, or distributor, including any producer-distributor or nonprofit cooperative association acting as a distributor, of milk, cream, or any dairy product at less than cost is an unlawful practice.
(b) For the purposes of this section, the following terms have the following meanings:
(1) “Cost,” as applied to manufacturers and distributors, means the total consideration paid or exchanged for raw product, plus the total expense incurred for manufacturing, processing, handling, sale, and delivery.
(2) “Cost,” as applied to wholesale customers, means the invoice price charged to the wholesale customer, or the expense of replacement, whichever is lower, plus the wholesale customer’s cost of doing business.
(3) “Cost of doing business,” as applied to wholesale customers, means a wholesale customer’s total operating expense divided by the customer’s total sales income.
(4) (A) Except as provided in subparagraph (B), “total consideration paid or exchanged for raw product,” in the case of market milk or market cream, means the applicable minimum price of the market milk or market cream, if any, payable by distributors to producers pursuant to stabilization or marketing plans in effect pursuant to Chapter 2 (commending with Section 61801).
(B) Notwithstanding subparagraph (A), in situations involving sales on a bid basis to public agencies or institutions, the definition in subparagraph (A) shall only apply to market milk or market cream that is utilized for class 1 purposes, as those purposes are defined in Chapter 2 (commencing with Section 61801).
(c) Proof of cost, based on audits or surveys conducted in accordance with generally accepted accounting principles as defined by the American Institute of Certified Public Accountants and the Financial Accounting Standards Board, and modified, if necessary, to satisfy the requirements of this section, shall establish a rebuttable presumption of that cost at the time of the transaction of any sale. This presumption is a presumption affecting the burden of proof, but it does not apply in a criminal action.
(d) Nothing in this section shall be deemed to prohibit any of the following activities:
(1) The meeting, in good faith, of a lawful competitive price or a lawful competitive condition.
(2) A distributor’s action in making conditional sales of equipment or other property, extending credit for merchandise purchased, or paying a customer’s obligations not otherwise prohibited by this chapter to another distributor in connection with the transfer of the customer’s business from the latter to the former.
(e) The secretary shall establish, by regulation pursuant to Section 61341, the procedures which shall be used to make the determinations required by this section, including the following:
(1) Any modifications to the generally accepted accounting principles described in subdivision (c) necessary to satisfy the requirements of this section.
(2) Procedures for evaluating efforts to meet lawful competitive prices or conditions.
(3) Other procedures necessary or appropriate to facilitate the application or enforcement of this section.

SEC. 13.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.