HRS § 480-4 - Combinations in restraint of trade, price-fixing and limitation of production prohibited

(a) Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce in the State, or in any section of this State is illegal. (b) Without limiting the generality of subsection (a), no person, exclusive of members of a single business entity consisting of a sole proprietorship, partnership, trust, or corporation, shall agree, combine, or conspire with any other person or persons, or enter into, become a member of, or participate in, any understanding, arrangement, pool, or trust, to do, directly or indirectly, any of the following acts, in the State or any section of the State: (1) Fix, control, or maintain the price of any commodity; (2) Limit, control, or discontinue, the production, manufacture, or sale of any commodity for the purpose or with the result of fixing, controlling or maintaining its price; (3) Fix, control, or maintain, any standard of quality of any commodity for the purpose or with the result of fixing, controlling, or maintaining its price; (4) Refuse to deal with any other person or persons for the purpose of effecting any of the acts described in paragraphs (1) to (3). (c) Notwithstanding subsection (b) and without limiting the application of subsection (a), it shall be lawful for a person to enter into any of the following restrictive covenants or agreements ancillary to a legitimate purpose not violative of this chapter, unless the effect thereof may be substantially to lessen competition or to tend to create a monopoly in any line of commerce in any section of the State: (1) A covenant or agreement by the transferor of a business not to compete within a reasonable area and within a reasonable period of time in connection with the sale of the business; (2) A covenant or agreement between partners not to compete with the partnership within a reasonable area and for a reasonable period of time upon the withdrawal of a partner from the partnership; (3) A covenant or agreement of the lessee to be restricted in the use of the leased premises to certain business or agricultural uses, or covenant or agreement of the lessee to be restricted in the use of the leased premises to certain business uses and of the lessor to be restricted in the use of premises reasonably proximate to any such leased premises to certain business uses; (4) A covenant or agreement by an employee or agent not to use the trade secrets of the employer or principal in competition with the employee's or agent's employer or principal, during the term of the agency or thereafter, or after the termination of employment, within such time as may be reasonably necessary for the protection of the employer or principal, without imposing undue hardship on the employee or agent. (d) Except as provided in subsection (c)(4), it shall be prohibited to include a noncompete clause or a nonsolicit clause in any employment contract relating to an employee of a technology business. The clause shall be void and of no force and effect. As used in this subsection: "Information technology development" means the design, integration, deployment, or support services for software. "Noncompete clause" means a clause in an employment contract that prohibits an employee from working in a specific geographic area for a specific period of time after leaving employment with the employer. "Nonsolicit clause" means a clause in an employment contract that prohibits an employee from soliciting employees of the employer after leaving employment with the employer. "Software development" means the creation of coded computer instructions. "Technology business" means a trade or business that derives the majority of its gross income from the sale or license of products or services resulting from its software development or information technology development, or both. A "technology business" excludes any trade or business that is considered by standard practice as part of the broadcast industry or any telecommunications carrier, as defined in section 269-1, that holds a franchise or charter enacted or granted by the legislative or executive authority of the State or its predecessor governments. [L 1961, c 190, §2; Supp, §205A-2; am imp L 1967, c 49, §1; HRS ; gen ch 1985; am L 2015, c 158, §2] Cross References Actions to enforce noncompetition agreements, see §607-14.9. Law Journals and Reviews Non-Compete Clauses in Physician Employment Contracts are Bad For Our Health. 14 HBJ, no. 13, at 79 (2011). Case Notes Applies only to commerce in the State. 518 F.2d 913. Insufficient evidence of unlawful conspiracy to require all contractors to contribute to contractor's association fund. 809 F.2d 626. Mentioned in discussing availability of estoppel as defense in private antitrust action. 296 F. Supp. 920. Important factors in determining predatory pricing include: timing of the price cut; particular growth cycle of the firm; circumstances and duration of the price cut. 513 F. Supp. 726. Mere formality of separate incorporation is not, without more, sufficient to provide the capability for conspiracy. Parent corporation controlled subsidiary to such a degree that the two entities in substance constitute a single entity incapable of conspiring with itself. 513 F. Supp. 726. Action by shopping center tenant against shopping center owner. 530 F. Supp. 499. Large landowner's parallel lease-only policy not unlawful conspiracy; standardization of leases not price-fixing. 594 F. Supp. 1480. No standing to sue for price-fixing and monopoly since no showing that alleged price-fixing caused injury. 606 F. Supp. 584. Preempted by federal labor regulations. 687 F. Supp. 1453. Salesman's Agreement imposed reasonable restrictions on former employees' contacts with customers where, inter alia, (1) restrictions regarding customer contact were limited to two years following termination; and (2) an employee was not prohibited from working for a competitor, but only in assisting the competitor in selling products that were competitive with the employer's products; even that restriction applied only when contacting certain customers. 18 F. Supp. 2d 1116. Where defendant, a wholesale food marketer and distributor, asserted that plaintiff, a common carrier, engaged in an illegal tying arrangement and that plaintiff worked in concert with another carrier to impair competition, defendant presented no genuine issue of material fact with respect to its claim for concerted action, and presented a viable claim under this section for an illegal tying arrangement. 61 F. Supp. 2d 1092. Defendants' motion for summary judgment on plaintiffs' claim under this section granted; although the word "commodity" was defined to include "any other business", the purchase of real estate by an individual owner could not be considered a business. 338 F. Supp. 2d 1106. Mentioned, where plaintiff alleged that defendants' practice of imposing maximum price restrictions in rebate program for the installation of solar water heaters violated state and federal antitrust law, and summary judgment granted for defendants on plaintiffs' claims based on Sections 1 and 2 of the Sherman Act and state antitrust claims. 409 F. Supp. 2d 1206. Restraints in subsection (c) are not the only allowable types; others that are not per se violations of chapter 480 are valid if deemed reasonable. 57 H. 113, 551 P.2d 163. A parent-subsidiary corporate relationship without more is generally insufficient to establish capacity for unlawful conspiracy. 63 H. 289, 627 P.2d 260. Where economic interest of corporation's officer/majority shareholder's was the same as that of corporation's two wholly-owned subsidiaries, officer/majority shareholder could not conspire with the corporation for purposes of §480-9 or this section. 91 H. 224, 982 P.2d 853. Where the two companies were wholly-owned subsidiaries of the same parent corporation and shared a singular economic interest, they could not constitute a plurality of actors for purposes of a conspiracy under §480-9 or this section. 91 H. 224, 982 P.2d 853.