The Antitrust Attorney Blog
Author: Paul Moore
On September 30, 2026, Governor Gavin Newsom signed AB 1776, the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy (COMPETE) Act. Effective January 1, 2027, the law extends California’s Cartwright Act to single-firm monopolization and monopsonization for the first time. New Business and Professions Code section 16731 makes it unlawful to monopolize or monopsonize, attempt to monopolize or monopsonize, maintain a monopoly or monopsony, or combine or conspire with another person to monopolize or monopsonize any part of trade or commerce.
The bill met significant resistance in the Legislature, and the final Act is substantially narrower than the version first proposed. Most significantly, the Legislature:
- removed a standalone prohibition on unilateral conduct that unreasonably restrains trade, leaving the Act focused on monopolization and monopsonization;
- eliminated the private right of action, limiting enforcement to the Attorney General and district attorneys; and
- narrowed the provision by changing the required showing from “market power” to “substantial market power.”
Even so, the Act gives California enforcers a new cause of action against unilateral conduct that previously fell outside the Cartwright Act. Among the Act’s principal provisions:
- Substantial market power. The government must allege, and prove at trial, that the defendant possesses “substantial market power,” through direct or indirect evidence. The statute does not define the term, leaving its development to California courts.
- Independence from federal law. Citing California Supreme Court precedent, the Legislature states that the Cartwright Act is “broader in range and deeper in reach” than the Sherman Act, and that interpretations of federal antitrust law are “at most instructive.”
- Liberal construction. Courts must interpret California antitrust law liberally to promote free and fair competition, mindful of the State’s policy favoring effective deterrence of antitrust violations.
- Labor markets. Protected competition expressly includes competition among businesses for workers.
- Lawful competition. A business may lawfully obtain and maintain market or monopoly power through superior products, services, or business acumen.
- The Act does not apply to qualifying independently owned California small businesses with no more than 100 employees and no more than $10 million in average annual gross receipts over the preceding three years, or to conduct under exclusive franchises, contracts, licenses, or permits granted and supervised by a government agency.
The Act addresses much of the conduct covered by Section 2 of the Sherman Act, but California courts will develop the new cause of action without treating federal precedent as controlling. Its practical scope will depend most on how those courts define and apply “substantial market power” permitting California courts to continue to develop its own antitrust jurisprudence. If you are a company doing business in California, feel free to contact me to help you assess whether their practices toward customers, suppliers, and workers could attract scrutiny under the new provision.
Image by OpenClipart-Vectors from Pixabay