New California Law Adds Single-Firm Conduct to Cartwright Act: Unilateral Actors Can Be Liable for State Antitrust Violations in Suits Brought by State Enforcers

Monopolizing and monopsonizing will soon be unlawful under California’s Cartwright Act, along with attempts to establish and acts to maintain monopolies and monopsonies. A new law adding state enforcement of single-firm conduct to the state’s primary antitrust statute will take effect January 1, 2027.

California Governor Gavin Newsom signed Assembly Bill 1776 — also called the “COMPETE Act” — into law on September 30, amending the Cartwright Act, Cal. Bus. & Prof. Code §§ 16720, et seq.¹ Enacted in 1907, the Cartwright Act historically has applied only to “a combination” involving two or more actors in restraint of trade and did not extend to unilateral conduct.²

That said, companies facing unilateral conduct allegations in California are not strangers to state enforcement. The Attorney General and local district attorneys already use the California Unfair Competition Law (“UCL”) and Unfair Practices Act (“UPA”) to police unilateral conduct not necessarily linked to market power and have historically looked to Section 2 of the Sherman Act in federal court for straightforward monopolization claims.³ Still, there was a gap in California law’s coverage of unilateral conduct relative to federal law and that of many other states.⁴ As explained in its history and stated purpose, AB 1776 now gives state enforcers a direct, state-law monopolization claim, increasing potential single-firm antitrust exposure for companies doing business in California.⁵

Key Provisions

• Prohibited unilateral conduct: It will be “unlawful for every person 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.” § 16731(a).
• No private right of action: While private plaintiffs may have standing to sue for other Cartwright Act violations, Cal. Bus. & Prof. Code § 16750, under the COMPETE Act, “[a]n action pursuant to this section may be initiated only by the Attorney General or a district attorney.” § 16731(f)(1).
• Proof of substantial market power: The state plaintiff must “allege and, to prevail at trial, prove substantial market power, either through direct or indirect evidence.” § 16731(c).⁶
• Remedies may include fines, treble damages, and injunctive relief: State enforcers could seek up to $1 million per unilateral conduct violation,⁷ injunctive relief,⁸ and, in a parens patriae action brought by the Attorney General on behalf of California residents, treble damages.⁹

California Declines to Treat Federal Antitrust Standards as Binding

The Cartwright Act was modeled after other states’ antitrust laws to address perceived deficiencies with the federal Sherman Act — still a motivating force for California’s lawmakers more than a century later.¹⁰ The California Law Review Commission recommended giving state courts the power to decide unilateral monopoly cases and better address state-specific antitrust issues, writing that “[t]he vertical integration of some of California’s largest industries, as well as the sheer scale of certain digital platforms, present unique competitive challenges not foreseen by the original antitrust law drafters.”¹¹ At the same time, Governor Newsom’s signing statement urged caution that California not get so far out front of the pack on antitrust law as to risk chilling California’s innovation machine: “While I align myself with the stated goal of targeting anti-competitive conduct that harms consumers, workers, and businesses alike, we must be careful not to set the bar too low — dragging legitimate, superior business practices and products into the ambit of anti-competitive behavior.”¹²

AB 1776 purports to distance itself from the Sherman Act, codifying state caselaw treating federal antitrust interpretations as “instructive” only¹³ and describing the Cartwright Act as “broader in range and deeper in reach” than the Sherman Act.¹⁴

When deciding claims for monopolization under the Cartwright Act, courts are instructed to use “the analytical framework and guidance of the California Supreme Court ... in In re Cipro Cases I & I,” (2015) 61 Cal.4th 116, 146-147.¹⁵ Cipro rejected the traditional federal approach where antitrust violations are either per se unlawful or analyzed under the rule of reason, instead allowing courts greater flexibility to tailor a sliding-scale analysis to the circumstances of each case.¹⁶

Substantial Market Power

Liability for single-firm conduct will require proof of “substantial market power” — a term not defined in the bill’s text or commentary, nor codified in federal antitrust law. That means California courts will decide how to interpret “substantial,” and could select a similar, higher, or lower threshold than developed under Sherman Act case law.

“Substantial market power” was not included in the original bill draft¹⁷ or recommended language from the California Law Revision Commission (CLRC),¹⁸ but was raised in public comments to early proposals. Comments quoted in the CLRC’s reports discuss substantial market power as belonging to “dominant, gatekeeping firms” with “the ability to control key platforms or choke points in the market” but do not supply concrete quantitative benchmarks.¹⁹

Some bill opponents wrote that it was “deeply flawed in that it has no market share thresholds.”²⁰ Following these comments, the Committee Chair asked the bill’s authors to add “substantial market power” as an element of the claim.²¹ Its addition without further guidance leaves courts to decide when a company has enough market power to be held liable.

Limitations and Carveouts

AB 1776 is not without limitations. A critical compromise made during the Assembly and Senate process eliminated a proposed private right of action,²² allowing only government enforcers to bring claims. Additionally, the bill exempts small businesses²³ and firms authorized by state government.²⁴

The Impetus for AB 1776

The Cartwright Act works alongside the California Unfair Practices Act and the Unfair Competition Law — two other chapters of the same Business and Professions Code that cover limited anticompetitive conduct by single firms but do not address the gap AB 1776 is designed to fill.

Despite a declared purpose that includes “safeguard[ing] the public against the creation or perpetuation of monopolies,”²⁵ the UPA does not prohibit monopolization itself. Instead, the UPA — which provides a private right of action²⁶ — reaches only specific enumerated conduct such as locality price discrimination,²⁷ below-cost sales,²⁸ loss-leader sales,²⁹ and price discrimination among buyers.³⁰

The UCL is broader, defining “unfair competition” to “include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”³¹ The UCL’s “unlawful” prong borrows violations from other laws, which may sweep in Section 2 of the Sherman Act but rises and falls with the predicate statute.³² The “unfair” prong has a wider reach but may fail for similar reasons³³ or based on the UCL’s tests for finding unfairness.³⁴

The UCL also grants a private right of action,³⁵ which could have allowed private citizens to circumvent AB 1776 by treating it as a predicate violation to bring a unilateral monopolization claim under the UCL. To close this potential loophole, AB 1776 limits the interaction between the two statutes so that a unilateral-conduct claim can serve as a predicate violation under the UCL only when it is brought by the Attorney General or a district attorney in the same action as the Cartwright Act claim.³⁶

Remedies Could Include Fines, Treble Damages, and Injunctive Relief

Aside from barring private damages claims, AB 1776 does not alter the remedies available for Cartwright Act violations, which are cumulative³⁷ and may include criminal penalties.³⁸ In a civil action, potential remedies include up to $1 million per violation,³⁹ injunctive relief,⁴⁰ and if the Attorney General is acting parens patriae on behalf of California residents (or a district attorney is acting on behalf of county residents), treble damages.⁴¹ By using the Cartwright Act as a predicate for “unlawful” conduct, the state could also seek equitable relief available under the UCL, such as restitution⁴² and additional civil penalties.⁴³

The Cartwright Act Continues to Evolve

AB 1776 is the latest step to develop the Cartwright Act into a stronger antitrust enforcement tool. Effective January 1, 2026, a separate amendment (Stats. 2025, ch. 338 (AB 325)) added Section 16729, barring the use or distribution of a “common pricing algorithm” to restrain trade or coerce another person into adopting an algorithmically recommended price or commercial term.⁴⁴ At the same time, the pleading standard for coordinated conduct was lowered to require only plausibility.⁴⁵

We’ll be paying attention as courts begin to interpret these new provisions.