On September 30, 2026, California Governor Gavin Newsom signed Assembly Bill 1776, known as the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy (COMPETE) Act, into law. The new Act, which will take effect on January 1, 2027, represents the most significant expansion of California antitrust law in decades by extending the reach of the state’s Cartwright Act beyond coordinated conduct by two or more firms to monopolization and monopsonization by a single firm.
The version of the COMPETE Act ultimately enacted is considerably narrower than the legislation proposed earlier this year. Most notably, Senate amendments eliminated a private right of action under the bill’s new provisions, removed a proposed stand-alone prohibition on unilateral restraints of trade, and limited enforcement to the California Attorney General and district attorneys. Nevertheless, the new law provides California with another tool to combat anticompetitive conduct and reinforces the state’s broader trend toward increasingly assertive antitrust enforcement.
Background
The COMPETE Act traces its origins to a 2022 legislative directive instructing the California Law Revision Commission (CLRC) to study whether California antitrust law should be revised to address monopolization by a single company and other perceived gaps in the state’s competition laws. Following a multi-year review involving antitrust academics and practitioners, the CLRC proposed a state-law framework governing single-firm conduct. The CLRC explained that existing California law did not provide a direct analogue to Section 2 of the federal Sherman Act. Specifically, while California’s Cartwright Act prohibited certain anticompetitive agreements, combinations, and conspiracies, it did not provide a generally applicable prohibition on unilateral monopolization.
The CLRC’s recommendation ultimately laid the foundation for AB 1776, which sought to address this limitation in existing California law. As the proposal evolved, earlier versions of the bill would have created a broad state-law framework governing single-firm conduct, including unilateral restraints of trade, monopolization and attempted monopolization, and monopsonization and attempted monopsonization. Those versions also stated that federal antitrust precedent would not bind California courts and included detailed guidance providing that claims could proceed without satisfying specified requirements associated with federal Section 2 doctrine, including, in certain circumstances, defining a relevant market, establishing a specified market-share threshold, or showing likely recoupment of losses from below-cost pricing. Earlier versions also created a private right of action that would have permitted private parties, in addition to public enforcers, to bring claims under the statute.
These provisions drew substantial criticism from opponents, who argued that the bill departed from established federal antitrust doctrine, provided insufficient guidance regarding the scope of unlawful single-firm conduct, and would significantly increase litigation risk for businesses participating in California markets.
Senate Amendments Narrowed the Scope of the Law
During the Senate’s consideration of AB 1776, lawmakers adopted several amendments that narrowed both the available enforcement mechanisms and the scope of liability.
Most notably, the Senate removed the bill’s private right of action. As enacted, actions under the new single-firm conduct provisions may be brought only by the California Attorney General or a district attorney. Private plaintiffs retain any rights available under pre-existing provisions of California antitrust law, but they cannot sue under the Act’s new monopolization framework and, subject to specified exceptions, cannot use an alleged violation of the new provisions as a predicate for a claim under California’s Unfair Competition Law.
Senate amendments also narrowed the statute’s substantive reach. They removed the proposed stand-alone prohibition on unilateral restraints of trade and added a requirement that the government plead and prove “substantial market power” through direct or indirect evidence. The enacted law also recognizes that a business may lawfully obtain or maintain market power or monopoly power through the superiority of its products, services, or business acumen.
In addition, the final version tempers earlier efforts to distinguish California antitrust law from federal precedent. The enacted law states that federal antitrust decisions are, at most, instructive to California courts, but amendments removed language that would have restricted dismissal of claims based on federal antitrust principles and deleted a detailed list of federal standards that earlier drafts had identified as unnecessary. Federal precedent therefore may remain persuasive, even though California courts are directed to interpret California antitrust law independently and to apply a state-specific analytical framework and guidance.
Key Takeaways for Businesses and Industries
Although the elimination of a private right of action represents a meaningful scaling back of the enforcement regime contemplated by earlier versions of the bill, businesses should not assume that the Act is merely symbolic. California has adopted an increasingly assertive antitrust enforcement posture in recent years. The California Attorney General’s Office has played a prominent role in multistate antitrust investigations and litigation, pursued significant state-law competition cases, and devoted increasing resources to competition enforcement across a range of industries and conduct. California’s commitment to antitrust enforcement is further reflected in its growing competition-enforcement resources, with the state's 2026-27 budget providing approximately $14.3 million for antitrust litigation by the Attorney General’s Office and expressly citing an anticipated increase in antitrust investigations and litigation as California expands its role in competition enforcement.
Against this backdrop, companies with significant market positions should evaluate their pricing, distribution, purchasing, employment, and other competitive practices in anticipation of potential scrutiny from California antitrust enforcers. Businesses should also monitor guidance and judicial decisions interpreting unresolved terms and standards, particularly “substantial market power.” To that end, businesses should also note that Governor Newsom’s signing message struck a more moderate tone than some earlier iterations of the legislation, emphasizing that substantial market power is a necessary but not sufficient condition for liability, cautioning against treating legitimate, superior business practices or products as anticompetitive, and signaling an expectation that courts and enforcers will apply the law in a manner that targets clear anticompetitive misconduct without creating unnecessary uncertainty for lawful and vigorous competition.
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