On September 30, 2026, Governor Gavin Newsom (D-CA) signed into law AB 1776—the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy Act (the COMPETE Act). The latest in a series of amendments to the Cartwright Act,1 the COMPETE Act bans monopolization and monopsonization and allows the California attorney general or a California district attorney to bring enforcement actions targeting such conduct.
California’s Cartwright Act, passed nearly 120 years ago, had only barred coordinated conduct between two or more firms until passage of the COMPETE Act. California prosecutors relied on other California laws, such as the Unfair Competition Law (UCL), or on federal antitrust statutes—which often meant removal to federal court—to address allegedly anticompetitive or unfair conduct carried out by a single firm. The COMPETE Act changes that long-term status quo and brings single-firm monopolization and monopsonization squarely within reach of state antitrust law and state courts.
The Act takes effect on January 1, 2027. Firms doing business in California and California-based firms meeting the 100-employee and $10 million revenue threshold for application of the Act should carefully evaluate the COMPETE Act. The Act is written broadly and directs courts to develop standards through common law that may alter or extend standards developed under federal antitrust statutes or under the UCL.
Key provisions in the COMPETE Act include:
- Single Firm Conduct Banned on Sell and Buy Sides: The COMPETE Act renders it unlawful for any 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. Courts are directed to apply the analytical framework set out in a California Supreme Court case, In re Cipro Cases I & II, 61 Cal. 4th 116 (2015).2
- Small Businesses Exempt: The COMPETE Act contains a carveout for any independently owned and operated business with a principal office in California, officers domiciled in California, 100 or fewer employees, and average annual gross receipts of $10 million or less over the three years preceding any enforcement action.
- Relationship to Federal Law: The COMPETE Act states that California antitrust law is “broader in range and deeper in reach” than federal law and that case law interpreting federal law is “at most instructive” for California courts. The Act further cites to several California cases, effectively ratifying their interpretations of California law as requiring a proximate cause test for standing and antitrust injury, lower actionable market shares, and a distinct structured rule of reason analysis. The Act also points to statutory features of California law including indirect purchaser recovery and a broader range of recognized harms and per se violations. California courts are directed to “liberally interpret California’s antitrust laws to best promote free and fair competition and be mindful that California favors ‘maximizing’ effective deterrence of antitrust violations.”
- Substantial Market Power: The Act requires a plaintiff to prove, through either direct or indirect evidence, “substantial market power” to show a violation. The term is not defined in the statute, and the standards developed by California courts may depart from those developed by federal courts, which rarely find monopoly power for shares under 50 percent and generally consider shares of greater than 70 percent sufficient to establish monopoly power.
- No Private Right of Action: Although the Cartwright Act traditionally permits a private entity to bring suit for an alleged violation, the COMPETE Act limits its enforcers to the California attorney general or a California district attorney.
- Relationship to California’s Unfair Competition Law: California’s Unfair Competition Law, in general terms, prohibits business conduct that is unlawful, unfair, or fraudulent. The COMPETE Act explicitly prohibits an alleged COMPETE Act violation from serving as the predicate unlawful, unfair, or fraudulent conduct for a UCL claim, except in actions brought by the California attorney general or a California district attorney. This provision would appear to prevent private plaintiffs from using the UCL to circumvent the elimination of private rights of action under the COMPETE Act. It is unclear whether this provision will be read broadly or narrowly. A broad reading would prohibit UCL claims based on any conduct that could violate the COMPETE Act, which would bar previously available private UCL claims based on, for instance, unilateral conduct violating federal antitrust law. A narrow reading would limit the provision to conduct that violates the COMPETE Act but not any other laws.
- Clarified Pleading Standard Limited in Application: Section 16756.1 of the Cartwright Act, which clarifies that the California pleading threshold requires a plaintiff to allege “plausible” facts showing a violation of the law, does not apply to claims brought under the COMPETE Act unless the claim is one for conspiracy to monopolize or monopsonize; the clarified pleading standard does not apply to claims for monopolization or monopsonization, attempt to monopolize or monopsonize, or maintenance of a monopoly or monopsony.
- Complex Case Designation: Any claim for a violation of the COMPETE Act must be filed as a complex case. The case, therefore, will be assigned to an individual judge, and flexible case management schedules, discovery procedures, and protective orders become available.
- Labor Markets Protected: The COMPETE Act explicitly brings protection of competition for workers within the scope of the Cartwright Act and prohibits anticompetitive business practices that impede workers’ freedom to choose employment.
The final version of the COMPETE Act signed by Governor Newsom differs significantly from the initially introduced AB 1776, which had been modeled on a proposal from the California Law Revision Commission. The original bill would have allowed a private right of action, expressly prohibited balancing competitive effects across markets, prohibited single-firm “restraints of trade,” and limited state courts’ ability to consider federal case law. Even as narrowed, the COMPETE Act represents a dramatic step forward in California antitrust law and provides state enforcers with a powerful new tool.
For more information or advice, please contact any member of the Wilson Sonsini Antitrust and Competition practice.
[1] For more, see our “California Gets Tough on Algorithmic Pricing and Lowers Conspiracy Pleading Standards” alert, available here.
[2] The California Supreme Court, referencing U.S. Supreme Court precedent, rejected a formalistic analytic approach to antitrust and instead directed courts to “devise rules . . . for offering proof, or even presumptions where justified, to make the rule of reason a fair and efficient way to prohibit anticompetitive restraints and to promote procompetitive ones.” 61 Cal. 4th at 146-48.