Proposed Expansion of California’s Cartwright Act Passes Senate and Moves to Governor’s Desk

On Sunday, August 30, 2026, the California legislature gave final approval to AB 1776, also known as the COMPETE Act, after the state senate passed the bill and the state assembly concurred in the senate’s amendments. AB 1776 now moves to Governor Newsom’s desk. By September 30, the governor must sign, veto or let the bill automatically become law without his signature. Governor Newsom has not publicly disclosed his view of the bill.

As discussed in our previous client memos on AB 1776 (when it passed the Assembly Committee on Appropriations and when it passed the full assembly), the bill would expand the Cartwright Act, California’s antitrust law, to cover single firm conduct.

Summary of AB 1776

• Extension of Cartwright Act to single firm conduct. The bill extends the Cartwright Act to prohibit monopolization and monopsonization, as well as attempts to monopolize or monopsonize, maintaining a monopoly or monopsony, and combinations or conspiracies to monopolize or monopsonize any part of trade or commerce.

• Substantial-market-power requirement. A plaintiff must allege, and, at trial, prove, substantial market power through direct or indirect evidence. The bill does not define “substantial market power.”

• No private right of action. Only the California Attorney General or a district attorney may bring an action under the new provisions. The private right of action was removed as the bill made its way through the state senate.

• Federal law is instructive but not conclusive. The bill emphasizes that the Cartwright Act is “broader in range and deeper in reach” than the Sherman Act and is not modeled on federal antitrust law. Interpretations of federal antitrust laws are therefore “at most instructive” when construing California’s antitrust laws.

• Labor-market focus. The bill states that “[p]rotecting competition includes protecting competition between businesses when they compete for workers by prohibiting anticompetitive business practices that impede workers’ freedom to choose employment.”

• Competition on the merits. The bill affirms what has been held by California state courts: a business may lawfully obtain and maintain market or monopoly power through superior products, services or business acumen.

• Exceptions and exemptions. The monopolization and monopsonization provisions do not apply to certain small businesses: independently owned and operated businesses that are California-based, have California-domiciled officers and, together with affiliates, have no more than 100 employees and no more than $10 million in average annual gross receipts during the preceding three years. The new provisions also do not limit or prohibit certain government-authorized conduct, nor impose liability for conduct within the scope of that authority.

Practical Takeaways

• No private right of action. Unlike in previous versions of the bill, the new monopolization provisions may be enforced only by the California Attorney General or a district attorney. Private parties may not bring an action under the new provisions.

• Expanding scope of California antitrust law and enforcement. If it becomes law, AB 1776 would be another example of California expanding the scope of its antitrust laws and enforcement powers. Within the past year, California has passed laws to require certain parties to submit their Hart-Scott-Rodino (“HSR”) Act filings to the California Attorney General; increase state civil antitrust penalties and create state criminal antitrust penalties; and restrict the use of common pricing algorithms.

• Increased budget for antitrust enforcement underlines California’s willingness to expand antitrust enforcement efforts. The California state budget, passed in June, includes about $14.3 million for antitrust enforcement. In his budget request, Governor Newsom explicitly noted that “states are now being called upon to step in to lead multiple highly complex and massive cases, which require dozens of litigators per case and significant expert costs.”

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