California Adopts COMPETE Act

Summary

On September 30, 2026, Governor Gavin Newsom signed into law Assembly Bill 1776 (“AB 1776”), enacting the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy (the “COMPETE Act” or the “Act”),[1] which expands the Cartwright Act to prohibit single-firm monopolization and monopsonization. Until now, the Cartwright Act only prohibited unreasonable restraints of trade between two or more firms but did not reach unilateral conduct. With enactment of the COMPETE Act, California’s Cartwright Act will reach single-firm conduct.

The COMPETE Act will be enforced by California’s Attorney General and local district attorneys. Private plaintiffs can neither sue under the COMPETE Act nor use violations of the new section as a predicate for claims under California’s Unfair Competition Law (“UCL”).

The COMPETE Act

The Cartwright Act is California’s principal competition law. It has long prohibited unreasonable restraints of trade, which require participation by more than one person. Until now, the Cartwright Act did not reach unilateral anticompetitive conduct. As a result, plaintiffs have had to turn to Section 2 of the Sherman Act to bring such claims. The COMPETE Act expands the Cartwright Act by prohibiting monopolization and monopsonization, bringing unilateral anticompetitive conduct directly within the bounds of California’s competition laws. The Act also explicitly directs courts to interpret this prohibition more broadly than the federal Sherman Act.

The Act precludes private plaintiffs from bringing claims under the new section, reserving that authority for California’s Attorney General and district attorneys.

Prohibited Conduct

The COMPETE Act makes it “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.”[2]

The Act instructs courts to analyze claims under the familiar antitrust framework that the Supreme Court of California adopted in In re Cipro Cases I & II.[3] That framework generally requires plaintiffs to prove anticompetitive effects of the challenged conduct and then allows defendants to show any procompetitive justifications for that conduct.[4] In addition to adopting the Cipro framework, the Act requires that Plaintiffs prove that the defendant has “substantial market power” using “direct or indirect evidence.”[5]

The scope of the COMPETE Act departs from federal law in a few critical ways. The COMPETE Act confirms that the Cartwright Act is “broader in range and deeper in reach” than the Sherman Act, and that interpretations of the Sherman Act are “at most instructive” for construing the COMPETE Act.[6] The Act instructs courts 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,”[7] including for violations of the law that impact labor markets.[8]

Proper Plaintiff

Only the California Attorney General and district attorneys in California may bring actions for a violation of the new section[9] or use the violation as a predicate for a UCL claim.[10] Private plaintiffs thus cannot take advantage of the broader prohibitions on unlawful monopolies or monopsonies under this statute, whether directly or through the UCL. Instead, they must continue to rely on other antitrust statutes, such as Section 2 of the Sherman Act.

An earlier version of the bill would have permitted claims by private plaintiffs, but that private right of action was removed after concerns were raised about a potential explosion of new litigation.

Liability Carve-outs

The COMPETE Act exempts small local businesses based in California with 100 employees or fewer and gross receipts of $10 million or less.[11] The Act also exempts various types of business practices carried out in connection with the government. For example, the Act explicitly does not prohibit exclusive franchises, contracts, licenses, or permits granted and supervised by a federal, state, or local government agency.[12] Nor can there be liability for conduct within the scope of authority granted by such documents.[13] Finally, the Act does not prohibit “conduct required or authorized pursuant to state or federal law that is granted and supervised by a local, state, or federal government agency.”[14]

Remedies

State and local prosecutors enforcing the COMPETE Act will be able to pursue the remedies that they can seek in other Cartwright Act actions. In civil suits, prosecutors can obtain treble damages, injunctive relief, and civil penalties.[15] If they bring UCL claims with COMPETE Act violations as predicates, they can also obtain injunctive relief (including restitution) and civil penalties.[16] Those remedies are cumulative.[17] In addition, prosecutors can initiate criminal proceedings under the Cartwright Act and seek fines and other criminal remedies.[18] While prosecutions under the Cartwright Act have been rare, the California Attorney General’s Office has expressed interest in utilizing its criminal enforcement authority.

Implications

The COMPETE Act is a notable expansion of California’s competition laws, albeit one that can only be enforced by public officials. Clients who conduct business in California should consider in their compliance programs the broad reach of the new monopolization statute.