On January 30, 2026, the California Law Revision Commission (“CLRC” or the “Commission”) officially approved a final legislative proposal to newly regulate “single firm conduct” (“SFC”) under the Golden State’s antitrust law, the Cartwright Act. The proposal—which now makes its way to the legislature—aims not just at parity with Section 2 of the federal Sherman Act in proscribing certain anticompetitive forms of SFC, but expressly goes beyond the boundaries courts have delineated for monopolization claims under federal law. If signed into law, this proposal would constitute one of the most ambitious expansions of competition law anywhere in the nation. Historically, CLRC proposals are signed into law more than 90 percent of the time.1 If that trend continues here, it would significantly reshape the competition law landscape in the world’s fifth-largest economy.
The Current State of California Competition Law regarding Single Firm Conduct
In 2022, the California Legislature passed a resolution tasking the CLRC with studying the idea of amending the Cartwright Act—which, at present, only proscribes combinations featuring two or more firms2—to address anticompetitive conduct by a single firm. (2022 Cal. Stat. res. Ch. 147). The goal was to address a perceived hole in the Cartwright Act’s coverage and give California an analogue to Section 2 of the Sherman Act, which proscribes SFC that monopolizes or seeks to monopolize a particular market. The resolution was prompted by concerns that large companies—many of which are headquartered or do business in California—could escape antitrust liability absent a California state law targeting single firm anticompetitive conduct. California’s primary antitrust statute—the Cartwright Act—only prohibits price-fixing and conspiracies “involving two or more persons.”3 It generally does not reach the conduct of a single company acting alone to exclude competitors or obtain a monopoly through anticompetitive means.
While California’s Unfair Competition Law (“UCL”) and Unfair Practices Act (“UPA”) offer some protections against anticompetitive SFC, each has limitations. For example, the UCL does not provide for compensatory damages or automatic attorney’s fee awards. And the UPA is broken into piecemeal provisions, each of which targets a specific type of conduct—it is not a comprehensive anti-monopoly statute in the vein of Section 2. Thus, the CLRC concluded that neither is sufficient to police anticompetitive single firm conduct.
How the Proposal Rewrites the Rules under California Law
Instead of merely restating the text of Section 2 and incorporating established federal antitrust case law, the CLRC took a more aggressive approach designed to expand the frontiers of state antitrust law in at least three ways.
First, the legislative proposal includes language stating that federal law does not necessarily govern the contours of the Cartwright Act, which the CLRC believes should be interpreted more liberally.4 This attempt at decoupling the Cartwright Act from the Sherman Act by expanding the scope of offending conduct by some degree—the precise magnitude of which is unclear—creates inherent uncertainty for both consumers and firms. For decades, both state and federal courts generally have construed California state antitrust law in harmony with federal law.5 The proposed legislation threatens that harmony, potentially leaving businesses (and courts) with a dearth of authority to rely on.
Second, the proposed statute expressly removes a tool sometimes available for antitrust defendants to refute liability—so-called “cross-market balancing.” In federal court, antitrust defendants that are alleged to have violated Section 2 can often offer evidence of procompetitive justifications for their actions. In at least some cases, this can involve a multimarket analysis, meaning that even if the challenged conduct caused certain anticompetitive effects in one market, the conduct might be justified if it generated procompetitive effects in another market (so long as the latter outweighs the former).6 Not so anymore, if the CLRC proposal becomes law. Proposed Section 16731(c) states: “Anticompetitive effects and procompetitive justifications of the challenged conduct shall be evaluated within the same relevant market.”
Finally, in perhaps the sharpest departure from federal antitrust law, the CLRC’s proposed Section 16732 contains ten new subsections, each of which removes another obstacle for antitrust plaintiffs seeking to establish liability. All of them are geared towards signaling the CLRC’s disapproval of certain federal antitrust precedents, as discussed in the Commission’s accompanying recommendation. This proposal would further decouple state competition law in California from federal antitrust law, potentially leaving future litigants and courts with sizeable gaps in the applicable case law, now that Supreme Court precedents may no longer guide application of the Cartwright Act, as it once did.
The notable Supreme Court precedents the proposed Section 16732 eschews include:
- Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004): Trinko is an important Section 2 case in which the Court largely rejected the idea that a firm has a general duty-to-deal with its competitors. In so holding, the Court narrowed the holding of an earlier Supreme Court decision, Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), which served as the basis for successful refusal-to-deal claims for nearly 20 years. The Commission pushed back on this holding, noting that “refusals to deal in today’s economy can be anticompetitive for reasons beyond Aspen Skiing’s fact pattern.”
- Brooke Group v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993): Brooke Group is a Section 2 predatory‑pricing case in which the Court affirmed two elements that made it harder for antitrust plaintiffs to prevail on predatory‑pricing claims. The two elements are: (1) the plaintiff must show that the defendant’s pricing is “below an appropriate measure of its rival’s costs,” and (2) that the defendant has a “dangerous probability of recouping its investment in below‑cost prices.” The CLRC criticized the Court’s rationale as reflecting the “outdated thinking that pricing predation was irrational.”
- Ohio v. Am. Express Co., 585 U.S. 529 (2018): A fairly recent antitrust decision, Amex held that American Express did not violate antitrust laws by prohibiting merchants from discouraging the use of its cards in favor of other payment methods with lower transaction fees. The Court reasoned that because a credit‑card network is a “two‑sided transaction platform,” it is insufficient to allege anticompetitive effects solely on the merchant‑services side (i.e., merchants bearing higher transaction fees because they cannot steer customers to cheaper cards). Instead, the lower court had to also consider the cardholder side of the transaction, where the higher fees may have procompetitive benefits (e.g., providing better consumer rewards enabled by the higher transaction fees). The CLRC’s proposal would reject this two-sided transaction framework for Cartwright Act claims, as noted in the proposed Subsection (f): “In cases where a defendant’s business is a multi-sided platform, the defendant’s conduct presents harm to competition on more than one side of the multi-sided platform, or the harm to competition on one side of the multi-sided platform outweighs any benefits to competition on any other side(s) of the multi-sided platform.”
Reactions
News of the CLRC’s proposed changes has been met with mixed reactions, revealing a sharp divide in perspectives over the future of competition policy in California. Detractors have derided the proposal as “a law with poorly defined terms, lacking standardized tests for wrongdoing, and relying on a presumption of illegal activity when it comes to a number of business practices that are widely considered typical and benefit consumers by offering better services and prices.” They warn that if passed, the proposal’s “chilling effects would be substantial, delivering a devastating blow to California’s innovation economy and resulting in a sharp increase in litigation and consumer prices.” In contrast, supporters have hailed the proposal as “a major step toward correcting a gap in California’s Cartwright Act,” and creating “a level playing field for small businesses and startups.”
What Comes Next—and Why It Matters
The CLRC’s proposal continues a now well-established trend in the Golden State towards more robust antitrust enforcement. As previously discussed, California recently enacted Section 16729 to its Business and Professions Code, which prohibits the use of “common pricing algorithms” under the Cartwright Act. This new proposal would not only expand the scope of conduct subject to California state competition law, but may signal future reforms. For example, the CLRC has indicated that future meetings will focus on proposed legislation addressing mergers and acquisitions, signaling additional changes to come for California’s competition law toolkit, which is available to both government enforcers and private litigants.
For years, California has been a leader in privacy and environmental regulation while operating with what many would characterize as a significant blind spot in its own antitrust statutes. If this proposal is enacted, that era is over. By giving state regulators and private plaintiffs the power to strike at single-firm conduct without needing a federal passport, California isn’t just closing a loophole—it’s sharpening a new spear for the next generation of antitrust enforcement.
1California Law Revision Commission Home (“Historically, over 90% of the Commission’s recommendations have been enacted into law, affecting more than 22,500 sections of the California statutory codes.”).
2See Asahi Kasei Pharma Corp. v. CoTherix, Inc., 204 Cal. App. 4th 1, 8 (2012) (“The Cartwright Act bans combinations, but single firm monopolization is not cognizable under the Cartwright Act.”).
3Cal. Bus. & Prof. Code § 16720.
4See Proposed Section 16730(c): “. . . courts shall 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;’ and that the Cartwright Act is not modeled on the Sherman Act.”; see also Proposed Section 16730(d): “Federal case law on the subject of this article is not binding on California courts, but courts may consider federal case law as persuasive authority to the extent they find it consistent with California law[.]”
5Golan v. Pingel Enter., Inc., 310 F.3d 1360, 1369 (Fed. Cir. 2002) (“California’s state antitrust statute, the Cartwright Act, is patterned after the Sherman Act, and Sherman Act decisions are applicable to cases under the Cartwright Act.”); G.H.I.I. v. MTS, Inc., 147 Cal. App. 3d 256, 265 (Cal. Ct. App. 1983) (“The Cartwright Act is patterned after the federal Sherman Anti-Trust Act . . . and decisions under the latter act are applicable to the former.”)
6See, e.g., Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 482–84 (1992) (relevant market of Kodak-brand service and parts; procompetitive rationale in market for photocopiers); NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 104–08 (1984) (relevant market of college football television; procompetitive rationale of protecting the market for college football tickets).
