California's COMPETE Act: A New Frontier for State Antitrust Enforcement

Find a lawyer Our capabilities Your career

Oct 2 2026

On September 30, 2026, Governor Gavin Newsom signed California Assembly Bill 1776, the Competition and Opportunity in Markets for a Prosperous, Equitable, and Transparent Economy (COMPETE) Act, which passed the California legislature on August 30, 2026, along a largely party-line vote. The bill expands the scope of conduct covered by the state’s 119-year-old antitrust law, the Cartwright Act – which previously reached only combinations among multiple firms – to cover single-firm monopolization and monopsonization. These new prohibitions, however, can be enforced only by California state prosecutors, not by private plaintiffs. Nevertheless, the COMPETE Act increases the risk of competition law liability for a broad range of companies doing business in California.

What are the changes enacted by the COMPETE Act? Following multiple rounds of amendments that limited its scope, the COMPETE Act still meaningfully broadens the reach of California antitrust law. After it takes effect on January 1, 2027, the COMPETE Act will:

Enable challenges to single-firm conduct. The COMPETE Act prohibits any person from “monopolizing or monopsonizing” trade or commerce. Previously, the Cartwright Act applied only to misconduct involving two or more firms, but the COMPETE Act now reaches unilateral conduct as well.
Require a showing of only “substantial market power.” The COMPETE Act requires that plaintiffs bringing a monopolization or monopsonization case prove that the defendant has “substantial market power” through direct or indirect evidence. The initial draft legislation required that plaintiffs show only “market power,” but concerns about whether that would set an inappropriately low threshold led the legislature to require “substantial market power.” The Act does not define that term, and it is unclear whether courts will give the “substantial market power” requirement the same meaning as the “monopoly power” element of a federal Section 2 claim. To the extent that courts require a less stringent showing to establish “substantial market power” than “monopoly power,” smaller, non-dominant firms could be prosecuted for conduct that remains entirely legal under federal law.
Limit the effect of federal antitrust interpretations. The COMPETE Act encourages courts to apply its provisions to a broader range of conduct than federal antitrust law, declaring that interpretations of federal antitrust laws are “at most instructive” in interpreting California antitrust law. This provision was the subject of considerable legislative debate. Some prior drafts of the Act took a much more granular approach toward federal antitrust precedent, explicitly noting that “establishing liability [under the COMPETE Act] shall not require” certain findings that are necessary prerequisites to a federal antitrust violation (e.g., pricing below cost for predatory pricing claims, participating in a prior course of dealing for refusal to deal claims). The final, enacted language replaces those specifics with the more general guidance that courts should consider federal antitrust precedent “at most instructive,” and it remains to be seen how much more expansively courts will interpret California antitrust law going forward. Companies should be aware that conduct that is legal under federal antitrust law could still be found to violate California antitrust law.
Allow only California prosecutors to enforce new prohibitions. Unlike the Cartwright Act’s long-standing provisions addressing multi-firm conduct, which permit private plaintiffs as well as the government to bring antitrust claims, under the COMPETE Act, only the California attorney general and district attorneys can bring claims based on single-firm conduct. Proponents of a private right of action claimed that public enforcement alone may be insufficient to discourage monopolization, but concerns about the potential for frivolous litigation ultimately led to only state officials being authorized to bring monopolization claims.

Looking Ahead

The COMPETE Act expands the authority of California’s attorney general and district attorneys to challenge individual businesses for allegedly anticompetitive unilateral conduct. It also brings California’s Cartwright Act in line with other state antitrust statutes. Numerous other states frequently involved in active antitrust enforcement (including Colorado, Illinois, New Jersey, and Washington) already enforce statutes against single-firm anticompetitive conduct. In contrast, New York’s antitrust statute currently applies to only multi-firm conduct, though a recent legislative proposal seeks to amend the statute to also cover single-firm conduct as well.

We expect that California officials will exercise their new authority. California Attorney General Rob Bonta has emerged as an active antitrust enforcer, leading coalitions of states to bring major antitrust actions, including challenges to the proposed Nexstar/Tegna merger and to Live Nation’s allegedly anticompetitive practices. To support greater enforcement, AG Bonta has sought to expand the size of the California antitrust unit, arguing that anti-monopoly efforts “will address the primary issue for many Californians, which is affordability.”

If and when California officials look to enforce the COMPETE Act, there is no reason to expect that they will focus exclusively on California-headquartered businesses. Any sufficiently large firm that does business in California could find itself subject to scrutiny and prosecution, with little clear guidance about exactly how far the COMPETE Act reaches. While court decisions may eventually provide greater clarity, uncertainty about the scope of the Act could linger for years – or even decades.

To receive the latest insights on US legal developments, subscribe to the Freshfields A Fresh Take Blog.

Authors

Washington, DC

Oct 2 2026

Enable challenges to single-firm conduct. The COMPETE Act prohibits any person from “monopolizing or monopsonizing” trade or commerce. Previously, the Cartwright Act applied only to misconduct involving two or more firms, but the COMPETE Act now reaches unilateral conduct as well.
Require a showing of only “substantial market power.” The COMPETE Act requires that plaintiffs bringing a monopolization or monopsonization case prove that the defendant has “substantial market power” through direct or indirect evidence. The initial draft legislation required that plaintiffs show only “market power,” but concerns about whether that would set an inappropriately low threshold led the legislature to require “substantial market power.” The Act does not define that term, and it is unclear whether courts will give the “substantial market power” requirement the same meaning as the “monopoly power” element of a federal Section 2 claim. To the extent that courts require a less stringent showing to establish “substantial market power” than “monopoly power,” smaller, non-dominant firms could be prosecuted for conduct that remains entirely legal under federal law.
Limit the effect of federal antitrust interpretations. The COMPETE Act encourages courts to apply its provisions to a broader range of conduct than federal antitrust law, declaring that interpretations of federal antitrust laws are “at most instructive” in interpreting California antitrust law. This provision was the subject of considerable legislative debate. Some prior drafts of the Act took a much more granular approach toward federal antitrust precedent, explicitly noting that “establishing liability [under the COMPETE Act] shall not require” certain findings that are necessary prerequisites to a federal antitrust violation (e.g., pricing below cost for predatory pricing claims, participating in a prior course of dealing for refusal to deal claims). The final, enacted language replaces those specifics with the more general guidance that courts should consider federal antitrust precedent “at most instructive,” and it remains to be seen how much more expansively courts will interpret California antitrust law going forward. Companies should be aware that conduct that is legal under federal antitrust law could still be found to violate California antitrust law.
Allow only California prosecutors to enforce new prohibitions. Unlike the Cartwright Act’s long-standing provisions addressing multi-firm conduct, which permit private plaintiffs as well as the government to bring antitrust claims, under the COMPETE Act, only the California attorney general and district attorneys can bring claims based on single-firm conduct. Proponents of a private right of action claimed that public enforcement alone may be insufficient to discourage monopolization, but concerns about the potential for frivolous litigation ultimately led to only state officials being authorized to bring monopolization claims.