A Blunted Spear: California’s New Single-Firm Conduct Law Falls Short of Its Billing

On September 30, 2026, California Governor Gavin Newsom signed Assembly Bill 1776, known as the COMPETE Act (the “Act”), into law. The Act adds three new sections to the Business and Professions Code (Sections 16730, 16731, and 16732) and, for the first time, extends the Cartwright Act, California’s principal antitrust statute, to monopolization and monopsonization by a single firm. The Act takes effect on January 1, 2027.

In February 17, 2026, we wrote that the California Law Revision Commission’s (“CLRC”) final legislative proposal on single-firm conduct would, if enacted, “constitute one of the most ambitious expansions of competition law anywhere in the nation,” aiming to push beyond the confines of the federal Sherman Act. The statute that emerged from the California Legislature after eight rounds of amendments is a very different document. Gone are the private right of action, the CLRC’s list of federal Supreme Court doctrines that California courts would no longer follow, the ban on cross-market balancing, and the declaration that federal case law is “not binding” on California courts. What remains is a public-enforcement-only statute that largely codifies existing California precedent and, in several important respects, is narrower than the federal law it was designed to surpass.

What the COMPETE Act Does

The finalized Section 16731(a) 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.” The language tracks Section 2 of the Sherman Act, with an added express reference to monopsony. A plaintiff must “allege and, to prevail at trial, prove substantial market power” — a term the Act does not define — “either through direct or indirect evidence.” The statute further provides that courts  “shall use the analytical framework and guidance of the California Supreme Court in the manner described in In Re Cipro Cases I & II.”  See § 16731(b)–(c). That framework largely tracks federal antitrust law. Relying on U.S. Supreme Court precedent, Cipro describes the familiar continuum of per se, “quick look,” and rule-of-reason analysis, and cautions that these categories are not easy labels, but call for an inquiry into “the circumstances, details, and logic” of the restraint at issue. In substance, this does not meaningfully differ from the federal antitrust framework.

Importantly, only the Attorney General or a district attorney may bring an action, and an alleged violation cannot serve as a predicate for a private claim under California’s Unfair Competition Law (“UCL”). The Act also exempts certain small California businesses, as well as conduct granted and supervised by government agencies.

A Significant Retreat from the CLRC’s Proposal

However, the enacted statute bears little resemblance to the proposal originally put forth by the CLRC.

• First, the private right of action is gone. This is a significant limitation of the law — it represents a split from federal antitrust laws and California’s Cartwright Act, which grant the ability for individuals to bring private litigation.
• Second, the Legislature retreated on rejecting federal precedent. The CLRC’s proposed Section 16730(d) declared that “[f]ederal case law on the subject of this article is not binding on California state courts,” and the June 16, 2026 version of the bill would have barred dismissal of a claim “pursuant to the Sherman Act or any case decided thereunder” unless the court also found the dismissal “consistent with this chapter.” The enacted Section 16730(d) says only that federal interpretations are “at most instructive” — a principle the California Supreme Court had already articulated in 2013.
• Third, the CLRC’s proposed Section 16732 listed ten items that California law would not require to establish liability, targeting Supreme Court precedents such as Trinko (refusals to deal), Brooke Group (predatory pricing), and American Express (multi-sided platforms) which has now been replaced with a single sentence directing courts to “liberally interpret” California’s antitrust laws.
• Fourth, the Legislature’s last round of amendments, on August 27, 2026, deleted the requirement that procompetitive justifications be evaluated “within the same relevant market,” which would have eliminated cross-market balancing, along with the bill’s endorsement of the 2023 federal Merger Guidelines.

The resulting law is not just weaker than the CLRC’s proposal; in key respects, it is narrower than the federal statute it was meant to surpass. Section 2 of the Sherman Act may be enforced by “any person who shall be injured in his business or property,” who may recover treble damages and attorney’s fees. The COMPETE Act offers no private remedy at all. And the principle that monopoly power acquired through “a superior product, business acumen, or historic accident” is not unlawful now appears in the text of California’s statute itself.

Where Risk Remains

However, the Act is not toothless. As the Attorney General’s office has noted, it allows monopolization and monopsonization claims to be brought in state court “under decades of related Cartwright Act case law, rather than relying on federal Sherman Act precedent.” In civil actions brought by the Attorney General or a district attorney, the Cartwright Act now authorizes civil penalties of up to $1 million “for each violation of this chapter,” in addition to mandatory injunctions “reasonably necessary to restore and preserve fair competition.” The Act’s express prohibition on monopsonization, combined with its focus on competition for workers, makes single-employer conduct in labor markets a likely area of interest. And how courts will adapt Cipro to purely unilateral conduct remains an open question.

The COMPETE Act is the latest in a series of California measures expanding state antitrust enforcement, following new rules on common pricing algorithms, higher Cartwright Act penalties, and a state premerger notification requirement that applies to filings made on or after January 1, 2027. But in February 2026, we wrote that, if the CLRC’s proposal were enacted, California would be “sharpening a new spear for the next generation of antitrust enforcement.” The spear the Legislature ultimately delivered is considerably blunter.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.