California has recently enacted a new wave of antitrust legislation, including recent amendments to the Cartwright Act and the institution of a new mini-HSR Act. These changes will give California earlier insight into transactions that may impact the state and will also bring unilateral conduct under the jurisdiction of state antitrust enforcers. The changes also expressly seek to cover conduct beyond the scope of the Sherman Act and limit the influence of federal Sherman Act interpretations in construing California antitrust law. These changes are slated to go into place in January 2027, giving clients with significant operations in California a narrow window of time to assess exposure to the new laws and prepare for any potential changes.
The COMPETE Act will expand California's antitrust authority
On September 30, 2026, California Governor Gavin Newsom signed the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy Act (the "COMPETE Act"), which will go into effect on January 1, 2027. The COMPETE Act amends California's state antitrust law, known as the Cartwright Act, to include anticompetitive conduct undertaken by single firms in addition to multilateral restraints of trade. The 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."1 The act exempts "small businesses," defined as those with 100 or fewer employees and average annual gross receipts of less than $10 million over the three years preceding a complaint.2 Earlier drafts of the bill included a private right of action to enforce its provisions, but the final version allows only the state Attorney General or a district attorney to file a complaint.
The COMPETE Act also codifies several California Supreme Court decisions asserting that the Cartwright Act is broader in scope than the Sherman Act, and that interpretations of federal antitrust statutes are "at most instructive" because the Cartwright Act is not modeled after the Sherman Act.3 The COMPETE Act expressly mandates that "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."4 A summary of the key changes that the COMPETE Act brings and what they mean in practice is set out here:
| What's new in the COMPETE Act | What it means in practice |
| Adds prohibition of single-firm "restraints of trade" in addition to prohibition of multi-firm conduct | Unilateral pricing decisions, refusals to deal, exclusive dealing, and distribution restrictions by a single company could all potentially constitute unlawful restraints of trade |
| Does not include market share threshold for single-firm conduct like Section 2 of the Sherman Act | The act requires proof of "substantial market power, either through direct or indirect evidence" to bring an action under the act |
| Prohibits monopolization by one person or by agreement among multiple people | This is a divergence from existing federal law, which has defined monopolization as the domination of a market by one competitor |
| Creates a "small business" exception | Businesses with 100 or fewer employees and average annual gross receipts of less than $10 million over the three years preceding a complaint will not be impacted |
| Adds a safe harbor provision for businesses that "lawfully obtain and maintain market power or monopoly power" (consistent with federal law) | Businesses that have lawfully obtained their market power "through the superiority of its products, services, or business acumen" are protected |
| Certain federal antitrust principles are not required to prove a claim | Federal precedent applying the Sherman Act may not apply to certain allegations |
In a statement issued with the signing, Governor Newsom signaled that state authorities should focus on "clear wrongdoing" when enforcing the COMPETE Act and should avoid "creating needless uncertainty that risks harming legitimate businesses."5 He also suggested that more work may need to be done to ensure that the COMPETE Act serves its intended purpose. He also left a clear pathway for future antitrust legislation in the state of California, noting that "additional legislation may be required to clarify the appropriate standards." He also indicated that the COMPETE Act will "level[] the playing field for small businesses by making it easier to open and expand businesses, cutting red tape, and protecting competition" and will ensure that "California's economy works for everyone, not just the biggest and best-connected."6
The COMPETE Act initially originated from a study by the nonpartisan California Law Revision Commission tasked with identifying defects within California law and recommending changes.7 The Commission identified specific "fundamental shortcoming[s] of California antitrust law" which the COMPETE Act seeks to cure.8 The Commission also noted that California courts should "develop their own jurisprudence" to avoid the importation of "known shortcomings of Federal law into California law" and to prevent California courts from relying on or following federal case law, "including widely criticized cases that have weakened the Sherman Act in recent decades."9 The Commission similarly criticized federal jurisprudence in recent decades as "substantially narrow[ing] the scope of the Sherman Act" and warning that California's reliance on that jurisprudence "could well rob California law of the power it needs to protect competition."10 Although the COMPETE Act has been amended considerably since its initial drafting and some of the more wide-sweeping changes initially proposed were scaled back, the COMPETE Act still demonstrates the state's recent push towards more rigid state antitrust enforcement and to generally increase California's state power to regulate potential antitrust violations.
Mini-HSR requirements set to take effect
The COMPETE Act comes on the heels of California's adoption of a mini-HSR act—a requirement that certain parties making an HSR filing must also send the filing to the California Attorney General within one business day of their federal filing. This mini-HSR Act, titled the California Uniform Antitrust Premerger Notification Act, will also take effect on January 1, 2027.11
California's mini-HSR regime is generally modeled after those introduced in Colorado and Washington in 2025. California's law requires submission of a copy of the HSR form to the state where:
i. The person has its principal place of business in California, or
ii. The person or a person it controls had annual net sales in California of the goods or services involved in the transaction of at least 20% of the prevailing federal HSR filing threshold, currently $26.78 million.
If the filer's principal place of business is in California, the filer must also include a copy of additional documentary material filed with the HSR form. If the filer only meets the annual net sales prong for submission to California, the state may request any additional documentary material filed with the HSR form. Potential fines for noncompliance are significantly higher than the fines posed by Washington and Colorado's mini-HSR acts, up to $25,000 per day. Merging parties should plan for this additional workstream as necessary and prepare for the additional scrutiny a transaction will face when reviewed by a new stakeholder.
What this means for businesses
These changes to California antitrust law could impact companies that have significant operations in the state of California. For now, there are a few key things for companies with ties to California to keep in mind leading up to the enactment of both laws in January 2027:
Keep in mind potential for increased state enforcement. Because California antitrust authorities will have earlier insight into transactions impacting the state (receiving notice one business day after a party's federal HSR filing), companies can likely expect to see increased interest and potential enforcement actions from California antitrust authorities, even where there may not be federal interest. California also has one of the largest, best funded, and most active state antitrust divisions in the country, further supporting a potential increase in state enforcement.
Recognize lower barriers to bring a claim. The COMPETE Act requires proof of "substantial market power, either through direct or indirect evidence" to bring a claim. While the text of the COMPETE Act suggests that there may be a lower threshold for initiating antitrust claims and a broader range of unilateral conduct may be subject to scrutiny as a result, a reduced barrier to filing a complaint does not automatically mean that state enforcers will be ultimately successful in bringing a claim.
Ensure compliance systems are up to date and in place. Companies with significant operations in California should take this time to evaluate internal practices and policies under the new heightened COMPETE Act standards and the mini-HSR Act's filing requirements to ensure full compliance with the state's new regulations, in general practice and in any future planned transactions.
Prepare to assess future transactions for reportability under the Mini-HSR Act. Starting in 2027, companies with significant businesses in California should be proactive in assessing whether any HSR filing must also be sent to the California Attorney General (similar to practices in place for companies with operations in Washington and Colorado). Failure to do so could result in significant daily penalties. Antitrust counsel should be involved as early as possible to ensure that all requirements are met.
1 California Assembly Bill 1776 (2025-2026), available at Bill Text - AB-1776 Cartwright Act: violations.
2 Id.
3 Id.
4 Id.
5 Governor Gavin Newsom's AB 1776 Signing Message, Office of the Governor (Sep. 30, 2026), available at SGSS 9121-126092906092.
6 Governor Newsom Signs Historic Law to Stop Big Business From Shutting Out Competition, Cuts Red Tape to Speed Up Business Permitting, Office of Governor Gavin Newsom (Sep. 30, 2026), available at https://www.gov.ca.gov/2026/09/30/governor-newsom-signs-historic-law-to-stop-big-business-from-shutting-out-competition-cuts-red-tape-to-speed-up-business-permitting.
7 Cal. Gov't Code § 8289(a).
8 Single-Firm Conduct Working Group, California Law Review Commission Study of Antitrust Law (Jan. 25, 2024) at p. 1, https://clrc.ca.gov/pub/Misc-Report/ExRpt-B750-Grp1.pdf#:~:text=Section%2016720%20defines%20the%20term%20%E2%80%9Ctrust%E2%80%9D%20to,to%20recover%20treble%20damages%20and%20attorneys'%20fees.
9 Id.
10 Id. at 13.
11 California Senate Bill 25 (2025-2026), available at Bill Text - SB-25 Antitrust: premerger notification.
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