California Senate Strips Private Right of Action from Proposed Antitrust Single-Firm Conduct Bill

California lawmakers have amended Assembly Bill 1776, the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy (COMPETE) Act, to provide that actions under the bill’s proposed antitrust single-firm conduct provision may be initiated only by the California attorney general or a district attorney. This change eliminates direct private suits under proposed Section 16731, materially reducing private litigation exposure while preserving significant public enforcement risk.

The Senate amendments narrow the California Law Revision Commission’s (CLRC’s) initial proposal, which was largely adopted by the Assembly, ultimately bringing the proposed state antitrust legislation closer to familiar federal Sherman Act Section 2 concepts.

BACKGROUND

In 2022, the California Legislature directed the CLRC to study potential reforms to California’s state antitrust laws, known as the Cartwright Act. Federal antitrust laws historically have addressed not only conduct involving multiple firms, such as mergers and anticompetitive collusion, but also “single-firm conduct,” such as the offense of monopolization under Section 2 of the Sherman Act.

The CLRC proposed that California adopt into its state antitrust laws a single-firm conduct proposal that contained a legal standard distinct from Section 2 of the Sherman Act. As proposed, AB 1776 would have created a California single-firm conduct regime that intentionally departed from Sherman Act Section 2.

Among the initial proposal’s notable features were that

• its unilateral restraint of trade prohibition was not tied to monopoly power or a dangerous probability of achieving it,
• it expressly disclaimed a series of federal doctrines,
• it would have made it easier to challenge conduct without fully considering its business rationale or competitive benefits,
• it risked protecting less efficient rivals because it did not preserve a defense for monopoly power obtained through superior products, services, or business acumen, and
• it would have exposed firms with relatively modest market shares to costly litigation.

As it now stands, following several amendments in the Assembly and the Senate, AB 1776 would prohibit any person from “monopolizing or monopsonizing” any part of trade or commerce, and instruct courts to construe California’s antitrust laws liberally to promote free and fair competition.

However, the aspects of the proposal that received the most opposition have since been whittled away. Presently, the bill would (1) require a plaintiff to allege and prove “substantial market power” through direct or indirect evidence, (2) treat federal law as “instructive,” (3) direct courts to evaluate procompetitive justifications in the same relevant market as the challenged conduct, (4) recognize that a business may lawfully obtain market power or monopoly through superior products, services, or business acumen, and (5) exempt qualifying small businesses.

Before the August 13 amendments, the bill did not expressly restrict enforcement to public authorities, raising both hopes among supporters and concerns among those in opposition that private plaintiffs could enforce the new provision and invoke the Cartwright Act’s treble-damages remedy.

The opposition to private enforcement also heightened against the backdrop of AB 325, a California law enacted in 2025 that lowered the pleading standard for allegations of concerted conduct under the Cartwright Act effective January 1, 2026.

SENATE AMENDMENTS

AB 1776 underwent substantial revision in the Senate in response to concerns raised by, among others, opponents and legislators regarding the potential unbudgeted litigation enforcement costs, overburdened courts, and the uncertainty courts may face in interpreting the proposed legislation.

The Senate Judiciary Committee advanced the bill on a 9-2 vote after its chair requested that the bill’s author commit to additional amendments while the bill was before the Senate Appropriations Committee.  Those requested changes included eliminating the standalone “unreasonable restraint of trade” prohibition, requiring a showing of “substantial market power,” not just “market power,” to assert a claim, and softening the bill’s departure from federal antitrust precedent.

The bill moved next to the Senate Appropriations Committee, where it was placed on the Suspense File for further assessment of its fiscal impact. On August 13, the committee voted 5-2 to advance AB 1776 with amendments providing that an action under proposed Section 16731 may be initiated only by the California attorney general or a district attorney and that any such action is deemed a complex case.[1]

The amended measure has returned to the Senate floor for amendments consistent with those announced by the Appropriations Committee.

IMPACT

The August 13 amendment should allay concerns raised by those who felt the bill could become a vehicle for a substantial increase in private Cartwright Act filings. The amendment is the latest step in a broader retreat from the bill’s original construction.

The successive amendments adopted as the bill moved through the legislature have removed many of the proposal’s more aggressive features and brought it substantially closer to a recognizable Section 2 framework, albeit meaningful differences remain, most notably the undefined “substantial market power” threshold.

As it stands, the proposed law remains a consequential expansion of California antitrust law, but one materially more restrained than the proposal first advanced by the CLRC.

NEXT STEPS

While the amendment to eliminate a private right of action would significantly narrow the scope of AB 1776, it would not eliminate enforcement exposure under the proposed law. If AB 1776 is enacted in its current form, the attorney general and district attorneys would retain authority to bring actions alleging monopolization or monopsonization under the new provision.

The precise scope and reach of AB 1776 will ultimately depend on the final statutory language. Because the bill originated in the Assembly and has been amended in the Senate, Senate passage would require the measure to return to the Assembly for a concurrence vote on the Senate amendments before it could be presented to the governor.

August 21 was the last day to amend bills on the floor, and August 31 is the last day for each house to pass bills. The governor would then have until September 30 to sign or veto the measure, and a bill signed by that date would take effect January 1, 2027.

Morgan Lewis will continue to monitor developments on the proposed changes to the Cartwright Act and is available to provide counsel on the potential impacts of these proposals.