California Legislature Proposes Major Cartwright Act Expansion with ‘Single Firm Conduct’ Provision

The California legislature is considering Assembly Bill 1776 (AB 1776), which seeks to materially expand the Cartwright Act by creating an express single-firm conduct prohibition under California state antitrust law.

AB 1776 culminated from the California Law Revision Commission’s (CLRC) B-750 Study seeking to reform the state’s existing antitrust regime. The proposed legislation effectively codifies the Commission’s proposed single-firm conduct provision announced in January 2026.

AB 1776 contends that the Cartwright Act is “broader in range and deeper in reach” than the Sherman Act and thus federal antitrust precedent is generally not binding on California courts.
To distance the proposal from federal law, AB 1776 enumerates a list of elements that would not need to be provided to establish liability under the proposed law—effectively negating the availability of a wide range of defenses that are typically available in federal monopolization cases.

The likely impact of this proposed legislation is potentially significant: if enacted as drafted, AB 1776 would likely make California state-law antitrust claims easier to plead, harder to dismiss earlier in the case, and more attractive as alternatives or complements to Sherman Act claims. 

SINGLE FIRM CONDUCT PROPOSAL

The Cartwright Act currently focuses on coordinated conduct—involving two or more persons.  As proposed, the bill would make it “unlawful for one or more persons” to act “[i]n restraint of trade; or, [t]o monopolize or monopsonize, to attempt to monopolize or monopsonize, to maintain a monopoly or monopsony, or to combine or conspire with another person to monopolize or monopsonize in any part of trade or commerce.” It also requires that courts evaluate asserted procompetitive justifications in the same relevant market as the alleged harm, rather than allowing defendants to offset harm in one market with claimed benefits in another. 

Further, the proposal prevents California courts from importing some of the more restrictive Sherman Act Section 2 doctrines as mandatory elements. For example, the bill explains liability need not depend on rigid showings of prior course of dealing, below-cost pricing, likely recoupment of losses, quantitative proof of harm, harm on both sides of a multisided platform, an “as efficient” competitor, federal-style market-share thresholds, or a formal market definition where there is direct evidence of market power.

INITIAL PUBLIC REACTION

Public comments on the proposal have been mixed, with some supporting the attempt to bolster California’s antitrust laws and forge its own antitrust regime, while others cautioned against creating a new standard that could spark uncertainty in the courts and create uncertainty for businesses.

Supporters of the proposal argue federal case law has led to unwanted outcomes and created unhelpful precedent. Opponents, on the other hand, believe the proposal would harm innovative businesses, protect competitors rather than competition, and leave courts without a clear analytical framework to apply the new law without the benefit of federal precedent.

POTENTIAL IMPACT ON ANTITRUST LITIGATION IN CALIFORNIA

If passed as currently drafted, the likely effect of AB 1776 is to make California a more plaintiff-friendly and enforcement-oriented jurisdiction, with more disputes likely to turn on factual disputes about the actual effects of alleged conduct rather than on threshold doctrinal barriers that must be cleared to assert a viable claim under federal precedent.

Plaintiffs would seek to benefit from a state-law path that is not encumbered by an arguably more restrictive federal doctrine, while defendants would face greater uncertainty because established defenses under federal law and screening rules would arguably carry less force in California courts.

For these reasons, many in the business community are concerned about the chilling effect the proposal could have on innovation in California, which is often considered the epicenter of innovation and an engine for American economic growth. Indeed, in recent weeks California has been touting its economic record as a “global powerhouse.”[1] 

NEXT STEPS

The bill is now advancing through the legislature where Democrats hold a supermajority and appear to support aggressive competition enforcement. The bill, however, has a broad business opposition campaign from various trade groups, which can lead to amendments, slower movement, or a narrower final version. 

The Assembly Judiciary Committee held a hearing on April 7, which moved the bill forward procedurally.  Although labelling much of the opposition’s concerns as “overstated” the Committee suggested that the bill’s author should nevertheless make further amendments, including noting that “the author may wish to consider a reasonable market threshold that would limit the single firm conduct provisions of this bill to firms that actually have the market size and power to truly undermine competition.”[2]

Additionally, the Committee expressed concern over the bill’s lack of clear guidance to courts and businesses about what conduct would be considered anticompetitive, and suggested the author consider amending the bill “to provide a more affirmative set of factors that a court should consider when evaluating a case rather than a set of factors the court may but need not rely upon.”

The final day for a vote on the proposed bill in this legislative session is August 31, 2026, and the last day for the governor to sign or veto a bill passed before that date is September 30, 2026. With Governor Gavin Newsom nearing the end of this term and the significant opposition to the bill as drafted, it is unclear at this stage whether he would sign the bill into law as currently drafted.

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