The California Law Revision Commission (the Commission) recently released draft legislative changes that could make California’s Cartwright Act a bigger force in government and private antitrust enforcement. The proposal would for the first time make the Cartwright Act applicable to exclusionary unilateral (single-firm) conduct, as distinguished from anticompetitive agreements to which the Cartwright Act already applies. And it could make the Cartwright Act a plaintiff-friendly vehicle for single-firm conduct cases. Specifically, the draft would disavow for Cartwright Act claims decades-old rules that limit liability for several types of single-firm conduct that federal courts have developed—such as claims based on refusals to deal, bundled discounts, and exclusionary pricing.

The Commission’s proposals are not law yet. However, the California Legislature historically has adopted a large portion of the Commission’s recommendations—and if it does so here, California may become a center for aggressive enforcement under distinctly interventionist legal rules. Because of the size of California’s economy, the Commission’s proposal could force a wide range of companies to change their business practices in response, not just in California but more broadly. Companies with substantial market positions in California therefore should monitor these developments closely, and if the proposal becomes law, would need to carefully evaluate antitrust risk under the Act.

Background

The Commission is an independent state agency that is charged with assessing California law for “defects and anachronisms” and recommending reforms.¹ In 2022, the California Legislature asked the Commission to study several antitrust topics, including whether California’s antitrust statute should be amended to apply to single-firm conduct.² That statute, the Cartwright Act, currently applies only to conduct by “two or more persons,” so it does not reach unilateral conduct.³ A five-member working group on single-firm conduct presented a preliminary report in 2024, the Commission received public comments in 2025, and Commission staff published a draft final report on January 20, 2026.⁴ The draft report would recommend that the Legislature amend the Cartwright Act to reach single-firm conduct under legal standards that would depart in many important ways from federal monopolization law under Section 2 of the Sherman Act.

At the highest level, the proposed changes to the Cartwright Act would be consistent with an established trend of states amending their antitrust statutes to diverge from federal law. For instance, following the Supreme Court’s Illinois Brick decision,⁵ which restricted indirect (i.e., downstream) purchasers from bringing antitrust claims, about half the states have changed their laws to allow those claims.⁶ Although manufacturers dictating minimum prices to retailers is no longer per se illegal under Section 1 of the Sherman Act after the Supreme Court’s Leegin decision,⁷ that practice remains per se illegal under several state laws,⁸ which has affected firms’ distribution practices. California, Colorado and Washington have recently adopted their own merger notification statutes.⁹ And California has recently passed legislation targeting algorithmic price setting.¹⁰ The proposed single-firm conduct amendments to the Cartwright Act could become the next example of this trend but with much broader implications.

The Proposed Amendments

The Commission’s proposal would add three sections to the Cartwright Act. The first, Section 16730, would state the purposes of the other two new sections, emphasizing that the Cartwright Act is more expansive than the federal Sherman Act. Although this section would not add new legal rules, courts could rely on it to interpret the Cartwright Act liberally.

The second new section, Section 16731, would prohibit single-firms from monopolizing or monopsonizing markets or attempting to monopolize or monopsonize.¹¹ Section 16731 would for the first time extend the Cartwright Act to single-firm conduct and, in specifically referring to monopsony (which the Sherman Act does not ), reflects a particular focus on buyer-side conduct (e.g., employer practices in labor markets).¹²

Where the Commission’s proposals most substantially diverge from federal rules governing antitrust enforcement against single-firm conduct is in Section 16732. That section would implement a novel mechanism for making California’s single-firm conduct law more interventionist than federal law. Specifically, Section 16732 identifies ten factors that federal courts have sometimes made prerequisites for establishing liability under Section 2 Sherman Act.¹³ Under Section 16732, those factors “may constitute evidence of a violation of Section 16731,” but California law would not require a finding of any of them to establish liability.¹⁴ Section 16732 would therefore weaken liability requirements that federal courts have developed over decades to address concerns that Section 2 could be applied too broadly and over-deter procompetitive conduct. Those Section 2 principles would not be binding in cases brought under the Cartwright Act—whether in state or federal court.

The ten factors fall into four categories. The first two would weaken federal limits to common challenges of single-firm conduct—refusals to deal and exclusionary pricing. A third would clarify how courts should evaluate antitrust claims that relate to two-sided markets. The last category includes provisions that might make California law diverge from other aspects of federal single-firm conduct law.

Refusals to Deal

Refusal to deal claims involve allegations that a monopolist has excluded competition by refusing to supply or otherwise do business with another firm, typically a rival. Section 16732(a) would not require for Cartwright Act claims a key liability prerequisite that stems from the Supreme Court’s Trinko decision,¹⁵ namely that:

“(a) The unilateral conduct of the defendant altered or terminated a prior course of dealing between the defendant and a person subject to the exclusionary conduct.”¹⁶

Courts might construe another provision, Section 16732(d), as softening an additional federal law requirement—that the defendant’s refusal to deal sacrificed short-term profits in pursuit of a monopoly—though in more general terms. Under this provision, a plaintiff is not required to show that:

“(d) The defendant’s conduct makes no economic sense apart from its tendency to harm competition.”¹⁷

Both of these requirements have substantially limited the reach of refusal to deal liability under Section 2 of the Sherman Act, as the Commission acknowledges.¹⁸ Under these subsections, companies could face liability for refusing to do business with rivals even if they had never done business with them, and even if the refusal does not seek to eliminate or marginalize competitors.

Exclusionary Pricing

Sections 16732(c) and (g) also would relax important prerequisites under federal antitrust law for claims that a monopolist has harmed competition through exclusionary pricing conduct. The federal law on these issues was established by the Supreme Court in Brooke Group.¹⁹ Under the Cartwright Act, plaintiffs would not need to prove that:

“(c) The defendant’s price for a product or service was below any measure of the costs to the defendant for providing the product or service required under federal antitrust law.”

“(g) In a claim of predatory pricing, the defendant is likely to recoup the losses it sustains from below-cost pricing of the products or services at issue.”²⁰

Brooke Group recognized that those elements would be “not easy to establish,”²¹ That has proved the case in the decades since Brooke Group. The Commission contends that Brooke Group’s limitations are overly restrictive because digital products often have no or very low marginal costs.²²

Section 16732(h) could be construed to disavow a requirement that some courts have applied under federal law to constrict liability for claims alleging that a bundled discount has excluded competition from suppliers with a narrower product portfolio than the alleged monopolist, since plaintiffs would not have to show that:

“(h) The rivals whose ability to compete has been reduced or harmed are as efficient, or nearly as efficient, as the defendants.”²³

The Commission says that this subsection is a response to a Southern District of New York decision that applied Section 2 to a claim grounded in bundled discounts.²⁴ In Ortho Diagnostic, the court held that plaintiffs challenging bundled discounts as predatory must prove that the defendant priced below cost or that the plaintiff was at least as efficient a supplier (i.e., that it could produce at an equal or lower cost) as the defendant.²⁵ The court in Ortho Diagnostic was concerned that allowing less-efficient producers to sue would discourage more-efficient producers from offering low prices, which are good for consumers.²⁶

Two-Sided Markets

Subsection (f) responds²⁷ to the Supreme Court’s decision in American Express²⁸ holding that courts must evaluate collectively competitive effects on both sides of a credit card transaction market (i.e., merchant and cardholder). The Commission proposes to disavow that rule for purposes of the Cartwright Act by eliminating any requirement that plaintiffs prove:

“(f) In cases where a defendant’s business is a multi-sided platform, the defendant’s conduct presents harm to competition on more than one side of the multi-sided platform, or the harm to competition on one side of the multi-sided platform outweighs any benefits to competition on any other side(s) of the multi-sided platform.”²⁹

The Commission expressed concern that American Express had created uncertainty about how to evaluate claims implicating two-sided markets, and that firms could avoid liability for harming competition on one side if the challenged conducted brought procompetitive benefits on the other.³⁰

Other Doctrinal Areas

The following subsections of Section 16732 would modify other principles that some Section 2 cases have endorsed by not requiring Cartwright Act plaintiffs to prove:

“(a) The defendant treated persons subject to the exclusionary conduct differently than the defendant treated other persons.”

“(e) The conduct’s risk of harming competition or actual harm must be proven with quantitative evidence.”

“(i) A single firm or person has or may achieve a market share at or above a threshold recognized under Section 2 of the Sherman Act or any specific threshold of market power.”

“(j) A definition of “relevant market” where there is direct evidence of market effects or power.”³¹

Subsection (i) could be the most significant of these proposed changes. In Section 2 cases, courts sometimes apply benchmark market share thresholds to make determinations about monopoly power.³² Subsection (i) might cause some courts to apply a more flexible and lenient approach to determining monopoly power, allowing some claims to survive a motion to dismiss or summary judgment or to ultimately succeed that would have failed under Section 2 for lack of monopoly power.

Subsection (b) responds³³ to Aspen Skiing, in which the Supreme Court attributed significance to a firm’s disparate treatment of a rival compared with the general public.³⁴ This nondiscrimination principle might be relevant in refusal to deal and certain other types of cases.³⁵

Finally, subsection (j) appears to be a response to Supreme Court case law requiring Section 2 plaintiffs to define a relevant market,³⁶ including American Express, which held that defining the relevant market is required when assessing direct evidence showing the competitive effects of vertical restraints under Section 1 of the Sherman Act.³⁷ The Commission suggests that market definition may not be required in some Section 2 cases if harm to competition is obvious.³⁸

Next Steps

The Commission is considering these single-firm conduct proposals alongside possible amendments to the Cartwright Act in other areas including mergers, multi-firm conduct, and artificial intelligence.³⁹ Although the future of the Commission’s recommendations is uncertain, there seems to be a reasonable possibility that some of the single-firm conduct recommendations will become law if the Commission adopts them. At its next meeting on March 20, 2026, the Commission will have the opportunity to consider whether to adopt the draft final recommendation.⁴⁰ If adopted, the recommendation would be sent to the California Legislature.⁴¹ The Legislature would then decide whether to enact all, some, or none of the proposed amendments. Any legislation passed by the Legislature would then go to the governor.⁴² Governor Gavin Newsom has already signed bills that expanded the reach of the state's antitrust law.⁴³ Historically, the Legislature has enacted over 90% of Commission legislation recommendations.⁴⁴

Implications

If the Commission’s recommended changes to the Cartwright Act become law, they could have far-reaching implications for antitrust enforcement against single-firm conduct:

• The Commission’s proposal could nullify or weaken for Cartwright Act claims many important limitations on single-firm conduct liability under federal law.
• The Cartwright Act has potentially broad application, given California’s size and economic power and the enormous number of firms that sell products or services in California. Private plaintiffs would be able to bring single-firm conduct claims in California courts or in federal courts under California law (as ancillary to a federal claim or based on diversity jurisdiction). Additionally, the California Attorney General would have a new tool for investigations and enforcement actions based on single-firm conduct. Plaintiffs would not need to prove important prerequisites for claims under Section 2 of the Sherman Act, which have substantially limited liability under federal law.
• Given the very expansive reach of the Cartwright Act, in determining their unilateral conduct, companies with substantial market positions would need to carefully evaluate antitrust risk under the Act. In some circumstances, they would need to rigorously evaluate conduct that is low risk under well-established Section 2 law. They could determine that they must alter their policies to account for unique antitrust risk in California.

WilmerHale’s leading antitrust team in California and around the world is ready to assist you with planning for and responding to these crucial potential Cartwright Act developments. We are also prepared to discuss ways in which interested firms might participate in the Commission’s and potentially the Legislature’s evaluation of the proposal.

This alert was updated on February 11, 2026, to reflect that after publication on February 10, 2026, Governor Newsom signed into law a merger notification requirement similar those previously adopted by Colorado and Washington.