Governor Gavin Newsom signed the COMPETE Act into law on September 30, 2026.¹ For the first time, California’s antitrust statute, the Cartwright Act, will reach single-firm conduct: the new law makes it unlawful to monopolize or monopsonize in any part of trade or commerce.² The law takes effect in January 2027.

As enacted, the COMPETE Act has been pared back significantly and differs much less substantially from Section 2 of the Sherman Act than the proposal that preceded it. Among other things, the California Law Revision Commission’s (the “Commission”) draft proposal would have disavowed many of the limitations for Cartwright Act claims on single-firm conduct liability that federal courts have developed under Section 2, including anti-interventionist rules that govern refusals to deal, bundled discounts, and exclusionary pricing claims.³ See A Golden State Revolution May be Coming to Single Firm Conduct Rules. It also would have allowed private plaintiffs to bring single-firm conduct claims. None of these provisions survived.

The final law limits enforcement to the California Attorney General and district attorneys and largely codifies existing California precedent on the relationship between the Cartwright Act and federal antitrust law. Even so, the law gives California public enforcers a new state-law vehicle to challenge single-firm conduct in state court, under standards that may prove less demanding than those under Section 2. Given the size of California’s economy, companies with substantial market positions in California need to consider the law when making decisions regarding single-firm conduct that could bring antitrust exposure. The COMPETE Act is one of several significant measures to emerge from California’s 2026 legislative session, which also produced a number of new artificial intelligence and privacy laws.⁴

The Amendments

The COMPETE Act adds three new amendments. Section 16730 articulates the Cartwright Act’s purposes and emphasizes that the Cartwright Act is more expansive than the Sherman Act.⁵ It recites California Supreme Court holdings that the Cartwright Act is “broader in range and deeper in reach” than the Sherman Act and that federal court constructions of that statute are “at most instructive” when construing California’s antitrust laws.⁶ Section 16730 catalogs ways in which California courts have recognized that the Cartwright Act departs from the Sherman Act, including indirect purchaser recovery, the requisite causal connection between illegal conduct and injury for standing and antitrust injury, lower shares for finding monopoly power, a structured rule of reason analysis, and differing burdens of proof.⁷ But Section 16730 also affirms that a business may lawfully obtain and maintain market power or monopoly power by offering superior products, services, or business acumen.⁸ Although this section largely restates existing California case law, plaintiffs likely will cite it as definitive legislative authority to interpret the Cartwright Act liberally.

Section 16731 is the provision that extends the Cartwright Act to single-firm conduct.⁹  Subsection (a) makes it unlawful “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.”¹⁰ As in the Commission’s proposal, the statute specifically refers to monopsony, which the Sherman Act does not (although courts have found that monopsonization can violate Section 2). Calling out monopsonizing reflects a focus on buyer-side conduct, such as hiring in labor markets.

Subsection (b) directs courts adjudicating Section 16731 claims to “use the analytical framework and guidance of the California Supreme Court in the manner described in In re Cipro Cases I & II.”¹¹ Cipro described a rule of reason analysis for certain Cartwright Act claims. Among other things, that analysis asks whether an act was made for the purpose of avoiding competition and whether the anticompetitive effects of the challenged conduct outweigh any procompetitive justifications.¹²

Subsection (c) requires a plaintiff “to allege and, to prevail at trial, prove substantial market power, either through direct or indirect evidence.”¹³ The statute does not define “substantial market power.” Nor does it include the Commission’s proposal that courts be limited to weighing anticompetitive effects and procompetitive benefits that occur in the same market.¹⁴

An extremely consequential change from the Commission’s proposal concerns who may sue. The Commission’s draft would have allowed private plaintiffs to bring single-firm conduct claims in California or federal court.¹⁵ But under subsection (f) of the enacted law, an action under Section 16731 “may be initiated only by the Attorney General or a district attorney.”¹⁶ Outside such public enforcement actions, an alleged violation of Section 16731 “shall not serve as a predicate violation” under California’s Unfair Competition Law (UCL).¹⁷ This keeps private plaintiffs from seeking remedies under the UCL for conduct that allegedly violates the Cartwright Act’s single-firm conduct provisions.

Section 16731 includes two exemptions. First, the single-firm conduct provisions do not apply to “any small business.”¹⁸ Second, they do not “prevent, limit, or prohibit” any exclusive franchise, contract, license, or permit “that is granted and supervised by a local, state, or federal governmental agency.”¹⁹

Finally, Section 16732 directs courts to “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.”²⁰

Implications

Although the COMPETE Act does not go nearly as far as the Commission’s proposal, it has important implications for companies with a substantial California presence:

• Companies should evaluate unilateral conduct that could bring antitrust scrutiny with California in mind, given the new statute and California’s size and economic importance. The new statute raises new risks and uncertainties for companies that do substantial business in California. The California Attorney General and district attorneys now have a monopolization route to state courts, which may apply California precedent and statutory affirmations that are in several respects more plaintiff-friendly than federal Section 2 law. It remains to be seen how meaningful the gap between federal and California monopolization law becomes in practice after courts begin to construe the new statute. Plaintiffs will likely cite the statute’s liberal-construction directive to try to avoid federal precedent that limits Section 2 liability.
• The “substantial market power” standard may become a focal point of litigation. Federal courts have sometimes defined monopoly power as substantial market power. But California antitrust enforcers may argue that the “substantial market power” formulation together with Section 16730’s reference to “lower actionable market shares” under California law authorize courts to find monopoly power based on shares that would not support such a finding under Section 2.²¹

WilmerHale’s leading antitrust team in California and around the world is ready to assist you with evaluating and responding to the COMPETE Act and related Cartwright Act developments.