Introduction
State legislatures across the country are considering legislation that would increase antitrust scrutiny for a variety of business activities. For example, in July 2024, the Uniform Law Commission (ULC), which drafts uniform laws that states may adopt, approved the Uniform Antitrust Pre-Merger Notification Act, which would give state attorneys general access to certain filings made pursuant to the federal Hart-Scott Rodino Act (HSR), increasing scrutiny of mergers and acquisitions transactions.1 Thus far, the District of Columbia, California, Colorado, Hawaii, and Washington have introduced legislation mirroring the ULC's Uniform Antitrust Pre-Merger Notification Act.2 Notably, California and New York are considering updates to their antitrust laws that would go even further than the reforms promoted by the ULC and would represent a drastic shift in antitrust enforcement in those states.
California
Today, California's three primary competition laws reach
concerted conduct (e.g., price fixing, group boycotts, market
allocation schemes), but provide only limited remedies for single
firm conduct and mergers. The primary California antitrust law is
the Cartwright Act, a 1907 statute that has been interpreted as
generally consistent with Section 1 of the federal Sherman
Act.3 Similar to federal antitrust law, the Cartwright
Act provides for private standing and treble damages, but has been
consistently interpreted not to reach single firm
conduct.4 California's Unfair Competition Law (UCL)
more broadly prohibits any "unlawful, unfair or fraudulent
business practice"5 — and thus may reach
conduct unlawful under Section 2 of the Sherman Act — but
provides only for injunctive and equitable relief (such as
restitution). Finally, California's Unfair Practices Act (UPA)
prohibits, among other things, price discrimination, below-cost
pricing, loyalty discrimination, and secret rebates and
allowances.6 The UPA is analogous to the federal
Robinson-Patman Act.7
In 2022, the California State Legislature directed the California
Law Revision Commission (CLRC) — an influential commission
that recommends legal reforms to the California State Legislature
— to study and report on whether California should further
expand its antitrust laws.8 On January 13, 2025, CLRC
staff published its findings and recommendations to the
CLRC.9 Among other things, these recommendations include
that: (1) California should revise its existing antitrust laws to
address single-firm conduct; (2) California should adopt elements
of an "abuse of dominance" (AOD) standard for analyzing
single-firm conduct; and (3) California should adopt merger
approval and prenotification laws and review mergers under an
"appreciable risk" standard of harm.10
At a January 23, 2025 meeting, the CLRC largely adopted its
staff's recommendations, though the CLRC removed the AOD
language, and instead directed staff to propose "standards ...
that guard against the misuse of market power to any new
single-firm conduct provision."11 Additionally, the
CLRC did not make a decision on the "appreciable risk"
standard, and directed staff to further explore and provide
"deeper legal analysis" of the appropriate standard for
merger review.12 CLRC staff is now tasked with proposing
legislation to the CLRC that will incorporate the CLRC's
approvals and directives from the January 23, 2025 meeting, and the
CLRC expects to propose draft legislation to the California State
Legislature by the end of the year.13
CLRC staff can be expected to propose draft legislation that is
designed to make it easier for plaintiffs to prevail in claims
relating to single-firm conduct and make it easier for the
California Attorney General to enjoin mergers. If enacted, these
reforms would represent a radical change in California antitrust
law and result in inconsistencies with federal antitrust law.
Adoption of a California single-firm conduct law that incorporates an abuse of dominance, or misuse of market power, standard
Although California may file parens patriae suits under
the federal Sherman Act, California does not currently have a state
law that is directed at single-firm conduct. As a result, the CLRC
approved the recommendation that California should adopt its own
single-firm conduct law. CLRC staff further recommended that this
California single-firm conduct law should utilize an
"AOD-like," or "misuse of market power"
standard, departing from the longstanding monopolization standard
under Section 2 of the Sherman Act, which prohibits only conduct
that excludes competition, rather than the exercise of monopoly
power.14 The CLRC staff believes that an AOD or a misuse
of market power standard will help California "balance out
weak federal laws that have handicapped litigation against large []
companies over the past three decades."15
Importantly, neither AOD nor misuse of market power have been
implemented anywhere in the United States, and thus there would be
no existing legal precedent to guide courts in interpreting these
provisions. An AOD standard would be modeled after existing
European Union (EU) law that makes it "unlawful for a dominant
entity to abuse that position to its competitive
advantage."16 Unlike the monopolization standard
under the Sherman Act, which generally requires a 70% market
share,17 the European Commission generally considers
dominance to start around 40% market share.18 The EU
also goes further than the U.S. with respect to the type of conduct
that it considers to be unlawful. For example, AOD under the EU
includes certain "exploitative abuses,"19 such
as excessive pricing and unfair contractual terms imposed upon
consumers, that are typically not considered to be exclusionary
conduct under U.S. law.20 It is not entirely clear what
the CLRC envisions with respect to conduct that would constitute a
misuse of market power, though the CLRC suggested that it might
include elements of AOD.
Adoption of a California merger review and premerger notification law that departs from existing federal law and incorporates an "appreciable risk" standard
Although some states, including California, have laws that require notification of some mergers (such as mergers in the health care industry), no state in the country has a premerger notification law that impacts mergers in every sector. The CLRC is seeking to change this while also changing the legal standard for evaluating mergers. Specifically, CLRC staff recommended that California adopt a law prohibiting mergers whose effect may be "to create an appreciable risk of materially lessening competition" — i.e., the "appreciable risk" standard.21 This language is inspired by Sen. Amy Klobuchar's proposed changes to federal law embodied in the Competition and Antitrust Law Enforcement Reform Act (CALERA).22 As discussed above, although the CLRC directed CLRC staff to further study this issue, CLRC staff nevertheless is expected to revert with draft language that would lower the standard for enjoining a merger, even if that draft language does not exactly mirror CALERA's "appreciable risk" language.
Other antitrust bills currently under consideration in California
Separate and apart from the work of the CLRC, there are several bills under consideration by the California State Legislature that would expand California's existing antitrust laws.
On February 21, 2025, Senator Hurtado introduced Senate Bill 763
(SB 763), which would amend the Cartwright Act to increase the
criminal and civil fines imposed for violations of the
act.23 Specifically, the bill would increase criminal
fines for corporations from $1 million to $100 million per
violation, increase criminal fines for individuals from $250,000 to
$1 million per violation, increase the term of imprisonment for a
felony violation from one, two, or three years to two, three, or
five years, and add additional civil penalties of up to $1 million
per violation that courts can impose based on the nature of the
misconduct.24 These proposed penalties are more
commensurate with antitrust penalties under federal law, giving
California the ability to severely punish antitrust violations
— including through criminal prosecutions — even
without their federal counterparts.
Additionally, on December 2, 2024, Senator Umberg introduced Senate
Bill 25 (SB 25), the Uniform Antitrust Premerger Notification
Act.25 This bill is modeled after the UCL's Uniform
Antitrust Premerger Notification Act, discussed above, and it would
require that persons who file a premerger notification pursuant to
HSR to the Federal Trade Commission (FTC) or U.S. Department of
Justice (DOJ) also provide a copy of the HSR filing to the
California Attorney General. The bill would apply only to companies
with a "principal place of business in [California] or []
annual net sales in [California] of the goods or services involved
in the transaction of at least 20% of the [HSR] filing
threshold."26
New York
In January 2025, New York legislators introduced the
Twenty-First Century Antitrust Act for the fourth
time.27 Broadly speaking, the bill would create a
single-firm conduct law that uses an AOD standard, requires
premerger notification of certain mergers to the New York Attorney
General, creates a private right of action, empowers the attorney
general to adopt, promulgate, amend, and repeal rules relating to
AOD, and authorizes class actions.28 According to the
act's legislative findings, the bill is designed to address
"New York's great concern with the growing accumulation of
power in the hands of dominant corporations that harms our
marketplace, our democracy, and that undermines the power of
workers, consumers, and small businesses."29
The bill is consistent with California's efforts to adopt an
AOD-based standard for single-firm conduct. However, the bill
provides more clarity by specifying that sellers with over 40%
market share and buyers with over 30% market share are presumed to
be dominant.30 These standards are significantly lower
than the standard for monopolization under federal law, where it is
unlikely that market share below 70% is sufficient to establish
monopoly power.31 The bill also specifies that refusals
to deal, tying, exclusivity agreements, non-compete agreements,
restraints on the prices or wages offered by another firm, and any
action that the attorney general determines through rulemaking to
pose a "substantial risk of harming competition" or that
"serves no legitimate business purpose that cannot be achieved
in some less restrictive way," are "presumed to be
illegal when engaged in by dominant firms."32 The
bill further provides that a defendant can only rebut this
presumption by clear and convincing evidence demonstrating that the
procompetitive benefits of the challenged conduct are achievable
only through that conduct and outweigh that conduct's harm to
competition.33
Additionally, like the federal Sherman Act, the bill would give
private individuals the right to sue for violations of the act,
both as individuals and members of a class.34 Like
actions brought by the attorney general, private enforcement of the
bill would be litigated using an AOD standard. The bill also
provides for treble damages and reasonable attorneys'
fees.35 The bill also provides that "direct
evidence" — such as a "reduction in output or in
quality of goods or services, the imposition of supracompetitive
prices, or the ability to force, induce, or otherwise coerce a
supplier to offer a lower price, discount advertising allowance, or
other service than what the supplier offers others" —
can be used to prove dominance without regard to market share or
even a definition of the relevant market.36 In total,
the act's provisions related to single-firm conduct would
diverge greatly from the existing antitrust laws in place either
federally or in any state in the country.
With regard to mergers, the bill would require premerger
notification of virtually any transaction by a person doing
business in New York if the transaction is also reportable to the
FTC and DOJ under HSR, though the bill diverges from the California
approach by not including the "appreciable risk" standard
for merger reviews.
Conclusion
Both California and New York are considering significant reforms to their antitrust laws that would radically change the existing antitrust legal regimes in those states. Companies doing business in these two states should stay alert to these developments and seek legal advice on how they may impact their business. Moreover, these developments would not necessarily be limited to just California and New York — several additional states, like New Jersey,37 Minnesota,38 and Pennsylvania,39 have proposed similar legislation in recent years. These states, and others, could be emboldened to pass significant antitrust reforms if California and New York do so first.
Footnotes
1 Uniform Law Commission, Two New Uniform Acts and Amendments to Acts Approved at ULC's 133rd Annual Meeting, Jul. 24, 2024.
2 Uniform Law Commission, Antitrust Pre-Merger Notification Act, accessed Feb. 11, 2025.
3 Cal. Bus. & Prof. Code § 16720. The Cartwright Act was modeled most closely after Texas' 1889 antitrust bill, 1889 Tex.Gen.Laws, ch. 117, which itself was modeled after U.S. Senator Reagan's 1888 "bill to define trusts." See California v. Texaco, Inc., 762 P.2d 385 (1988) for a detailed analysis of the Cartwright Act's legislative history and its relationship to the Sherman Act and other states' antitrust laws.
4 Dimidowich v. Bell & Howell, 803 F.2d 1473, 1478 (9th Cir. 1986), opinion modified on denial of reh'g, 810 F.2d 1517 (9th Cir. 1987); Aetna Inc. v. Gilead Scis., Inc., 599 F. Supp. 3d 913, 931 (N.D. Cal. 2022).
5 Cal. Bus. & Prof. Code § 17200.
6 Cal. Bus. & Prof. Code § 17000.
7 In recent years, California has shown interest in updating and broadening its antitrust laws. In 2019, California passed Assembly Bill 824 (AB 824) to go beyond federal law in targeting so-called "reverse payment" settlement agreements of patent litigation between brand-name and generic pharmaceutical companies. The statute creates a series of presumptions and eases the evidentiary burden on plaintiffs in antitrust cases regarding such settlements. Assemb. 824, 2019 (N.Y. 2019). On February 13, 2025, the Eastern District of California held that AB 824 is constitutional and not preempted by federal law — but only to the extent that it is applied to settlement agreements that are "negotiated, completed, or entered into within California's borders." Order at 20, Ass'n for Accessible Meds. v. Bonta, No. 20-cv-01708 (Feb. 13, 2025), ECF 92.
8 2022 Cal. Stat. res. Ch. 147.
9 Cal. Law Rev. Comm'n, Antitrust Law: Initial Recommendations for ACR 95 Questions, Memo. 2025-11, Jan. 13, 2025 (Memo).
10 Id.
11 California Law Revision Commission, California Law Revision Commission meeting, YouTube (Jan. 23, 2025) starting at 3:03:25.
12 Id. starting at 4:48:22.
13 Id. starting at 1:09:57.
14 Memo. at 8.
15 Id.
16 Id.
17 United States v. Aluminum Co. of Am., 148 F.2d 416, 424 (2d Cir. 1945) (90% market share "is enough to constitute a monopoly; it is doubtful whether [60%] or [64%] would be enough; and certainly [33%] is not").
18 European Commission, Procedures in Article 102 Investigations ("If a company has a market share of less than 40%, it is unlikely to be dominant.").
19 Consolidated Version of the Treaty on the Functioning of the European Union art 102(a), 2012 OJ C 326/47 (noting that an abuse of dominance may include "directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions").
20 See, e.g., Verizon Commc'ns Inc. v. Law Offs. of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004) ("The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system.").
21 Id. at 12.
22 Id.
23 S. 763, 2025-2026 Leg. (Cal.).
24 Id.
25 S. 25, 2025-2026 Leg. (Cal.).
26 Id.
27 Assemb. A2015, 2025-2026 Leg. (N.Y.).
28 Id.
29 Id.
30 Id.
31 United States v. Aluminum Co. of Am., 148 F.2d 416, 424 (2d Cir. 1945) (99% market share "is enough to constitute a monopoly; it is doubtful whether [60%] or [64%] percent would be enough; and certainly [33%] is not"). Note, however, that Section 2 of Sherman Act also covers attempted monopolization, where courts may find liability when a defendant has market share between 30% and 50% if certain additional requirements are met. See, e.g., Rebel Oil Co., Inc. v. Atlantic Richfield Co., 51 F.3d 1421, 1438 (9th Cir. 1995) ("When the claim involves attempted monopolization, most cases hold that a market share of 30% is presumptively insufficient to establish the power to control price.").
32 Assemb. A2015, 2025-2026 Leg. (N.Y.).
33 Id.
34 Id.
35 Id.
36 Id.
37 S. 3778, 2022-2023 (N.J.).
38 H.R. 1563, 2023-2024 (Minn.).
39 H.R. 2012, 2023-2024 (Pa.).
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