On September 30, 2026, Governor Newsom signed AB 1776, the COMPETE Act. It is one of the biggest changes to California antitrust law in decades, and it takes effect January 1, 2027.
For more than a century, the Cartwright Act reached agreements among two or more businesses but generally not a single company acting alone. A case against one dominant firm had to be brought under federal law. That gap is now closed.
What changed
The law makes it unlawful to monopolize or monopsonize a market, attempt to do so, or maintain a monopoly or monopsony through anticompetitive conduct. California prosecutors can now sue a single company under state law for using its market position to keep competitors out.
It works on both sides of a market. A company with substantial power over the customers it sells to is covered. So is a company with substantial power over the suppliers or workers it buys from.
What did not change
Earlier versions would have allowed private businesses and consumers to sue. The final law gives enforcement authority only to the Attorney General and district attorneys. It also expressly prevents private plaintiffs from using an alleged violation of the new law as the basis for an Unfair Competition Law claim.
Size alone is not a violation. A company that earns a dominant position through better products, better service, or good judgment has done nothing wrong. The question is how you got there and how you stay there.
The law also exempts certain small California businesses. To qualify, a business must be independently owned, based in California with California officers, and have no more than 100 employees and $10 million in average annual revenue, counting affiliates.
Why it matters
California is putting money behind enforcement. The 2026-27 budget provides $14.3 million for additional antitrust work.
The penalties are already higher. Last year’s SB 763 raised the maximum criminal fine for a corporate Cartwright Act violation to $6 million per offense and added civil penalties of up to $1 million per violation. Those are not nuisance numbers.
And the new law does not define its central term. The government must prove “substantial market power,” but there is no market-share threshold. Federal decisions may be considered, but they are not controlling. California courts will build the standard case by case, with instructions from the Legislature to interpret California antitrust law liberally.
Where the risk is
The companies most exposed are those with a strong position in a California market whose practices make it harder for competitors to reach customers, suppliers, or employees. That can include exclusive dealing and most-favored-nation terms, restrictions on distributors and resellers, certain pricing practices, limits on employee movement, and platform rules that favor the owner’s products over third parties.
If your company holds a significant position in a California market, look at those contracts and practices now. The question is not whether you compete hard. It is whether a prosecutor could describe what you do as excluding rivals rather than beating them.
Large employers and others with substantial purchasing power should give the same attention to supplier and employment arrangements. The buyer side of this law may prove just as important as the seller side.
The COMPETE Act does not outlaw aggressive competition. But it gives California its own tool against dominant firms, funds the people who will use it, and leaves the standard to the courts. Understand it before January 1.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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