California COMPETE Act: Narrowed Bill Still Expands State Antitrust Risk for Single-Firm Conduct

California’s legislature is poised to vote on a new antitrust statute, the COMPETE Act (Assembly Bill 1776), before the end of its 2026 legislative session on August 31. The COMPETE Act seeks to expand antitrust liability under the state’s existing statute, the Cartwright Act, to cover single-firm conduct and potentially lower the burden of establishing such claims. Over the summer, several amendments significantly scaled back the bill’s scope. Most recently, on August 13, 2026, the California Legislature eliminated a right of action for private plaintiffs—the latest change as the bill moves toward a full vote. Earlier amendments removed provisions requiring California courts to depart from federal antitrust frameworks and added protections for companies with exclusive government contracts or licenses. Despite these revisions, the COMPETE Act would still represent a significant expansion of California antitrust law, and businesses should be mindful that the bill, if enacted, will give regulators a powerful new enforcement tool.

Key Takeaways

• Single-firm conduct would face new scrutiny: The bill would expand the Cartwright Act to cover single-firm conduct.
• Recent amendments narrowed the bill: Lawmakers removed key judicial guidance provisions, added safe harbors, and eliminated a private right of action.
• Enforcement risk would still be meaningful: The California Attorney General and district attorneys would retain exclusive authority to bring claims.
• Federal precedent may carry less weight: The bill says California antitrust law can be broader than federal law in single-firm conduct cases.
• Court interpretation could still shift: The Act directs courts to read California antitrust law liberally to promote competition and maximize deterrence.

Background

The COMPETE Act stems from a years-long effort by the California Law Revision Commission to analyze and modernize California’s antitrust law. The CLRC is an independent California state agency responsible for recommending reforms of state law. In March 2026, the Commission recommended four fundamental changes to the Cartwright Act: (1) adding a purpose statement declaring that the Act is intended to promote free and fair competition, including competition for workers, and affirming that the Cartwright Act is broader than federal law; (2) expanding the Act to bar single-firm conduct by explicitly making it unlawful for one or more firms to unreasonably restrain trade or to monopolize or monopsonize a market; (3) including judicial guidance that would lower the standards compared to certain federal antitrust claims, and eliminating the need to define a relevant market if there is direct evidence of market power; and (4) directing courts to liberally interpret California’s antitrust laws to maximize deterrence of antitrust violations. Because private plaintiffs may bring claims under the Cartwright Act, the default expectation was that private plaintiffs would also bring claims under these new provisions.

The original version of the COMPETE Act, introduced in the California Assembly on February 9, 2026, incorporated all of the Commission’s recommendations.

Reduced Scope of the COMPETE Act

Recent amendments have significantly narrowed the scope of the COMPETE Act, both reducing the potential for private enforcement under the Act and reducing the likelihood that the Act will open the door for cases based on novel antitrust theories. 

Elimination of the Judicial Guidance Section

An amendment adopted on June 16 removed the judicial guidance section, which contained many of the Act’s explicit substantive changes to California’s antitrust law. The cuts removed highly publicized provisions repudiating requirements imported from federal antitrust law, including the requirements to show:

• That a dominant company terminated an existing, profitable business relationship with a competitor to bring a claim for refusal to deal;
• The defendant priced goods below cost and had a realistic chance to recoup those costs to state a predatory pricing claim;
• Competitive effects on both sides of the market in cases involving two-sided markets; and
• A relevant market in cases with direct evidence of market power.

This substantial narrowing of the COMPETE Act’s changes to California antitrust law significantly reduced the potential for novel theories of liability to arise from the Act.

Safe Harbor Provisions

The COMPETE Act was further amended on June 22 and August 3 to add safe harbor provisions clarifying that the COMPETE Act does not prohibit exclusive contracts granted by local, state, or federal governmental agencies and protecting conduct “required or authorized by state or federal law.” These safe harbors will ensure that the COMPETE Act does not interfere with monopolies or partial monopolies granted by state and federal law, such as through contracts with utilities or intellectual property laws.

Elimination of a Private Right of Action

On August 13, an amendment limited enforcement of the COMPETE Act to the California Attorney General and district attorneys. Eliminating the Act’s private right of action significantly reduces the scale of potential new litigation that could result from its substantive provisions. The amendment clarifies that the Act will not serve as a new tool for private businesses or consumers who might have otherwise brought their own actions or actions on behalf of putative classes.

The Amended COMPETE Act Still Represents A Significant Expansion

Despite the recent amendments, the COMPETE Act still represents both an expansion of enforcement tools available to the California Attorney General and a reframing of California’s antitrust law that may influence courts’ analysis of antitrust issues. The Act codifies analytical frameworks that have been applied in past court decisions and reaffirms that the purpose of antitrust law is “the promotion and protection of free and fair competition.” It also directs courts to interpret the State’s antitrust laws liberally and perhaps more expansively than federal law. The Act would open the possibility of new enforcement lawsuits and additional state-law penalties for companies accused of monopolizing markets.

Application to Single Firm Conduct

The latest version of the COMPETE Act still expands California’s Cartwright Act to prohibit single-firm conduct, such as a single firm’s attempt to monopolize a market. While single-firm conduct is barred by federal antitrust law, the Cartwright Act has historically been limited to multi-firm conduct. Significantly, the Act encourages courts to depart from federal law when evaluating single-firm conduct claims, stating that federal precedent is “at most instructive” and emphasizing that California antitrust law is “broader in range and deeper in reach” than federal law. The bill highlights findings that California antitrust law applies a lower bar for standing and antitrust injury, recognizes “broader harms” and more categories of per se illegal conduct, and supports actions based on “lower actionable market shares.” The Act also explicitly limits procompetitive justifications for allegedly anticompetitive actions to benefits “within the same relevant market as the conduct that is alleged to be unlawful”—a significant departure from federal antitrust law in cases involving two-sided markets. These lower standards mean that the COMPETE Act’s single-firm conduct provisions will not simply mirror the federal Sherman Act, but could open the door to liability that would not exist under federal law.

Broad Scope of Enforcement

The COMPETE Act also directs courts to interpret California’s antitrust law consistent with its goal of promoting competition. The Act adds a purpose statement to the existing Cartwright Act, explicitly declaring that the “purpose of the Cartwright Act is the promotion and protection of free and fair competition.” Accordingly, the Act explicitly endorses broad views of the scope and purpose of antitrust law, stating that protecting competition “includes protecting competition between businesses when they compete for workers” and endorsing broad statements of the purpose of antitrust law contained in the Federal Trade Commission and Department of Justice 2023 Merger Guidelines. The Act 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.” While these statements of purpose do not substantively change California antitrust law, the legislature’s direction to maximize deterrence of antitrust violations may tip the balance in close cases.

Conclusion

While recent changes to the COMPETE Act have limited both the volume and novelty of potential new litigation that could arise from the Act, the bill would, nonetheless, represent the most significant expansion of California’s Cartwright Act in decades and could give the California Attorney General new tools to continue the recent trend of increased state-level antitrust enforcement. If it is passed, businesses should reevaluate their antitrust exposure under the Cartwright Act’s new provisions.

We will continue to monitor these developments and provide updates as the COMPETE Act moves through the legislative process. Please contact our team with any questions about how the Act may affect your business, or reach out to one of the attorneys listed on the alert or your regular O’Melveny contact.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Diana Aguilar, an O'Melveny partner licensed to practice law in California; Lauren M. Weinstein, an O’Melveny partner licensed to practice law in the District of Columbia; Adam Walker, an O’Melveny counsel licensed to practice law in the District of Columbia; and Michael Tubach, an O'Melveny partner licensed to practice law in California and the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

© 2026 O’Melveny & Myers LLP. All Rights Reserved. Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York’s Rules of Professional Conduct to O’Melveny & Myers LLP, 1301 Avenue of the Americas, Suite 1700, New York, NY, 10019, T: +1 212 326 2000.