Executive Summary
- What’s new: California Assembly Bill 1776, known as the COMPETE Act, has moved closer to becoming law after passing the California Senate Judiciary Committee. Several potential amendments may narrow the bill as legislators work to reach consensus prior to a full legislative vote on the bill.
- Why it matters: Notwithstanding that several proposed amendments could narrow the original bill’s provisions, if enacted, the bill could make it easier for plaintiffs to bring antitrust claims based on California law and take them to trial. The Cartwright Act might also subject businesses to liability for conduct that has long been considered lawful under federal antitrust law.
- What to do next: Companies with a significant market presence in California should continue to closely monitor the progress of this bill, and begin to evaluate their pricing, distribution and other competitive strategies.
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On June 30, 2026, California Assembly Bill 1776, known as the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy (COMPETE) Act, passed California’s Senate Judiciary Committee with a 9-2 vote. As we’ve highlighted recently, AB 1776 would amend and significantly expand the Cartwright Act, California’s principal antitrust law, extending it to include single-firm conduct.
Although several potential amendments could narrow the bill in response to opposition raised at the Senate Judiciary hearing on June 30, 2026, if enacted, the bill could significantly expand the scope of California’s antitrust law beyond federal antitrust principles.
The bill continues to advance through the California Legislature and has been referred to the California Senate Appropriations Committee.
Noteworthy Amendments to AB 1776 Since Original Proposal
After the bill was originally introduced, the bill’s sponsor, Democratic Assemblymember Cecilia Aguiar-Curry proposed a few notable amendments to the bill that was in front of the Senate Judiciary Committee on June 30, 2026. The committee approved these amendments — among others — the same day without much debate:
- Removal of explicit federal antitrust standards from examples of what is not required to find liability. An amendment to Section 3 of the bill removed specific examples of federal antitrust standards that are necessary to find defendants liable under federal law that would not have been necessary for plaintiffs to show under AB 1776 (e.g., no prior dealing requirement for refusal-to-deal claims and no need to show the defendant priced goods below cost for predatory pricing claims). Instead, the bill now reads that courts should “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.”
- Exemption for state-authorized exclusive franchises. The bill now has an exemption for exclusive franchises that are authorized by state law and overseen by a local government agency. Prior to this addition, the only exemption to the bill was for independently owned California-based small businesses with fewer than 100 employees and less than $10 million gross receipts.
Key Takeaways From the Senate Judiciary Hearing
During the Senate Judiciary Committee hearing, multiple senators expressed skepticism with the bill as currently drafted. In her opening speech in support of the bill, Assemblymember Aguiar-Curry highlighted new potential amendments that she committed to implement in the next version of the bill, should the bill pass the Senate Judiciary Committee and reach the next phase of the legislative process.
Each proposed amendment would narrow the scope and potential impact of AB 1776 if enacted. The key areas discussed during the hearing were:
- Private right of action. The bill’s private right of action (PRA) was a significant source of debate at the hearing. Multiple senators raised concerns about the potential for the PRA to generate excessive and frivolous litigation, with some questioning whether the state attorney general should be the sole enforcement authority for the bill’s proposed expanded provisions. Opponents echoed these concerns, noting uncertainty about how the PRA would be applied in practice. Assemblymember Aguiar-Curry committed to working with the committee and the attorney general on enforcement provisions as the bill advances. It remains to be seen whether the PRA will remain in future iterations of the bill.
- “Substantial market power” requirement. Assemblymember Aguiar-Curry proposed raising the market power threshold plaintiffs must establish to bring a claim under the bill in the next version of the bill. If amended, plaintiffs would be required to prove “substantial market power” by a defendant, rather than simply “market power.” This heightened standard would raise the bar for plaintiffs seeking to bring a claim under the bill.
- Affirmation of lawful business practices. Assemblymember Aguiar-Curry also proposed new language for the next version of the bill that would affirm businesses’ ability to obtain or maintain superior market power through legitimate means, such as product superiority. If added to the bill, it would clarify that merit-based monopolies would remain lawful under the amended Cartwright Act.
- Federal law may be instructive on the Cartwright Act. A third proposed amendment would strike language that would have explicitly decoupled the Cartwright Act from federal antitrust law in the next version of the bill. The revised text would allow federal law to continue serving as instructive authority on the Cartwright Act, though it is unclear how much weight California courts would give to federal decisions interpreting federal law when ruling on Cartwright Act claims subject to the bill.
Next Steps
The bill, which likely will be amended consistent with the discussion at the Senate Judiciary Committee hearing, has been referred to the California Senate Appropriations Committee, where another hearing will be held. No date for the hearing has been set, but the Senate Appropriations Committee’s next bill hearing is on August 3, 2026.
The bill must be signed by Gov. Gavin Newsom by September 30, 2026, in order to be effective starting January 1, 2027. Although Democrats hold a supermajority in the California Legislature, given the discussion during the Senate Judiciary Committee hearing, there is no guarantee that the bill would pass a full legislative vote. It also remains unclear how Gov. Newsom views the bill, particularly as it continues to be amended in the Legislature.
The proposed legislation presents increased legal risk and uncertainty in a rapidly shifting legal and compliance landscape. Many firms, both nationally and internationally, may be affected by the bill, and businesses with a significant presence in California should continue to closely monitor the progress of the bill as it advances.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.