ICLE Examines California COMPETE Act’s Changes to Antitrust Law
PORTLAND, Ore. (Oct. 2, 2026) — California’s newly enacted COMPETE Act changes how the state evaluates single-firm conduct, with implications for competition, business practices, and antitrust enforcement, according to an analysis by the International Center for Law & Economics (ICLE).
Gov. Gavin Newsom signed Assembly Bill 1776, the COMPETE Act, on Sept. 30. The law extends California’s Cartwright Act to single-firm conduct for the first time in the statute’s 119-year history. ICLE’s analysis examines how the enacted text differs from the version discussed in its May 2026 issue brief, “Competing Against Competition: The COMPETE Act’s Antitrust Overreach.”
The final law removes the provision allowing private lawsuits. That change eliminates private suits seeking triple damages under the new provisions, including the potential for rivals to use litigation costs to extract settlements regardless of merit, according to Eric Fruits, ICLE’s director of economic research.
The enacted text also requires proof of substantial market power and directs courts to the In re Cipro Cases framework, which weighs harms to competition against benefits to competition. It affirms that firms may lawfully gain market power by offering better products.
Legislators also removed provisions that would have allowed courts to dispense with proof of market power, evidence that a firm could recover losses from below-cost pricing, and consideration of competitive effects across markets.
“These changes address several concerns examined in our May issue brief,” Fruits said. “Our analysis considers how the enacted provisions may affect competition and how courts can distinguish harmful conduct from practices that benefit consumers.”
The statute leaves “substantial market power” undefined and cites California cases that permit liability at lower market shares than federal law. ICLE’s analysis explains how uncertainty about that threshold could prompt firms to compete less aggressively to avoid enforcement.
The law directs courts to interpret antitrust law liberally and keep “maximizing” deterrence in mind. ICLE examines how that instruction may affect close cases and the costs of enforcement errors. Competitive entry can erode monopoly profits when enforcement misses a violation, Fruits noted. A ruling that wrongly condemns beneficial conduct, by contrast, may deter similar competition through precedent.
The law treats federal precedent as “instructive,” but not necessarily dispositive. It also gives courts limited guidance on defining labor markets or measuring employers’ power to suppress wages, subjects on which economists have yet to agree, Fruits said.
The Legislative Counsel’s digest indicates that the new provisions expand the conduct subject to criminal penalties. Courts assess single-firm conduct under the rule of reason, which weighs competitive harms and benefits, rather than per se rules that prohibit conduct outright. ICLE’s analysis considers the implications for clear legal standards and fair notice when district attorneys pursue criminal enforcement.
Firms may also face practical difficulties limiting pricing or platform practices to California, Fruits noted. A single enforcement action or settlement could shape national practices, potentially prompting litigation under the dormant Commerce Clause, which limits state interference with interstate commerce.
“The market-power requirement, the Cipro framework, and the protection for superior products give courts criteria for evaluating single-firm conduct,” Fruits said. “Their practical effects will depend on how courts and enforcers interpret and apply the statute.”
To interview Fruits, contact Jim Fellinger at [email protected].
About ICLE
The International Center for Law & Economics is a nonprofit, nonpartisan research center working with a roster of more than one-hundred academic affiliates and research centers from around the globe. ICLE scholars promote the use of law and economics methodologies to inform public policy debates.