The proposal would enhance enforcement tools available to state authorities and potentially broaden liability exposure for businesses operating in California.

The California Legislature is currently considering a bill that would substantially expand the scope and enforcement mechanisms of California’s antitrust regime. On January 30, 2026, the California Law Revision Commission officially approved a final legislative proposal to broaden the state’s antitrust statute, the Cartwright Act, to include single-firm conduct and to allow state enforcers to go beyond the federal Sherman Act. While the bill, AB 1776, remains under consideration in the state Legislature, it reflects a broader trend toward more aggressive antitrust regulation and enforcement at the state level, both in California and nationally.

For example, last year, California Governor Gavin Newsom signed legislation increasing criminal fines for antitrust violations from $1 million to $6 million and approved a bill outlawing the use of certain shared-pricing algorithms. Last month, Newsom signed legislation requiring merging companies to provide copies of certain federal corporate merger filings to the California attorney general.

AB 1776 is intended to strengthen state antitrust law to more effectively address perceived gaps in existing frameworks, particularly in markets where large or dominant firms may be able to restrict competition without clearly violating traditional antitrust standards. The proposal would enhance enforcement tools available to state authorities and potentially broaden liability exposure for businesses operating in California.

Key Features of AB 1776

Although the bill text continues to evolve through the legislative process, AB 1776, as currently proposed, would:

• Expand the substantive reach of California antitrust law, making it easier for enforcers to challenge conduct viewed as anticompetitive or exclusionary, even where such conduct might be more difficult to pursue under federal antitrust standards.
• Strengthen investigatory and enforcement powers for state authorities, aiming to facilitate more proactive oversight of competitive conditions in California markets.
• Potentially increase the range of conduct and business arrangements subject to scrutiny, including practices that may previously have been viewed as falling into gray areas under existing California or federal law.
• Signal a policy emphasis on promoting “fair competition,” with an eye toward deterring perceived market abuses by large or strategically positioned firms.

Implications for Businesses

If enacted, AB 1776 could materially alter the antitrust risk landscape for companies doing business in California. Firms may face an increased likelihood of investigation or enforcement action by state authorities, even where federal enforcement has been limited or declined. Conduct that previously was analyzed primarily under federal standards could be subject to broader or more plaintiff-friendly theories under state law. Companies may need to reassess existing and planned business practices—including pricing strategies, vertical arrangements, exclusivity provisions and information-sharing—under a more expansive California standard.

What Companies Should Do Now

Given the potential breadth of AB 1776, companies operating in or affecting California markets should consider:

• Monitoring the bill closely as it moves through the legislative process and as amendments are introduced.
• Evaluating current competitive practices and policies, particularly in markets where they exercise significant market share or influence.
• Preparing for the possibility of enhanced state scrutiny, including reviewing internal antitrust compliance programs and documentation practices.

Conclusion

As AB 1776 progresses, additional details will emerge regarding specific standards, enforcement mechanisms and potential remedies. Companies should remain attentive to developments and be prepared to adjust compliance strategies if the bill is enacted.

For More Information

If you have any questions about this Alert, please contact Sean P. McConnell, Christopher H. Casey, any of the attorneys in our Antitrust and Competition Group, any of the attorneys in our State Attorneys General Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.