A California commission studying changes to the state’s antitrust laws advanced a proposal on Thursday that would expand state restrictions against anticompetitive business practices.
The California Law Revision Commission voted 5-0 to send its recommendation on expanding the state’s landmark antitrust law out for public comment. The proposal would make illegal certain anticompetitive business practices by companies acting on their own, an extension of existing law that focuses on collusion between competing companies.
Public comment on the proposal would go through Jan. 9. The commission would later decide to incorporate any additional language in the draft before voting next month to send its recommendation to the legislature.
The proposal would mark a shift in California law as the state’s Democratic leaders eye an increasingly aggressive approach to antitrust policy. Labor unions and consumer advocates contend the commission’s recommendations will bolster competition, particularly in consolidated sectors.
Industry groups warn that the proposal would upend longstanding rules, from predatory pricing to how companies deal with rivals.
The consequences of this shift could ripple from Hollywood to Silicon Valley and across California’s farm lands.
New Approach
The draft legislation would align California’s landmark antitrust law, the Cartwright Act, more closely with the federal Sherman Act in addressing anticompetitive practices by individual companies.
The commission proposal would go further than the Sherman Act, breaking from decades of federal court precedent by giving state court judges more flexibility to rule on a case. For example, they wouldn’t have to consider certain factors, such as a company’s market share, that federal judges have to take into account when weighing such cases under the Sherman Act.
The proposal would also align state law with elements of former President Joe Biden’s administration’s merger guidelines.
Business groups have argued the commission’s proposals would endanger common practices, such as offering volume discounts and entering into exclusive licensing agreements.
“The current antitrust system has a robust and evolving body of case law that already addresses harmful conduct, including predatory pricing, exclusionary behavior, and anticompetitive bundling,” business groups, such as the Chamber of Progress and the Bay Area Council, said in a Wednesday letter to the commission.
Consumer advocates and labor unions have largely backed the commission’s approach, contending it would give teeth to antitrust laws they argue have been narrowed by decades of federal court decisions.
The recommendation would bolster competition by curbing the power of large businesses that wield outsize power in their industries, argued Mona Masri, state director of strategic initiatives for the antimonopoly advocacy group Economic Security Project.
“We have an unreliable federal regulatory system right now, so we cannot really rely on the federal government to take the type of action we need to protect consumers, workers, and businesses that aren’t these massive corporate giants,” she said in an interview.
Legislative Action
California lawmakers have taken several steps in recent years to toughen the state’s antitrust rules.
A new law (SB 763) enacted this year increases the penalties for violating the Cartwright Act, boosting criminal penalties to $6 million from $1 million and creating a new $1 million civil penalty. Lawmakers also expanded state antitrust law to cover pricing algorithms (AB 325).
They may consider next year whether to expand pre-merger notification requirements. Assemblymember Rebecca Bauer-Kahan (D) filed a bill last year (AB 1345) with similar language to the commission’s proposal, but told Bloomberg Government she won’t push the measure in 2026.
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