A sweeping proposal to expand California’s antitrust laws is drawing sharp opposition from industry groups, who warn the measure could expose businesses to broad and potentially unfair claims of anticompetitive conduct, even when they do not dominate their markets.
The legislation, known as Assembly Bill 1776, would significantly widen the scope of the state’s Cartwright Act. Traditionally, the law has focused on anticompetitive behavior involving multiple companies. Under the proposed changes, however, individual firms could also face liability. The bill would further move away from long-standing federal legal standards that courts have relied on for decades when evaluating antitrust claims, according to Bloomberg.
The issue has quickly become one of the most divisive topics in the current legislative session, which runs through August. It has set up a clash between labor unions and consumer advocates—key allies of the Democratic supermajority in Sacramento—and major business interests, including those in the technology and entertainment sectors, per to Bloomberg.
At the heart of the debate is a fundamental question: how to define market power. Under federal law, particularly the Sherman Act, proving that a company controls a substantial share of a market is often critical to winning an antitrust case. AB 1776 departs from that framework by omitting any specific market share threshold.
Supporters argue that omission is intentional and necessary. They contend that strict thresholds allow large companies to avoid accountability. “It is a red herring and by defining a market share, it automatically gives large companies an ability to hide,” said Abiel Garcia, a partner at Kesselman Brantly Stockinger who supports the bill.
Backers also argue that current federal standards have weakened antitrust enforcement over time. They say the proposed law would allow courts greater flexibility to address harmful business practices, even when a company does not hold a dominant share of a market. For example, they point to industries like pharmacy benefit management, where firms may exert significant influence without technically controlling a majority share, according to Bloomberg.
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Opponents, however, say the absence of clear thresholds creates dangerous uncertainty. The California Chamber of Commerce and other business groups argue that companies would have little guidance on what constitutes lawful behavior. Eric Enson, a partner at Croll representing the chamber, warned lawmakers that the bill has “no thresholds whatsoever, meaning that everyday competitive practices, like price cutting and loyalty rewards programs—even by small and medium sized businesses—could be recast as unlawful restraints of trade.”
Critics also caution that the proposal could isolate California’s legal framework from federal standards and those used in other states, complicating compliance for businesses operating across jurisdictions, per to Bloomberg.
As tensions rise, some lawmakers are exploring whether a compromise is possible. During a recent Assembly Judiciary Committee hearing, Assemblymember Diane Papan suggested that establishing a market share threshold could help bridge the divide. “We got to come up with something, and these people need to be able to sleep at night,” she said, referring to business owners concerned about the bill’s reach.
Still, agreement remains elusive. While the bill’s author, Assembly Majority Leader Cecilia Aguiar-Curry, indicated openness to further discussions, neither supporters nor opponents have proposed a specific threshold.
A legislative analysis noted that defining the relevant market would remain critical under the new framework. “Properly pleading and scoping the relevant market is especially important as a firm’s percentage of the market share is likely to indicate just how much power a firm has to manipulate the market and stifle competition,” the Assembly Judiciary Committee analysis stated.
The same analysis suggested lawmakers consider amendments to clarify how market share should be evaluated, though it also pointed out that critics have yet to offer a workable alternative.
Some observers have looked to New York as a potential model. A similar bill introduced there last year included explicit thresholds for determining market dominance. While it passed the state Senate, it ultimately stalled in the Assembly.
For now, both sides remain far apart. Supporters argue that introducing firm thresholds would weaken the bill’s intent. “We would be handicapping the ability of the state to advocate for its small businesses,” said Bianca Blomquist, California director for Small Business Majority.
Source: Bloomberg
