AB 1776

AB1776:v94#DOCUMENT

Bill Start

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Assembly Bill

No. 1776

An act to add Sections 16730, 16731, and 16732 to the Business and Professions Code, relating to business regulations.

LEGISLATIVE COUNSEL'S DIGEST

AB 1776, as amended, Aguiar-Curry. Cartwright Act: violations.

Existing law, commonly known as the Cartwright Act, identifies certain acts as unlawful restraints of trade and unlawful trusts and prescribes provisions for its enforcement. Chapter 338 of the Statutes of 2025 provides that in a complaint for any violation of the Cartwright Act, it is sufficient to contain factual allegations demonstrating that the existence of a contract, combination in the form of a trust, or conspiracy to restrain trade or commerce is plausible. Chapter 338 of the Statutes of 2025 also provides that a complaint for any violation of the Cartwright Act is not required to allege facts tending to exclude the possibility of independent action. Existing case law, In re Cipro Cases I & II (2015) 61 Cal. 4th 116, establishes a rule of reason analysis for certain claims under the Cartwright Act, which, among other things, determines whether an act was made for the purpose of avoiding competition and whether the anticompetitive effects of the agreement outweigh any procompetitive justifications.

This bill would prohibit one or more persons from acting, causing, taking, or directing measures, actions, or events that are to unreasonably restrain trade or monopolize or monopsonize in any part of trade or commerce, as specified, or in restraint of trade. provided. The bill would prohibit anticompetitive effects in one market from being offset by purported benefits in a separate market. The bill would require courts to use the analytical framework and guidance provided in In re Cipro Cases I & II. The bill would require a plaintiff bringing an action under its provisions to allege, and prove at trial, market power through either direct or indirect evidence. The bill would exempt a small business, as defined, from these provisions. The bill would also make related findings and declarations. The bill would require courts to liberally interpret California’s antitrust laws to best promote free and fair competition, as provided.

Because the bill would expand the scope of activities prohibited by the Cartwright Act, the violation of which is punishable as a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Digest Key

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

Section 16730 is added to the Business and Professions Code, to read:

16730.

(a) The purpose of the Cartwright Act is the promotion and protection of free and fair competition (Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758, 783), which is fundamental to a healthy marketplace that protects all trade participants, including workers and consumers, and to an environment that is conducive to the preservation of our democratic, political, and social institutions.

(b) Protecting competition includes protecting competition between businesses when they compete for workers by prohibiting anticompetitive business practices that impede workers’ freedom to choose employment.

(c) The California Supreme Court has determined that the Cartwright Act is “broader in range and deeper in reach” than the federal Sherman Anti-Trust Act (Cianci v. Superior Court (1985) 40 Cal.3d 903, 920). The California Supreme Court has found the Cartwright Act is not modeled on the federal Sherman Anti-Trust Act and therefore interpretations of federal antitrust law are not conclusive (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1195). Further, California courts have recognized that the Cartwright Act departs from the Sherman Anti-Trust Act in many respects, including, but not limited to, inclusion of indirect purchaser recovery (Section 16750); use of a proximate cause test for Cartwright Act standing and antitrust injury (Cellular Plus, Inc. v. Superior Court (1993) 14 Cal. App. 4th 1224, 1232); recognition of broader harms and per se conduct (Sections 16720 to 16729, inclusive); lower actionable market shares (Fisherman Wharf Bay Cruise v. Superior Ct. (2003) 114 Cal. App. 4th 309, 326); structured rule of reason analysis (In re Cipro Cases I & II (2015) 61 Cal.4th 116, 147); and differing burdens of proof.

(d) Interpretations of federal antitrust laws are at most instructive, not conclusive, when construing California’s antitrust laws, as they are not modeled on federal antitrust statutes (Aryeh v. Canon Business Sols., Inc. (2013) 55 Cal.4th 1185, 1195). Thus, a claim brought pursuant to Section 16731 shall not be dismissed or rejected on the pleadings or merits pursuant to the Sherman Act or any case decided thereunder unless the court also finds that such a dismissal or rejection is consistent with this chapter.

(e) California agrees with the United States Department of Justice and the Federal Trade Commission in recognizing that unilateral action and multiparty actions, horizontal and vertical relationships, and various forms of corporate entities can interfere with free and fair competition, as reflected in the Federal Trade Commission and Department of Justice 2023 Merger Guidelines.

SEC. 2.

Section 16731 is added to the Business and Professions Code, to read:

16731.

(a) It is unlawful for one or more persons to act, cause, take, or direct measures, actions, or events that do either of the following:

(1) Unreasonably restrain trade.

(2) Monopolize or monopsonize, attempt to monopolize or monopsonize, maintain a monopoly or monopsony, or combine or conspire with another person to monopolize or monopsonize any part of trade or commerce.

(b) Anticompetitive effects and procompetitive justifications of the challenged conduct shall be evaluated within the same relevant market.

(c) Courts adjudicating a claim brought under this section shall use the analytical framework and guidance of the California Supreme Court in the manner described in In re Cipro Cases I & II (2015) 61 Cal. 4th 116, 146–147.

(d) A plaintiff bringing an action pursuant to this section shall be required to allege and, to prevail at trial, prove market power, either through direct or indirect evidence.

(e) Section 16731 shall not apply to any small business, meaning an independently owned and operated business, the principal office of which is located in California, the officers of which are domiciled in California, and which, together with affiliates, has 100 or fewer employees and average annual gross receipts of ten million dollars ($10,000,000) or less over the three years prior to the filing of the complaint.

(f) (1) This section does not prevent, limit, or prohibit an exclusive franchise, contract, license, or permit authorized by state law that is granted and supervised by a local governmental agency, or impose any liability under this section on a person or entity acting within the scope of authority granted by one or more such exclusive franchises, contracts, licenses, or permits.(2) For purposes of this subdivision, “local governmental agency” includes a city, county, special district, sanitation district, or joint powers agency.

SEC. 3.

Section 16732 is added to the Business and Professions Code, to read:

16732.

Courts shall 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 (Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758).

SEC. 4.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.