AB 1776: 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 monopolize or monopsonize in any part of trade or commerce, as specified, or in restraint of trade. For these purposes, the bill would define restraint of trade to include any actions, measures, or acts included or cognizable under a specified provision of the Cartwright Act that defines trust, whether directed, caused, or performed by one or more persons. The bill would prohibit anticompetitive effects in one market from being offset by purported benefits in a separate market and would prohibit the harm to a person or persons from the challenged conduct from being offset by purported benefits to another person or persons. The bill would require courts to use the 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 provide that federal antitrust laws are, at most, instructive and not conclusive when interpreting Californias antitrust laws. The bill would authorize any of specified conditions to constitute evidence of liability under the Cartwright Act but would prohibit requiring a finding, including, but not limited to, of any of the specified conditions to establish liability. The bill would also make related findings and declarations. The bill would require courts to liberally interpret Californias 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.