California Poised to Introduce Nation’s Strongest Antimonopoly Law

California is now one step closer to enacting the strongest antimonopoly law in the country. 

In late January, the California Law Revision Commission concluded a major part of its years-long study of the state’s antitrust law by formally recommending that lawmakers adopt a new ban on predatory and anti-competitive conduct by powerful companies. If passed into law, the Commission’s recommendations would significantly boost the state’s ability to fight illegal monopolization by amending the state’s antitrust statute, the Cartwright Act, to ban anticompetitive conduct by a single company and by making clear that dangerous, pro-consolidation federal case law should not hamstring enforcement in the Sunshine State. 

The proposed changes would deliver significant benefits for the California economy — particularly for the small businesses, workers, and communities that so often suffer abuse at the hands of monopolistic corporations. California is one of only four states without a ban on “single firm conduct,” or anticompetitive abuses by a single, powerful company. If enacted, the proposed law would give state prosecutors the power to stop monopolistic abuses and create a level playing field for small businesses and workers without being hampered by the pro-bigness court rulings that have shaped federal antimonopoly law.

ILSR and a California-based network of anti-monopoly and consumer advocacy groups, led by Economic Security California, aided the Commission’s recommendations and its deep investigation of California antitrust law over the past two-plus years. That work included giving public comment at Commission hearings; collaborating with allies to recommend how the Commission should approach single-firm conduct, merger, and other rules; and joining numerous coalition advocacy letters asking the Commission and its staff to recommend a strong, clear, and easily enforceable antimonopoly statute in the state. 

The strength of the law comes from its clarity and enforceability that corrects problems found in federal law. For example, along with a ban on illegal monopolization and attempted monopolization, the draft law makes clear that a company’s abuse of suppliers or workers also constitutes an abuse of corporate power. To add clarity to the law, the recommended legislative language prohibits a company from engaging in “restraints of trade,” a term used in both the Cartwright Act and federal antitrust law and that, in the context of California statute, prohibits a variety of anticompetitive conduct. The statute also bars defendants from offsetting the harm in one market with purported benefits in another, unrelated market — a necessary improvement over federal law.

Along with this straightforward draft statutory language, the Commission recommendations include both a Purpose Statement and Judicial Guidance clarifying the intended policy behind the bill and describing how the law should be enforced. The Purpose Statement, for example, instructs judges to “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.” The Judicial Guidance adds a more comprehensive list of conduct that may constitute evidence of a violation of the law, including core monopolization tactics such as predatory pricing. 

Commission recommendations hold significant weight in the California legislative process. Once introduced by a sponsoring lawmaker, recommendations are very often enacted into law without substantive changes. As the Commission describes, “Commission materials that have been placed before and considered by the Legislature are legislative history, are declarative of legislative intent, and are entitled to great weight in construing statutes.” Once enacted, courts have relied on the Commission’s investigation and conclusions to interpret the intent and public policy behind the law. 

Faced with rising unaffordability, low wages and workplace abuse, food deserts, and a floundering small-business economy, states around the country are moving to enact, strengthen, and enforce state-level antitrust laws. The Commission’s investigation and monopolization recommendations put California at the leading edge of this nationwide movement to stop and prevent abuses of corporate power. 

ILSR’s collaboration with allies in California is a part of our broader support for strong state-level antimonopoly laws and enforcement around the country. Over the past several months, for example, ILSR has supported a series of state-level price discrimination bills that would help end the bullying and predation of Walmart, Kroger, and other supermarket goliaths. That work includes frontline advocacy for New York’s Consumer Grocery Pricing Fairness Act, sponsored by Sen. Cordell Cleare and Assemblymember Micah Lasher, and testifying in support of a similar bill pending in Minnesota.

Check out our state antitrust resource hub for more information on what states can do to constrain corporate consolidation.