AB1776 - Cartwright Act: violations.

Amended IN Senate August 27, 2026 Amended IN Senate August 13, 2026 Amended IN Senate August 03, 2026 Amended IN Senate June 22, 2026 Amended IN Senate June 16, 2026 Amended IN Assembly May 18, 2026 Amended IN Assembly April 09, 2026 Amended IN Assembly March 23, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 1776 Introduced by Assembly Member Aguiar-Curry (Principal coauthor: Assembly Member Mark González) (Principal coauthor: Senator Hurtado) coauthors: Senators Hurtado and Wahab) (Coauthors: Assembly Members Bains, Bonta, Connolly, Elhawary, Lee, Ortega, Rogers, and Schiavo) (Coauthors: Senators Cortese and Padilla) Cortese, Padilla, and Reyes) February 09, 2026 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 any person from monopolizing or monopsonizing any part of trade or commerce, as provided, and would require procompetitive justifications of the challenged conduct to be evaluated within the same relevant market, as specified. provided. 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, substantial 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 its provisions do not prevent, limit, or prohibit certain conduct and legal instruments, including exclusive franchises granted and supervised by a local, state, or federal governmental agency. The This bill would require any action brought pursuant to these provisions to be initiated only by the Attorney General or a district attorney. attorney, and would, with certain exceptions, preclude an alleged violation under its provisions from serving as a predicate violation under the Unfair Competition Law. The bill would require an action brought pursuant to these provisions to be filed as a “complex case” pursuant to provisions of law requiring the assessment of additional court fees, as specified. 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. discussed by the California Supreme Court in Clayworth v. Pfizer, Inc. (2010) 49 Cal.4th 758, 783 and in In re Cipro Cases I & II (2015) 61 Cal.4th 116, 136. (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 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). (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. (f) (e) The Legislature affirms that, as referenced in In re Cipro Cases I & II (2015) 61 Cal.4th 116, 148, a business may lawfully obtain and maintain market power or monopoly power through the superiority of its products, services, or business acumen. SEC. 2. Section 16731 is added to the Business and Professions Code, to read: 16731. (a) It is unlawful for every person to 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) Procompetitive justifications of the challenged conduct shall be evaluated within the same relevant market as the conduct that is alleged to be unlawful. (c) (b) 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) (c) A plaintiff bringing an action pursuant to this section shall be required to allege and, to prevail at trial, prove substantial market power, either through direct or indirect evidence. (e) (d) This section 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 before the filing of the complaint. (f) (e) (1) This section does not prevent, limit, or prohibit: (A) Any exclusive franchise, contract, license, or permit that is granted and supervised by a local, state, or federal governmental agency. (B) Conduct required or authorized pursuant to state or federal law that is granted and supervised by a local, state, or federal governmental agency. (2) This section does not impose any liability on a person or entity for conduct within the scope of authority granted by one or more such exclusive franchises, contracts, licenses, or permits. (3) For purposes of this subdivision, “local governmental agency” includes a city, county, special district, sanitation district, or joint powers agency. (g) (f) (1) An action pursuant to this section may be initiated only by the Attorney General or a district attorney. (h) Any action brought pursuant to, or under, this section is deemed a complex case as described in subdivision (a) of Section 3.400 of the California Rules of Court. (2) Except in an action brought by the Attorney General or a district attorney pursuant to this section, an alleged violation of this section shall not serve as a predicate violation under Chapter 5 (commencing with Section 17200). (3) This subdivision does not apply to, create or extinguish a defense to, or limit the scope of, an action that is not brought pursuant to this section. (g) Sections 16756, 16756.1, and 16757 do not apply to claims brought under this section unless the claims allege that a person combined or conspired with another person to monopolize or monopsonize any part of trade or commerce. (h) Pursuant to Section 70616 of the Government Code, any action under this section shall be filed as a complex case. 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.