SACRAMENTO — Following the California State Assembly’s approval of AB 1776 (Aguiar-Curry), the California COMPETE Act, one of the most aggressively lobbied bills of the 2026 legislative session, the American Economic Liberties Project released the following statement:

“California is the closest it has been in a quarter century to closing a loophole that has shielded the state’s largest corporations for actions that drive up prices, depress wages, and restrict business innovation,” said Lee Hepner, Senior Legal Counsel at the American Economic Liberties Project, which has been involved in the state’s antitrust reform effort since January 2023.

“While the federal administration hands out favors to the wealthy and politically connected, the COMPETE Act represents a groundswell among state lawmakers and enforcers to pick up the slack,” continued Hepner. “Despite the rancor of opposition coming from the largest corporations in the state, the COMPETE Act is a consensus-driven effort to fortify state law against the threat of monopoly power. It is equal parts tempered in its approach and ambitious in its confrontation of the status quo.” 

California prides itself on being the epicenter of creativity and innovation. Blue Jeans, Barbie, the Golden Era of film and TV, the microprocessor, the internet. They all came out of the Golden State.  But in recent years the path towards “disruption” in the state has looked increasingly homogeneous and constrained. Why? Monopolies. They kill competition and they kill innovation. Backed by a widespread coalition of consumer and antitrust advocates, labor, small businesses and trade associations, the COMPETE Act is a long overdue attempt to bring California back to its roots. If passed it would mark the most significant shift in state antitrust enforcement in over a century.

Unlike federal antitrust law, California’s Cartwright Act, its core antitrust law passed in 1907, does not prohibit “illegal monopolization,” or conduct by a single firm to harm competition. In fact, it is one of only five states in the country without such a prohibition. The “single firm conduct loophole” means that when challenging anticompetitive conduct – like Live Nation’s bundling of its venue and ticketing businesses, or Google’s exclusive control over distribution of its search engine – Californians are forced into federal courts and vulnerable to the narrowed scope of federal antitrust laws. In a recent case brought by the State of California against Amazon, alleging conduct that caused third-party sellers to hike prices across non-Amazon retail channels or risk being de-platformed, Amazon exploited the single firm conduct loophole to argue that its conduct was outside the reach of the Cartwright Act.

Assembly Bill 1776, the COMPETE Act, would close the state’s single firm conduct loophole once and for all. In doing so, AB 1776 would codify longstanding interpretations of the state’s existing antitrust law, including that state antitrust law is not bound by interpretations of federal antitrust law, is “broader in range and deeper in reach” than federal antitrust law, and is designed to maximally deter antitrust violations. In doing so, the bill distances state antitrust law from various federal cases that have faced criticism for dulling the original intent of the antitrust laws to protect competition from monopoly harm.

This is not the California legislature’s first attempt to close the single firm conduct loophole, following previous attempts in 1989, 2002 and 2006. Each of those attempts failed. But the world looks much different in 2026. Billionaires are buying our elections. Tech, healthcare, ag and media monopolies have placed their thumbs on the scales. California is the nation’s largest economy, but also one of its least affordable, consistently ranking among the worst states in terms of income and wealth inequality.

The imperative to close California’s single firm conduct loophole is balanced by the bill’s relatively modest intentions – and its strong foundation. The bill springs from a three-year study of antitrust law commissioned by the legislature and undertaken by the state’s nonpartisan California Law Revision Commission (CLRC). The CLRC study was informed by dozens of antitrust experts, economists, and practitioners including government enforcers and defense counsel for Fortune 500 companies. The CLRC rejected various opportunities to recommend more novel approaches to prohibiting anticompetitive single firm conduct, including an EU-style “abuse of dominance” standard, instead favoring statutory language deeply rooted in the nation’s long history of antitrust policy.

Even so, the COMPETE Act has emerged as the most lobbied bill of California’s legislative session. Opposition, led by the California Chamber of Commerce, has poured immense resources into killing the effort, wielding arguments that are in conflict with each other. The opposition has variously argued that the bill is both unnecessarily duplicative of federal antitrust law and that the bill would decimate business innovation in the state, without any credible basis for the assertion. For months, opposition has run social media ads urging lawmakers to oppose the bill. Last week, the opposition funded a mobile billboard to circle the Capitol, landing in hot political water for calling out the bill’s sponsor, Assembly Majority Leader Cecilia Aguiar-Curry, a single mother and farmer from Yolo County, by her first name (a political taboo).

The legislative process has also revealed a paradox: At an inflection point in the state’s history, when the titans of industry are cozying up to the Trump Administration for political favor, the imperative to rein in corporate power is as obvious as ever. Yet, the challenge in doing so is also greater than ever, compounded by the extraordinary political influence wielded by the most powerful corporations in the state.

The forceful opposition also reveals a fracture in the state’s business community: Recent amendments explicitly exempt some 98% of businesses in the state, acknowledging that the state’s small- and mid-size businesses are most often the targets of anticompetitive conduct and least likely to have the market power sufficient to inflict harm. Indeed, support for the bill includes small and mid-sized businesses and independent trade associations, including the Black and Filipino American Chambers of Commerce, tech company Yelp, and dozens of named small business owners.

Yet one look at the opposition’s “Vote No” flyer suggests that the opposition is led by the largest corporations in the state. Not one signatory is a small business. Rather, the letter is signed by 45 local subsidiaries of the California Chamber of Commerce and a host of technology, real estate, hospital, and finance trade associations representing the most dominant firms in their respective industries. Indeed, they represent the very sectors with the most direct, prominent and recent antitrust exposure, including major antitrust litigation against tech companies Google, Meta, and Apple; RealPage and the National Association of Realtors;  and recent or pending mergers among airlines, major retail grocery chains, and film and television networks.

“The COMPETE Act is pro-business and pro-innovation, and the big business lobby advocates for the status quo at the peril of its own reputation,” said Hepner. “The California Chamber of Commerce cannot credibly represent the best interests of the state’s vibrant business community by carrying water only for the largest corporations in the state.”

Following the Assembly Floor vote, the bill proceeds to the Senate, where lawmakers have until August 31 to decide its fate in the legislature. If successful, the bill would then proceed to the Governor’s desk. In recent weeks, Governor Newsom has taken steps in furtherance of enhancing the government’s response to corporate concentration and abuse, adding $14.3 million to the CA Attorney General’s budget for antitrust enforcement and appointing former head of the federal Consumer Financial Protection Bureau, Rohit Chopra, to a new Secretary role overseeing consumer protection efforts across state agencies.

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