California Assembly Passes AB 1776, Sending Major Antitrust Bill to the Senate

California’s COMPETE Act (AB 1776) narrowly passed the California State Assembly by three votes on Wednesday and now moves to the California State Senate. The bill — introduced in March by Assembly Majority Leader Cecilia Aguiar-Curry — is modeled closely on draft legislation recommended by the California Law Revision Commission in September. AB 1776 would not only significantly expand potential liability for single-firm conduct and monopolization but, based on recent amendments, would also explicitly decouple California antitrust analysis from certain federal standards. Crowell & Moring is representing the California Chamber of Commerce (CalChamber) in monitoring, analyzing, and responding to AB 1776. 

AB 1776 prohibits single-firm conduct that “unreasonably restrain[s] trade,” which is a legal standard that has never been applied to unilateral conduct and is not defined in the bill. Under this provision, unilateral pricing decisions, refusals to deal, and restrictions on distribution made by a single company could constitute a violation, particularly if they disadvantage a rival.

Before the assembly vote, the bill was amended to remove a list of federal antitrust precedents that were not required for a finding of liability. But that list was replaced with a broad statement that a claim brought under AB 1776 “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.”

In practical terms, this new language limits the ability of California courts to dismiss state antitrust claims based on Sherman Act doctrine or federal case law. This amendment is especially impactful when read together with another section of the bill that states that federal antitrust case law is “at most instructive, not conclusive, when construing California’s antitrust laws.” Taken together, these provisions weaken the traditional analytical link between California antitrust claims and federal antitrust law both at the pleading stage and on the merits.

The bill now moves to the California Senate. Businesses with California operations should monitor the bill closely, particularly those in technology, platform-based markets, or industries where licensing and pricing practices are central to competition strategy. As counsel for CalChamber, Crowell is actively evaluating AB 1776, drawing on its prior advocacy before the California Law Revision Commission and its ongoing work assessing the import and effect of other antitrust bills.

If you are interested in joining CalChamber’s coalition or would like to discuss these important ongoing legal developments, please contact any Crowell lawyer listed below.