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California’s district attorneys and the state attorney general will now have the ability to sue individual businesses that they believe are engaging in anticompetitive conduct.
But for some of its biggest proponents, it’s a hollow victory.
Gov. Gavin Newsom on Wednesday signed Assembly Bill 1776, known as the Compete Act, bringing an end to one of the most hard-fought political battles of the year. Unions and consumer rights groups supported the bill, but the state’s influential Chamber of Commerce fiercely opposed it and won several concessions to water it down.
Assemblymember Cecilia-Aguiar Curry, a powerful Davis Democrat, introduced the bill to modernize the century-old Cartwright Act, which regulates only anticompetitive conduct by two or more businesses. Many progressive Democrats, concerned about corporate consolidation of business in industries such as healthcare, ticket sales and retail, signed on as co-authors.
Newsom signed the bill along with six other small business-friendly bills on the constitutional deadline for signing legislation.
“We’re taking on predatory practices that drive up costs and shut entrepreneurs out — making sure California’s economy works for everyone, not just the biggest and best-connected,” he wrote in a release announcing his approval.
However, his signing message on AB 1776 was more circumspect.
“While I align myself with a stated goal of targeting anti-competitive conduct that harms consumers, workers, and businesses alike, we must be careful not to set the bar too low — dragging legitimate, superior business practices and products into the ambit of anti-competitive behavior,” he wrote.
He added that he expects judges and prosecutors to interpret and apply the law “in ways that penalize clear wrongdoing, without creating needless uncertainty.”
Lee Hepner, senior legal counsel at the American Economic Liberties Project, a former sponsor of the bill, wrote in a post on X that Newsom’s signing message made Hepner pessimistic that the law would be effective.
“I foresee politicized antitrust litigation budgets, partisan allegations of weaponized enforcement, novel legal defenses that find new basis in the legislative history of this bill, and public officials caving to the concentrated private power that antitrust laws are supposed to put in check,” he wrote.
The group had helped craft the legislation for years, but changed its position when Aguiar-Curry removed a “private right of action” provision that would have allowed any individual or business to sue a company they allege is harming them through anticompetitive tactics.
Other supporters included the California Federation of Labor Unions and TechEquity Action, a progressive advocacy group that lobbies for regulation of the tech industry.
Labor Federation President Lorena Gonzalez said in a statement that the new law “gets us one step closer to building a more affordable economy for working people.”
The bill grew out of a three-year review by the California Law Revision Commission, which the Legislature had asked to study changes to the 1907 Cartwright Act.
The private right of action was one of the biggest sticking points for CalChamber, which argued it would “expose businesses of all sizes to a wave of frivolous lawsuits.” The group launched a multimillion-dollar ad campaign over the summer to push to weaken the proposed law. Tech companies such as Meta and Google also spent hundreds of thousands of dollars to lobby legislators on AB 1776 and other issues.
Although Aguiar-Curry said she was disappointed the private right of action was gutted in the last weeks of the legislative session, she pressed on, and lawmakers passed the bill in the last days.
“California now has stronger tools to protect our small businesses, workers, and consumers and to make sure our markets work for everyone,” she said in Wednesday’s release.
