Proposals would untether California single-firm conduct standards from federal antitrust law.~~As summarized in our January 15, 2025 Client Alert, the California Law Revision Commission (CLRC) has been considering changes to California’s antitrust law.[1]  Earlier this year, the CLRC directed its staff to prepare specific proposals on, among other things, changes to California law to address unilateral (single-firm) anticompetitive conduct—which has historically been outside the ambit of the California Cartwright Act.[2]  Yesterday, the CLRC staff proposed three options for a potential single-firm conduct provision.~~The staff recommendations will now be considered by the CLRC’s commissioners, and a period of public comment is open in advance of the CLRC’s June 26, 2025 meeting at which the CLRC may select one of these three proposals to recommend for legislative adoption.[3]  Gibson Dunn attorneys are monitoring these recommendations and are available to discuss the implications for your business or assist in preparing a public comment for submission to the CLRC.~~Proposed Single-Firm Conduct Language~~The CLRC is considering recommending a state antitrust law to reach anticompetitive acts by a single company.  At the federal level, Section 2 of the Sherman Act prohibits anticompetitive monopolization and attempts to monopolize.  But the CLRC is considering options that would be broader than Section 2 in a number of ways, and the staff’s recommendations seek to explicitly “untether” state competition law from federal antitrust law.[4]  Indeed, in yesterday’s memo, the CLRC staff proposed that, in addition to specific language prohibiting unilateral anticompetitive conduct, for which the staff provided three options, the CLRC also consider statements of purpose which would clarify that California law is broader than federal law and would reject particular limiting principles in federal law.~~As the first option, the CLRC staff recommended adding a “basic” single-firm conduct provision to the Cartwright Act that would read: “It is unlawful for a person to monopolize or monopsonize, to attempt to monopolize or monopsonize, to maintain a monopoly or monopsony, or to combine or conspire with another person to monopolize or monopsonize, in any part of trade or commerce.”[5]  This option is the closest analogue to Section 2 of the Sherman Act.  As a result, this proposal is the most likely to be interpreted in line with federal law.  While that would minimize confusion, uncertainty, and room for novel theories of liability or inconsistent interpretations of state and federal law, the CLRC staff views this as a “significant drawback[]” based on their view that federal law is too restrictive on enforcers and plaintiffs.[6]  Moreover, this proposal does differ from federal law in certain ways, including an explicit prohibitions on monopsonization to “help address” an asserted “historical underenforcement of buyer-side monopolies that impact labor, among others.”[7]~~As the second option, the CLRC staff proposes an “enhanced” provision that, in addition to the above, would include an explicit prohibition on “act[ing], caus[ing], tak[ing] or direct[ing] measures, actions, or events . . . [i]n restraint of trade, or to attempt to restrain the free exercise of competition or the freedom of trade or production.”[8]  This would establish a new “restraint of trade” violation for single firm actors, untethered to the acquisition or maintenance of monopoly power (as required by Section 2 of the Sherman  Act), that would capture a “broad range of anticompetitive conduct that may not fall within the currently restricted scope of federal law.”[9]~~As the third option, the CLRC staff propose “a clean break from existing federal [single-firm conduct] law”[10] with a prohibition on “anticompetitive exclusionary conduct,” defined as conduct that tends to “[d]iminish or create a meaningful risk of diminishing the competitive constraints imposed by the defendant’s rivals and thereby increase or create a meaningful risk of increasing the defendant’s market power” and “[d]oes not provide sufficient benefits to prevent the defendant’s trading partners from being harmed by that increased market power.”[11]  This proposal would define trading partners as customers and suppliers, although the CLRC staff suggests clarifying the term to cover workers and other competitors.[12]~~Finally, CLRC staff also suggest including statements of purpose as part of any recommended legislation to guide the law’s interpretation and “untether that law from federal law and certain narrow precedents.”[13]  The staff proposed a number of sample purpose provisions, including statements that California antitrust law is intended to include protection for workers,[14] that California “favors the risk of over-enforcement of antitrust laws over the risk of under-enforcement,”[15] and that California antitrust law is broader than and not modeled on federal law.[16]  The latter could involve language explicitly rejecting certain federal precedents, including ones allowing a company to refuse to deal with competitors,[17] raising the requirements for predatory pricing claims,[18] requiring that plaintiffs define and prove a relevant market,[19] requiring that rivals must be as efficient as the defendant,[20] and requiring a certain threshold of market share or market power  before imposing liability for single firm conduct.[21]~~Takeaways~~The CLRC staff’s proposals—in particular, the second and third options—represent significant departures from existing law.  Each would impose liability on conduct that has remained outside the ambit of California antitrust law for over a century.  They also create the potential for proscribing conduct that was previously lawful under both federal and state law, expanding potential liability, encouraging investigations by the California Attorney General as well as private litigation—including class actions—in California courts, and creating uncertainty and compliance challenges for businesses, particularly those operating in multiple states.~~The second and third options, which go beyond prohibiting monopolization (or monopsonization) to prohibiting unilateral “restraints of trade” or actions that risk increasing a firm’s market power, do so without requiring a threshold showing of monopoly or near-monopoly power.  Indeed, some of the CLRC staff’s proposed findings and declarations explicitly reject the idea that liability requires a finding that a single firm has or may achieved market share at or above any particular threshold.[22]  This would be a vast expansion of antitrust law that not only could put California’s antitrust regime in opposition to federal law but also would “threaten to discourage the competitive enthusiasm that the antitrust laws seek to promote.”[23]  This also risks creating divergent interpretations of when single firm conduct violates the law and potentially subject any business – including those operating in otherwise competitive industries – to scrutiny for actions that are permissible under federal law.[24]~~The third option represents the most significant departure from existing law.  It appears to be centered around harm to competitors, as opposed to consumer welfare.  This could incentivize litigation by disappointed rivals in cases where consumers are not harmed by, or even benefit from, a firm’s conduct.[25]  Because it creates an entirely new standard, it would be particularly challenging for companies seeking to adopt compliant business practices and policies.  To that end, the staff even notes that this third option “leaves some doubt as to the burdens of proof and the extent to which there is to be some application of the traditional rule of reason analytical framework” that has long been used under federal law.[26]  The staff also noted the potential “difficulty,” under this standard, in “distinguishing between anticompetitive conduct, which is illegal, from competition on the merits, which is legal.”[27] For these reasons, the CLRC staff recognized that this proposal should be regarded as a “work in progress.”[28]~~The CLRC must review the staff’s recommendations and subject their own recommendations to a period of public comment prior to submitting them to the legislature.  Because the CLRC’s final recommendations historically have been adopted into law at a high rate,[29] companies and industry associations should think carefully about how the staff’s proposals may affect their businesses and whether to provide comments for the CLRC before the June 26, 2025 meeting at which the commissioners plan to discuss these options.  Attorneys from Gibson Dunn are available to help in preparing a public comment for submission to the CLRC or to the legislature as they consider potential bills, to discuss how these proposed changes may apply to your business, or to address any other questions you may have regarding the issues discussed in this update.~~[1] See Gibson Dunn, Staff of California Law Revision Commission Proposes Changes to California Antitrust Laws (Jan. 15, 2025), https://www.gibsondunn.com/staff-of-california-law-revision-commission-proposes-changes-to-california-antitrust-laws/.~~[2] Minutes, Cal. L. Revision Comm’n (Jan. 23, 2025) at 4, https://www.clrc.ca.gov/pub/2025/MM25-12.pdf; Alex Wilts, California Law Revision Commission Advances Antitrust Law Study (Jan. 24, 2025), here.~~[3] Memorandum, Draft Language for Single Firm Conduct Provision, Cal. L. Revision Comm’n (Mar. 24, 2025) at 1 [henceforth “SFC Options”], https://www.clrc.ca.gov/pub/2025/MM25-21.pdf.~~[4] Memorandum, Initial Recommendations for ACR 95 Questions, Cal. L. Revision Comm’n (Jan. 13, 2025) at 5 [henceforth “Initial Staff Memo”].~~[5] SFC Options at 2.~~[6] Id. at 2-3.~~[7] Id. at 2 & n.7.~~[8] Id. at 4.~~[9] Id. at 4.~~[10] SFC Options at 5.~~[11] Id. at 5.~~[12] Id. at 6-7 & nn.28, 30.~~[13] Id. at 3, 5, 8-14.~~[14] Id. at 10.~~[15] SFC Options at 11.~~[16] Id. at 12.~~[17] Id. at 12-13 & n.57.~~[18] Id. at 12-14 & n.56.~~[19] Id. at 12 & n.58.~~[20] SFC Options at 13-14.~~[21] Id. at 13-14 & n.61.~~[22] Id. at 13-14.~~[23] Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 775 (“Subjecting a single firm’s every action to judicial scrutiny for reasonableness would threaten to discourage the competitive enthusiasm that the antitrust laws seek to promote.”).~~[24] CLRC staff recognized as much:  “generating a unique set of standards that totally rejects federal law presents a formidable drafting challenge . . . [and] could be risky and invite uncertainty, which could chill innovation and business growth.”  Initial Staff Memo at 7.~~[25] SFC Options at 6, 8.~~[26] Id. at 6-7.~~[27] Id. at 7 & n.24; see also Memorandum, Single-Firm Conduct Working Group, Cal. L. Revision Comm’n (Jan. 25, 2024) at 15, https://www.clrc.ca.gov/pub/Misc-Report/ExRpt-B750-Grp1.pdf.~~[28] SFC Options at 8.~~[29] Cal. L. Revision Comm’n, https://clrc.ca.gov/ (last visited Jan. 15, 2025).~~The following Gibson Dunn lawyers prepared this update: Rachel S. Brass, Daniel G. Swanson, Caeli Higney, Julian Kleinbrodt, Sarah Roberts, and Gaby Candes.~~Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the issues discussed in this update. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following leaders and members of the firm’s Antitrust and Competition, Mergers and Acquisitions, or Private Equity practice groups in California:~~Antitrust and Competition:~~Rachel S. Brass – San Francisco (+1 415.393.8293, rbrass@gibsondunn.com)~~Christopher P. Dusseault – Los Angeles (+1 213.229.7855, cdusseault@gibsondunn.com)~~Caeli A. Higney – San Francisco (+1 415.393.8248, chigney@gibsondunn.com)~~Julian W. Kleinbrodt – San Francisco (+1 415.393.8382, jkleinbrodt@gibsondunn.com)~~Samuel G. Liversidge – Los Angeles (+1 213.229.7420, sliversidge@gibsondunn.com)~~Daniel G. Swanson – Los Angeles (+1 213.229.7430, dswanson@gibsondunn.com)~~Jay P. Srinivasan – Los Angeles (+1 213.229.7296, jsrinivasan@gibsondunn.com)~~Chris Whittaker – Orange County (+1 949.451.4337, cwhittaker@gibsondunn.com)~~Mergers and Acquisitions:~~Candice Choh – Century City (+1 310.552.8658, cchoh@gibsondunn.com)~~Matthew B. Dubeck – Los Angeles (+1 213.229.7622, mdubeck@gibsondunn.com)~~Abtin Jalali – San Francisco (+1 415.393.8307, ajalali@gibsondunn.com)~~Ari Lanin – Century City (+1 310.552.8581, alanin@gibsondunn.com)~~Stewart L. McDowell – San Francisco (+1 415.393.8322, smcdowell@gibsondunn.com)~~Ryan A. Murr – San Francisco (+1 415.393.8373, rmurr@gibsondunn.com)~~© 2025 Gibson, Dunn & Crutcher LLP.  All rights reserved.  For contact and other information, please visit us at www.gibsondunn.com.~~Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials.  The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel.  Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.~~Download PDF~~