With growing concerns of a more lax application of antitrust law under the current Trump administration, individual states have continued to look for ways to strengthen their own antitrust regulations. Washington state, for example, recently became the first to enact state-level general merger review, independent of federal authorities, while Arkansas will now prohibit pharmacy benefit managers from owning pharmacies, eliminating what the state sees as “anti-competitive business tactics”.

Unsurprisingly, California continues to lead the charge among states seeking to expand their antitrust authority – through potential legislation aimed at expansion of criminal enforcement, single-firm conduct and merger enforcement review at the state level. The result would be a significant overhaul of California’s antitrust law, the Cartwright Act.

In addition, after vowing in 2024 to dust off the criminal provisions of the Cartwright Act to criminally enforce California’s antitrust law for the first time in 25 years, the Attorney General’s Office continues to move resources in that direction, stating the Office’s intent to focus on California-based “crimes that affect [the] population directly as opposed to conspiracies that maybe affect the whole nation somewhat equally” and voicing support for new legislation that would increase Cartwright Act criminal penalties by 100-fold. Finally, the California state legislature has also drafted several bills that would vastly curtail the use of pricing software and algorithms, the enactment of which could have significant consequences for companies doing business in California.

California Continues Pressing for Expansive Antitrust Reforms

The California Law Revision Commission (CLRC), the influential body that makes recommendations to the California legislature, continues to consider and advocate for sweeping revisions of California’s Cartwright Act. As directed by the legislature, the CLRC – through seven working groups, made up of volunteers, including antitrust professors, practising attorneys and economists – has studied and reported on three main questions. The first is whether California law should be revised to prohibit monopolies in a fashion similar to federal law, given that the Cartwright Act currently does not apply to unilateral conduct. The second question is whether the law should be revised with respect to technology companies so that the analysis of “antitrust injury” is far broader and may include consideration of all sorts of alleged harms, not just increased prices and diminished competition. And third, the CLRC is evaluating whether to propose revisions to the law that would empower the California Attorney General to “approve” (and presumably reject) mergers and acquisitions.

After considering and rejecting several proposals that would have mirrored federal law’s monopolisation standards or Europe’s abuse of dominance stands, the CLRC staff has proposed three options for the regulation of single-firm conduct in California. The first, which most closely resembles the federal Sherman Act Section 2 equivalent would make unlawful monopolies and monopsonies, along with an intent or conspiracy to create them. However, in its proposal, the CLRC staff also notes this proposal may not go far enough to “untether... California’s law from federal law” and could “limit California’s ability to effectively control competition”.

The staff’s second “enhanced” provision would “capture the broad range of anticompetitive conduct that may not fall within the currently restricted scope” of federal law and would ban “restraints of trade” in addition to monopoly conduct. However, it is unclear how “restraints of trade” would be applied, particularly for entities which do not have or are not seeking monopoly power.

The third and most extreme proposal would be a “clean break” from existing federal law on single-firm conduct and would make all “exclusionary conduct” unlawful. Again, similar to the “enhanced” provision, this proposal would not require a showing of monopoly or attempt to monopolise. In addition, this third proposal appears to concentrate more on harm to competitors rather than harm to competition and ultimately, California consumers.

Earlier in the year, the CLRC also voted to draft a new law that would create California’s own merger approval and pre-merger notification requirements, and further directed staff to consider a new standard for evaluating harm in merger reviews that is lower than that required under federal law. The CLRC justified these moves based on concerns that federal scrutiny of mergers is likely to be lax under the Trump administration and that California has its own unique interests when it comes to mergers. The staff will present additional memoranda on this issue later in the year along with additional legislative proposals to “address dominant firms’ misuse of market power” – a standard that has never been interpreted or analysed by any US court.

The CLRC will meet again in June 2025 after a period of public comment on the proposals before voting on its submission to the legislature. Historically, The CLRC’s final recommendations have been adopted into law approximately 90% of the time.

California’s Attorney General Focuses on California-Based Crimes, Increased Fines

In speeches and public statements, the California Attorney General’s office has continued to focus on the possibility of bringing criminal prosecutions under the Cartwright Act, but has to date not filed any criminal antitrust charges.

For more than a century, the Cartwright Act has expressly authorised the California Attorney General to bring criminal prosecutions of companies and individuals involved in conspiracies and agreements that unreasonably restrain trade. Violation of the Cartwright Act carries with it the possibility of significant criminal penalties against both corporations and individuals, including large fines and up to three years of prison time. Historically, the California Attorney General brought criminal prosecutions of the Cartwright Act focused on bid rigging and other types of collusive conduct affecting state and local government contracts. For decades, however, these criminal provisions of the Cartwright Act have not been invoked by the Attorney General, which has focused instead on civil proceedings as its primary means of antitrust enforcement.

However, in a significant shift in enforcement strategies, in early-2024, California Assistant Attorney General Paula Blizzard announced that, for the first time in 25 years, California is “reinvigorating criminal prosecutions under the Cartwright Act”. Blizzard made a point of noting that the Cartwright Act allows for imprisonment in county jail, which can be less agreeable than state or federal prisons, calling that fact “probably the biggest deterrent that I have”.

Separately, in February 2025, Attorney General Rob Bonta announced his support for the legislature’s SB763, which would increase Cartwright Act criminal penalties for corporations to USD100 million, from today’s USD1 million penalty, and increase prison sentences for individuals found guilty of antitrust violations to as much as five years. The bill would also impose new civil penalties of up to USD1 million per violation of the Act.

In forecasting what types of criminal cases may be brought, the Attorney General, as well as the CLRC, have repeatedly emphasised the importance of protecting free and open labour markets. However, the state’s recently filed complaint against a leading sanitation services company, while alleging illegal “no poach” conduct, asks for an injunction and civil penalties under the state’s Unfair Competition Law rather than seeking criminal charges.

In addition, in a March 2025 speech, Assistant Attorney General Blizzard noted that “state procurement is also an area that we will look closely at”. This type of collusive conduct impacting state and local government procurement was last criminally prosecuted by the Attorney General in the 1990s.

Advancing Bans on Pricing Software and Algorithms

With the increasing role of technology in the marketplace, particularly in the pricing of retail goods and services, California appears to be positioning itself at the forefront of new laws aimed at curbing illegal price agreements. Several bills currently making their way through the California legislature could, if passed, have far-reaching implications for how companies doing business in California price their goods and services. The California Assembly Bill 325 and Senate Bill 384, as drafted, seek expansive prohibitions against the use, distribution of, and inputs into algorithmic pricing and supply software, even where there is no express co-ordination among competitors on the use of such software or the setting of prices. Their enactment would reach every business that uses software applications to develop pricing, supply levels and other commercial terms in California.

With the complexity of today’s marketplace and its rapidly changing conditions, businesses, large and small, often use software tools and technology to efficiently and dynamically price their goods and services. The technology can be licensed from third-party providers or developed internally by software engineers and pricing teams. AB325 and SB384, as written, would largely bar using the software tools and technology to price their goods and services, regardless of whether licensed or developed internally.

AB325, for instance, would prohibit the use or distribution of a pricing algorithm that (i) incorporates or was trained with “nonpublic competitor data”, defined broadly to include data of a competitor in the same or a related market; or (ii) is used to set prices and other commercial terms where the algorithm is being used by another business in the same or a related market.

In addition to its broad definition of data, AB325’s definition of “pricing algorithm” is similarly sweeping – encompassing “any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term”. As written, the bill would not only prohibit software used to set prices, but also technology used to measure and predict output and capacity needs.

SB384 is even more expansive, prohibiting the use of any software, system or process that collects current or historical pricing or supply level data from two or more persons or from public databases for the purposes of analysing and creating pricing models based on that data, which has long been recognised as a legitimate, competitive method for analysing pricing and other commercial terms.

While both bills appear aimed at curbing collusion through pricing algorithms, both federal and California antitrust law via the Cartwright Act already prohibit agreements between competitors to fix the prices of goods and services – whether via an algorithm or otherwise. These bills would go further by imposing liability even if competitors do not agree on prices or on the use of algorithms employed to set prices. Both have the potential to stifle development and use of algorithmic and dynamic pricing technologies in California, which as the world’s fifth-largest economy, would have significant ripple effects across industries.

What Comes Next for California?

California continues to set the stage for aggressive enforcement and expansion of antitrust laws, separate from its federal counterparts. With the work by the CLRC, the coming year will likely bring significant legislation to the state Assembly dealing with increased regulation of single-firm conduct and more aggressive merger review, as well as the potential for increased civil and criminal penalties for antitrust violations. The interplay between stricter California regulation and existing federal law will likely be tested and challenged within the courts, but that fact alone is unlikely to dissuade California from its current trajectory of stricter regulation of anti-competitive conduct.