California Law Revision Commission Proposes Far-Reaching Reform for Single-Firm Conduct Law
Client Alert | December 23, 2025
The CLRC has released its tentative recommendation for changes to California competition law on single-firm conduct.
The California Law Revision Commission (CLRC) has released its tentative recommendation for aggressive, new legislation departing from federal antitrust law.[1] As summarized in our January 15, 2025, March 25, 2025, and June 23, 2025 Client Alerts, the CLRC has been considering changes to state antitrust law since August 2022.[2] The December 2025 recommendation suggests that California not only adopt its first antitrust statute prohibiting conduct undertaken by one company acting alone, but that this law reaches avowedly “broader” and “deeper” than federal law does.
The CLRC is now soliciting public comments on the tentative recommendation through January 12, 2026. Gibson Dunn attorneys are monitoring these recommendations and are available to discuss the implications for your business and to assist in preparing a public comment for submission to the CLRC regarding the proposed single-firm conduct legislation. Now is the time for companies that do business in California to act in commenting on this legislation, either directly or through their trade or other associations.
Proposed Single-Firm Conduct Legislation
California currently lacks an analogue to the federal single-firm conduct prohibition in Section 2 of the Sherman Act. The Cartwright Act, California’s state competition law, focuses on the actions of “two or more persons” when addressing potentially anticompetitive behavior.[3] Accordingly, most efforts to challenge single-firm conduct are brought in federal court under Section 2, which prohibits anticompetitive conduct by a single firm that results in monopoly power or otherwise creates a “dangerous probability” of obtaining monopoly power.[4] The Commission decided against a recommendation that would have mirrored existing federal law on single-firm conduct, instead opting to recommend legislation that could be distinguished from existing federal law and “decades of federal jurisprudence.”[5]
The CLRC has proposed legislation that would not only prohibit unlawful monopolization (as federal law does) but would also prohibit unilateral “restraints of trade.”[6] This proposal has three particularly significant features:
- First, the proposed provision would prohibit unilateral “restraints of trade.” That undefined term is imported from Section 1 of the Sherman Act, where it refers only to conduct involving multiple actors. As a result, the CLRC’s intended interpretation of “restraint of trade” is unclear: It departs from its historic usage concerning conduct involving multiple actors, and the Commission says only that it “is intended to capture the full range of anticompetitive conduct by a single firm.”[7]
- Second, the proposed legislation would codify a prohibition on monopolization, which the CLRC noted is an attempt to “address the historical underenforcement of buyer-side monopolies.”[8]
- Third, the CLRC proposes a limitation on companies’ ability to justify their conduct by providing: (1) “Anticompetitive effects in one market from the challenged conduct may not be offset by purported benefits in a separate market” and (2) “the harm to a person or persons from the challenged conduct may not be offset by purported benefits to another person or persons.”
Notably, the proposed provision would not include an express requirement that a company have any particular degree of market power—potentially one of the intentional “difference[s] between state and federal law” that could expose a vastly larger number of companies to antitrust scrutiny.[9]
The CLRC has also recommended embedding in any legislation “judicial guidance” designed to make “establish[ing] liability” under California law less “restrictive.”[10] This guidance, which would be codified in proposed Section 16731, includes provisions that may make it easier to challenge certain kinds of conduct that courts have concluded is rarely anticompetitive, such as refusals to deal and predatory pricing.[11] It also seeks to make it easier to challenge conduct by digital platforms.[12] And it would remove certain elements of proof under federal law, such as the need to define a relevant market in certain circumstances.[13] All of this collectively may mean long-lawful business practices are subject to renewed scrutiny and uncertainty.
Takeaways
The CLRC’s recommendation for single-firm conduct legislation represents a significant departure from existing law, with the potential to vastly expand antitrust risk, establish a larger role for the California Attorney General, encourage class action or other treble damages litigation in California’s state and federal courts, and create uncertainty and compliance challenges for businesses, particularly those operating in multiple states. In particular, the proposed legislation’s use of novel and undefined terms, paring back of established limits on certain kinds of claims, and potential for application against even small companies with small market footprints threatens to create unprecedented restrictions on and uncertainty for companies doing business in California. Codifying the proposed judicial guidance as legislation could also foreclose judicial consideration of long-established federal precedent on behavior previously determined by courts either to be affirmatively competition enhancing or to otherwise not qualify as anticompetitive. That in turn not only expands the landscape of liability, but leaves companies without well-established guardrails and touchstones used when making business decisions. Parties who are found to have engaged in impermissible conduct under the proposed language would be liable for treble damages; the significant expansion of what is deemed to be anticompetitive behavior means companies could face high financial penalties for actions that are otherwise lawful at the federal level and in most or all other states.
The CLRC must subject their own recommendations to a period of public comment before submitting them to the legislature. That public comment period closes on January 12, 2026, so the time to submit comments is now. The CLRC notes that they will often substantially revise proposals in response to comments received from the public.[14] But because the CLRC’s final recommendations have historically been adopted into law at a high rate,[15] companies and industry associations concerned with this proposal should act quickly.
Gibson Dunn lawyers are available to help in preparing public comments, which would become part of the record for the legislation once enacted, for submission to the CLRC or to the legislature as they consider potential bills. In particular, lawyers from Gibson Dunn can help with both substance and strategy for preparing comments to respond to the proposed legislation and judicial guidance: for example, focusing on the vague language used in the proposed statute; addressing potential economic impacts of the proposed language in addition to interpretive issues; and raising issues related to how the proposal would affect California’s business climate. Gibson Dunn lawyers also can discuss how these proposed changes may apply to your business, affect your legal compliance policies and address any other questions you may have regarding the issues discussed in this update.
[1] Tentative Recommendation, Cal. L. Revision Comm’n (December 12, 2025) https://clrc.ca.gov/pub/Misc-Report/TR-B750.pdf.
[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] Bus. & Prof. Code §§ 16700 -16770.
[4] Spectrum Sports, Inc. v. McQuillan (1993) 506 U.S. 447, 456.
[5] Tentative Recommendation at 8.
[6] Id. at 10.
[7] Id. at 11.
[8] Id. at 12 n.98.
[9] Id. at 16 (proposed Section 16731, subsection (i)); id. at 20.
[10] Id. at 15-16.
[11] Disregarding Verizon Commc’ns v. Law Offices of Curtis V. Trinko, 540 U.S. 398 (2004) and Brooke Grp. v. Brown & Williamson Tobacco, 509 U.S. 209 (1993).
[12] Disregarding Ohio v. Am. Express, 585 U.S. 529 (2018).
[13] Id. at 16.
[14] Tentative Recommendation.
[15] Cal. L. Revision Comm’n, https://clrc.ca.gov/ (last visited June 18, 2025).
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 & Competition practice group in California:
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)
Eli M. Lazarus – San Francisco (+1 415.393.8340, elazarus@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)
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