Governor Newsom Signed a New Law Preventing Companies from Engaging in Monopoly Behavior

A bill was recently signed into law by Governor Newsom on September 30, 2026, and this new law is already causing many business owners to raise their eyebrows. The new law prohibits companies from monopolizing or monopsonizing trade or commerce. Even conspiring to or trying to monopolize or monopsonize is prohibited.

What does this mean? Well, it makes it illegal for any single company to engage in any type of monopoly or monopsony behavior. Everyone knows what monopoly behavior is because it is commonly discussed. However, monopsony behavior is where a dominant buyer manipulates the market through what it purchases, including manipulating the market through what prices it is willing to pay and what amount of product it purchases at any one time.

This new law is an expansion of an already existing California law, the Cartwright Act. Previously, the Cartwright Act only punished monopoly behavior where two or more companies had agreed to work together to maintain a monopoly such as fixing prices, limiting production, or otherwise restraining trade. Under existing law, the court would consider “whether an act was made for the purpose of avoiding competition and whether the anticompetitive effects of the agreement outweigh any procompetitive justifications.” If the court found the answer was “yes,” the parties were engaged in an unlawful monopoly.
Under the new law, the attorney general or a district attorney can bring a case against any company who appears to be maintaining a monopoly or who appears to be trying to maintain a monopoly. Some may argue that this standard seems subjective, as many companies have a strong foothold in the market simply because they have been in the market longer, have expansive exposure through marketing or celebrity endorsement, etc. What may appear to be a monopoly or a company trying to maintain a monopoly may simply be a company doing well through its lawful efforts.

Another interesting facet of the new law is that private citizens are not given standing to file a complaint against a company. Rather, it gives sole discretion to the attorney general or district attorney to bring a case against a company. In order for a court to find the company has run afoul of the new law, the court must find that the company has “substantial market power.” However, the new law acknowledges that a company could theoretically maintain market dominance “through the superiority of its products, services, or business acumen.”

This new law does not apply to small businesses which is defined as “an independently owned and operated business, the principal office of which is in California, the officers of which are domiciled in California, and which, together with affiliates, has 100 or fewer employees and average annual gross receipts of ten million dollars ($10,000,000) or less over the three years before the filing of the complaint.” If your business receives a gross income of less than ten million dollars, you are spared from the monopoly scrutiny. However, if your business grows (which many business owners hope and pray for), you may have to consider the monopoly scrutiny as a necessary evil of your growing pains.” For business owners, perhaps you should do your job well - but not too well- because avoiding monopoly scrutiny is now on your radar.

This new law goes into effect on January 1, 2027 and it will be interesting to see which companies will catch the eye of the attorney general and the district attorney’s office. It will also be interesting to see how the courts define “substantial market power” and what is simply market dominance lawfully obtained through better products, services, or business smarts. Business owners should keep a close eye on this new law as it is slowly transforming the way we do business here in California.