In California, A Win For Democracy Over Monopoly

Passage of a landmark antimonopoly bill in the State Assembly is a remarkable moment.

Cecilia Aguiar-Curry

Major reforms to the way we regulate and prevent corporate abuses are rare things — particularly in places that powerful corporations call home, and where their lobbyists and lackeys hold sway. Well, welcome to California, where last week, lawmakers in the home of Big Tech advanced a landmark antitrust bill that, if passed into law, would give Californians breakthrough protections against monopoly abuse and would stand as the most significant reform to our antitrust laws, state or federal, in several generations.

The COMPETE Act, introduced in the California State Assembly by Majority Leader Cecilia Aguiar-Curry, would add an illegal monopolization statute to California law and would ban dominant companies from using their power to restrain trade through monopolistic tactics. These kinds of dangerous monopoly actions pop up all the time in the real economy, and where they do, they deprive workers of higher wages, shoppers of lower prices and better stuff, and small businesses the chance to compete fairly with their more powerful rivals. The reforms in the COMPETE Act are the kinds of policies needed to make sure the economy is fair and working for everyone.

The sheer existence of this bill is exceptional in itself. The COMPETE Act’s journey began three years ago, when state lawmakers asked a government body called the California Law Revision Commission to review the state’s antitrust law, called the Cartwright Act, to see whether and how it could be improved. The Cartwright Act has had one glaring flaw throughout its nearly 120-year existence: Unlike the vast majority of state antitrust laws, it doesn’t ban monopolization or its abuse by a single company.

The California legislature’s interest didn’t come out of nowhere; New York, which also lacks a ban on illegal monopolies, had been debating a bill called the 21st Century Antitrust Act for several years, which piqued interest among California officials. The New York bill and its sponsor, Senator Michael Gianaris, were driven in large part by the rising antimonopoly movement and its recognition that our current federal laws don’t go far enough to stop and prevent abuses of outsized corporate power. In other words, the COMPETE Act, by and by, is the product of a broad and still-growing understanding that monopolization is rampant in America and states are the right place to create the tools to fight it.

It’s hard to explain how improbable last week’s passage in the Assembly was. Yes, banning illegal monopolization in the state with the world’s fourth-largest economy is common sense, but common sense reforms get smothered by corporate interests all the time. The Cartwright Act has been around for more than a century and no one has yet added a ban on illegal monopolization to the statute. No legislative attempt to add such a ban has even passed out of committee — the very first step to a bill becoming law. If California wants to sue a company for monopolizing an industry and abusing that power, it must either use federal law, or try to shoehorn monopoly allegations into its existing law meant only to prevent illegal conspiracies between two or more companies.

Both choices are fraught. As I’ve written before, the federal courts, warped by the pro-bigness consumer welfare standard, have made it nearly impossible to successfully sue a company for its monopoly tactics under the federal anti-monopoly statute, called the Sherman Act. Maybe I’ll go into this more at some point, but for now, suffice to say that leaving California with only the Sherman Act to stop monopoly abuses in federal courtrooms is essentially leaving it with no law at all.

The other choice for suing monopolists, to use the existing Cartwright Act, requires a kind of unsustainable tightrope walk to conform to what the law actually says. For example, in 2022, California Attorney General Rob Bonta sued Amazon for abusing its online retail monopoly by gouging small sellers with high fees, forcing prices up on Amazon, then coercing those sellers to charge those same artificially-high prices on other retail sites across the web. The lawsuit describes a pure monopoly play, but because the Cartwright Act requires a conspiracy between companies, the lawsuit frames Amazon’s wrongdoing as an agreement between Amazon and sellers to restrain trade. Which is nonsense — the sellers are objectively being victimized, trapped as they are in Amazon’s monopoly orbit — but Bonta did what he had to do to make the allegations match a law unequipped to deal with such abuse.

So the state law has to change — and yet, it never has. Reformers tried to add a monopoly ban to the Cartwright Act at least three times over the past quarter-century, and none of them came particularly close to becoming law. That’s in large part because the defenders of corporate power have always lined up in favor of the status quo, often arguing, as those who support monopoly power often do, that any strengthening of the law would “create business uncertainty” and imperil the state economy. Those same groups came out in force this year. The California Chamber of Commerce, a front group for corporate interests, spent significant money and organizing muscle fighting the COMPETE Act. It was the top bill on the Chamber’s “kill list,” and as is so devastatingly typical in American politics, corporate power expected to spend and bully their way to victory.

Only, that didn’t happen. Instead, 44 members of the California State Assembly stood up for shoppers, workers, and small businesses in the state and passed the COMPETE Act. They did this in the face of immense pressure from the Chamber and its allies, who warned of economic doom and political repercussions for supporting the bill. Supporting COMPETE took bravery and guts and a clear-eyed understanding that the state can thrive only by getting its people out from under the thumb of corporate monopolies. It was a remarkable victory for the people over the forces of corporate power.

The bill now moves to the state’s Senate, where it will face a new set of lawmakers, and almost certainly a renewed attempt by monopoly sympathizers to kill it. Ultimately, the fate of the bill will be written in that chamber. I can’t predict how that process will turn out. But like many other pockets of resistance to corporate power, supporters of the COMPETE Act are standing firmly on the right side of history, with the wind at their backs.