The California Cartwright Act, found at Business and Professions Code sections 16700 through 16770, is the state’s main antitrust law. It prohibits agreements between two or more people or businesses that restrain trade — price-fixing, bid-rigging, dividing markets, forcing tied purchases, and, as of January 1, 2026, coordinating prices through shared algorithms. Violations carry criminal fines up to $6 million for corporations, up to three years in prison and $1 million fines for individuals, and civil exposure to treble damages plus attorney’s fees in private lawsuits.
What Counts as a Violation
Section 16720 defines a “trust” as any combination of capital, skill, or acts by two or more persons aimed at restricting trade, limiting production, raising prices, preventing competition, or fixing the price of goods sold in California.1California Legislative Information. California Code Business and Professions Code – Combinations in Restraint of Trade Section 16726 declares every such trust “unlawful, against public policy and void.”
The word “trust” here is a legal term of art. It has nothing to do with estate planning. It covers any anti-competitive agreement or arrangement, formal or informal, written or verbal.
The Act reaches coordinated conduct. It generally does not reach the unilateral acts of a single dominant firm. If one company on its own decides to charge high prices or refuse to sell to certain customers, that behavior typically falls outside the statute. Liability starts when two or more parties agree.
Per Se Violations vs. the Rule of Reason
Not every agreement between competitors breaks the law. California courts sort conduct into two categories, and which one applies shapes the whole case.
Some conduct is per se illegal. The plaintiff does not have to prove the arrangement actually harmed competition — the agreement itself is enough. Price-fixing is the classic example, and California courts have treated it this way since at least 1971. It does not matter whether the agreed price was reasonable or whether any consumer can point to concrete harm.
Everything else runs through the rule of reason. A court weighs the competitive harm of the practice against its potential benefits, looking at market power, purpose, effect, and whether less restrictive alternatives existed. Defendants can argue that the restraint actually promotes efficiency or benefits consumers. These cases turn on the facts and are harder for plaintiffs to win.
Practices the Act Targets
Price-Fixing
Any agreement among competitors to set, stabilize, or coordinate prices is per se illegal. This goes beyond agreeing on a sticker price. It includes coordinating discounts, credit terms, surcharges, or the timing of price changes. A handshake deal or informal understanding is enough. Circumstantial evidence of parallel behavior combined with other suspicious factors can support a claim; a written contract is not required.
Bid-Rigging
Bid-rigging is competitors secretly agreeing to predetermine who wins a bidding process. Common schemes rotate the winning bidder, submit deliberately high “courtesy” bids, or divide contracts among conspirators. It is treated as a form of price-fixing and is per se illegal. It appears frequently in public construction contracts and government procurement, and it inflates costs for whoever is soliciting the bids.
Market Allocation
When competitors agree to split up customers, territories, or product lines, they eliminate the competitive pressure that keeps prices down and quality up. These agreements are illegal even when each company charges fair prices in its assigned territory, because the arrangement itself removes the consumer’s ability to shop between competitors.
Tying Arrangements
A tying arrangement forces a buyer to purchase a second product or service as a condition of getting the one they actually want. Section 16727 addresses these arrangements, and California law is more plaintiff-friendly than federal law: for a tying claim involving commodity sales, a plaintiff needs to prove only two of the three elements federal antitrust law requires.
Algorithmic Pricing Coordination
Effective January 1, 2026, AB 325 added Section 16729, targeting coordinated pricing through shared algorithms. The new law prohibits using or distributing a “common pricing algorithm” — defined as any methodology, including software, used by two or more persons that relies on competitor data to recommend, set, or influence prices — as part of an agreement to restrain trade. It also creates liability where the distributor of the algorithm coerces others into adopting its recommended prices. The concern behind the provision is that competitors can effectively fix prices through a shared algorithm without ever speaking to each other.
Criminal Penalties
SB 763 substantially increased the criminal penalties under Section 16755, effective January 1, 2026.2California Legislative Information. California Code BPC 16755 – Criminal Penalties The current penalties are:
- Corporations face fines up to $6,000,000 per violation, a sixfold increase from the prior $1,000,000 cap.
- Individuals face up to three years in state prison, up to one year in county jail, fines up to $1,000,000, or both prison time and a fine. The previous fine cap for individuals was $250,000.
- If the violation produced a financial gain or caused a financial loss to others, the court can impose a fine of up to twice the gross gain or twice the gross loss, whichever is greater. This gain-based fine can exceed the standard caps.
Gain-based fines are where the numbers can climb quickly. A price-fixing scheme that inflated costs by $10 million across affected customers could produce a fine of $20 million, far above the statutory ceiling. Prosecutors tend to bring criminal charges in cases involving clear, intentional conduct such as price-fixing or bid-rigging, not the borderline situations that get analyzed under the rule of reason.
Civil Damages and Who Can Sue
Section 16750 lets anyone injured in their business or property sue for three times their actual damages, plus interest, attorney’s fees, and litigation costs.3California Legislative Information. California Code BPC 16750 – Civil Remedies Treble damages carry most of the financial exposure in private cases. A defendant that caused $5 million in provable harm faces a $15 million damages award before attorney’s fees.
California’s standing rules are broader than federal law. A plaintiff can sue “regardless of whether such injured person dealt directly or indirectly with the defendant.”3California Legislative Information. California Code BPC 16750 – Civil Remedies Federal antitrust law generally limits standing to direct purchasers, so a consumer who bought price-fixed goods from a retailer rather than from the manufacturer in the conspiracy might have no federal claim but can still sue under the Cartwright Act.
Courts can also issue preliminary or permanent injunctions ordering a company to stop the challenged conduct. The Attorney General can bring civil actions on behalf of the state or its political subdivisions, and SB 763 added new civil penalties of up to $1,000,000 per violation in cases brought by the Attorney General or a district attorney. These civil penalties stack on top of treble damages and other existing remedies.
AB 325 also relaxed the pleading standard. Under the new Section 16756.1, a complaint survives a motion to dismiss if it alleges facts making a conspiracy plausible. Courts can no longer require plaintiffs to allege facts that tend to exclude the possibility of independent action. Defendants previously used that higher standard to knock cases out before discovery, which is where the evidence of secret agreements usually surfaces.
Defenses and Exemptions
For conduct analyzed under the rule of reason, a defendant can argue the practice actually benefits competition or consumers. A manufacturer imposing territorial restrictions on its distributors might argue the restrictions encourage each distributor to invest in local marketing rather than free-riding on the efforts of others. The defendant bears the burden of showing that the pro-competitive benefits outweigh the anti-competitive harm.
Certain activities are categorically exempt. Labor organizations engaged in collective bargaining over wages and working conditions are shielded from antitrust liability, a protection rooted in the federal Clayton Act and Norris-LaGuardia Act.4Federal Trade Commission. Enforcement Policy Statement on Exemption of Protected Labor Activity by Workers from Antitrust Liability Without it, a union negotiating wages could theoretically be accused of price-fixing labor. Agricultural cooperatives also enjoy antitrust protection under both federal and state law, letting farmers collectively market and sell their products without violating competition rules.
How It Compares to Federal Antitrust Law
The Cartwright Act operates alongside the Sherman Act and Clayton Act. It doesn’t replace them, and federal law doesn’t preempt it. A single course of anti-competitive conduct can violate both California and federal law at once, exposing defendants to parallel enforcement actions.
Where the two diverge, California generally favors plaintiffs. Indirect purchasers can sue in California but usually cannot under federal law. Tying claims require fewer elements. Resale price maintenance, where manufacturers dictate minimum prices to retailers, is no longer per se illegal under federal law after the Supreme Court’s 2007 Leegin decision, but it remains per se illegal under the Cartwright Act. And the 2026 pleading changes make it easier to survive early dismissal in California state court than in federal court.
Deadline to File
Criminal Cartwright Act cases must be filed within four years of the last act that was part of the violation.2California Legislative Information. California Code BPC 16755 – Criminal Penalties For an ongoing conspiracy such as a long-running price-fixing scheme, the clock resets with each new act in furtherance of the agreement, which can extend the window substantially. Civil claims are generally subject to a four-year limitations period as well. Waiting too long to investigate suspected anti-competitive conduct can forfeit the right to recover treble damages and attorney’s fees.