Enacted in 1907, California’s Cartwright Act stands, in terms of anticompetitive collusion, as one of the most consequential statewide antitrust statutes in the country.[1] Recognized by California’s Superior Court as “broader in range and deeper in reach than the Sherman Act,” the Cartwright Act allows California businesses and consumers to pursue antitrust claims ineligible under federal law.[2] Differences between California and federal regulatory frameworks—with specific regard to indirect purchaser standing, anticompetitive tying standards, third-party criminal liability, and relaxed pleading requirements—have opened pathways to substantial recoveries for California plaintiffs. This article discusses these differences and explains how they bolster protection for California consumers.
The Illinois Brick Doctrine and Indirect Purchasers
Precedent established by the 1977 United States Supreme Court Case Illinois Brick Co. v. Illinois dictates that indirect purchasers of goods or services along a supply chain cannot seek damages for antitrust violations committed by the manufacturer of the product.[3] According to the ruling, a direct purchaser is the party that buys the relevant product directly from the manufacturer, while an indirect purchaser acquires the product through an intermediary—such as through a wholesaler or retailer. The Court reasoned that allowing indirect purchasers to sue would create two principal issues: first, the risk of duplicative recoveries (where both direct and indirect purchasers recover for the same overcharge, leading to excessive liability for defendants), and second, the complexity of tracing and apportioning damages through multiple levels of distribution. This standard, allowing only direct purchasers to seek damages from anticompetitive practices, is known as the Illinois Brick doctrine.
California responded swiftly to the Illinois Brick ruling, enacting a 1978 amendment to the Cartwright Act that granted standing to “any person who is injured” by unlawful activity “regardless of whether such injured person dealt directly or indirectly with the defendant.”
In California v. ARC America Corp. (1989), the Supreme Court definitively held that Illinois Brick did not preempt California’s broader standing provision.[4] The Court reasoned that Illinois Brick was a rule of federal statutory interpretation under the Clayton Act, not a broader federal policy requiring uniformity among states. Principles of federalism permitted California to prioritize compensation for all injured parties and robust private enforcement over the administrative concerns that motivated the federal restriction. By allowing indirect purchasers to sue for damages passed through the supply chain, California courts balance robust enforcement and deterrence against concerns about duplicative recovery and apportionment complexity. This landmark decision has enabled injured parties at any level of the supply chain to seek recovery for anticompetitive conduct in California and numerous other states.
This concept is further exemplified in Union Carbide v. Superior Court (1984), a Supreme Court of California case that addressed the question of whether indirect purchasers could sue for damages under the Cartwright Act.[5] The case involved a class of indirect purchasers of industrial gas who alleged that Union Carbide and other manufacturers conspired to fix prices, causing them to pay artificially inflated rates to the distributors. Defendants argued that federal law, as interpreted in the Illinois Brick decision, barred such suits to prevent complex damages apportionment and the risk of multiple liability. The court determined that the 1978 amendment to the Cartwright Act demonstrated clear legislative intent to diverge from the federal standard set by Illinois Brick. The court ultimately denied Union Carbide’s petition to dismiss the case, reinforcing the independence of California antitrust law and expanding the legal standing for consumers and other indirect purchasers within the state who seek recovery for price-fixing schemes.
Tying Arrangements
Another separation between federal and California antitrust law concerns tying arrangements: agreements in which a seller conditions the sale of one product (the “tying” product) to the purchase of a second product pertaining to a different relevant market or market segment (the “tied” product). California’s antitrust protections may facilitate consumer action against such practices by softening the evidentiary threshold needed to expose anticompetitive tying arrangements.
Federal law has gradually moved from uniform per se illegality for tying arrangements, viewing tying as inherently anticompetitive, to a more nuanced per se rule.[6] Contemporary federal law states that tying arrangements are per se violations only when they meet all of the following prongs: (1) the forced purchase of one product is needed to obtain a separate desired product; (2) the seller has appreciable market power with respect to the tying product; and (3) the tie affects a substantial amount of commerce in the market for the tied product. The concern is that the perpetrator is using its market power in a related market as leverage to artificially enhance its market power up or down the supply chain.
California, however, does not require the fulfillment of all those conditions to constitute a violation. Under the court’s interpretation of section 16727 of the California Business & Professions Code, in addition to an agreement tying the sale of two products together, plaintiffs must demonstrate either that the defendant held sufficient market power in the tying product or that the tie foreclosed a substantial volume of commerce in the tied product market.
Morrison v. Viacom (1998) illustrates this difference well. In this case, the California state court applied sections 16720 and 16727 of the Cartwright Act to determine whether television services illegally compelled cable subscribers to purchase bundled broadcast channels despite their disinterest.[7] The court did not find that a “substantial amount of sale was affected in the tied product for local broadcast television,” yet ruled that California’s antitrust law was not preempted by federal cable law.[8]
Importantly, while tying arrangements may be challenged under either section 16720 or section 16727 of the Cartwright Act, the latter section is limited to commodities. The primary ramification of this distinction is that standing precedent under section 16720 requires all three prongs be satisfied to establish a per se violation, whereas only two prongs (with either substantial market power or substantial market impact) need to be fulfilled in analyses under section 16727. The necessity of just two prongs broadens the possibility for future claims examined under section 16727.
Third-Party Criminal Liability
Another distinct feature of California antitrust law is its breadth of criminal liability that extends to third parties. The Cartwright Act expressly criminalizes not only participation in a trust or cartel, but also “any person who engages in any such conspiracy or takes part therein, or aids or advises in its commission, or who as principal, manager, director, agent, servant or employee, or in any other capacity, knowingly carries out any of the stipulations, purposes, prices, rates, or furnishes any information to assist in carrying out those purposes, or orders thereunder or in pursuance thereof, is punishable.”[9] This sweeping language indicates that even a third party who is not an actual competitor in the affected market—for example, a consultant or data provider—could face criminal punishment if they assisted in the implementation of the anticompetitive agreement. Extending punishment even to tangential parties in a conspiratorial scheme can strengthen deterrence.
While this broad approach prioritizes deterrence, it may produce unintended consequences for market participants. Professional service providers may adopt overly cautious practices when working with California clients, potentially limiting legitimate competitive intelligence services and increasing transaction costs. The risk of criminal liability could also create a chilling effect on pro-competitive collaboration through trade associations, standard-setting bodies, and joint ventures. Balancing robust enforcement against these practical considerations remains an ongoing challenge for California policymakers.
Relaxed Pleading Standards
Under federal procedural law, as established by Bell Atlantic Corp. v. Twombly (2007) and Ashcroft v. Iqbal (2009), a complaint must provide sufficient facts to state a claim to relief that is plausible on its face.[10] In antitrust cases, simply pleading that competitors behaved similarly (e.g., through parallel pricing) is not enough—the complaint must contain further factual enhancement suggesting an actual interparty agreement. In practice, federal courts often demand that an antitrust plaintiff allege “plus factors” or circumstances that make plausible the occurrence of collusion, as opposed to mere coincidence. At the pleading stage, this is a relatively stringent threshold, resulting in the dismissal of numerous antitrust suits pre-discovery.
In October 2025, California enacted Assembly Bill 325 to lower the pleading standard for Cartwright Act cases. Under the modified regulations, complaints can survive a motion to dismiss by pleading a plausible conspiracy. Plaintiffs will not be expected to allege facts that tend to exclude the possibility of independent action in order to survive dismissal. In a direct deviation from federal precedent established in Twombly and Iqbal, if the complaint articulates a coherent theory of a conspiracy, the case should survive dismissal because alternative explanations for conspiratorial behavior need not be addressed at the early stages of the suit.
This divergence is particularly salient following the rise of complex, data-driven collusion allegations such as claims that firms use price-fixing algorithms to tacitly coordinate prices. For example, if a plaintiff alleges that a group of competitors adopted the same pricing algorithm and prices consequently adjusted in lockstep, the parallel conduct plus the context might be deemed plausible enough for the continuation of the case.
Conclusion
California’s robust network of antitrust regulations ensures that the most vulnerable parties can seek remediation. The Cartwright Act enhances deterrence beyond federal protections by entitling parties across the distribution chain to raise complaints, heightening the standards and consequences for companies engaging in tying, and broadening the processing ability for antitrust claims. Aggrieved consumers can access a web of protections against anticompetitive corporations—past what relief the federal government provides. California’s regulatory framework presents an exciting case study into whether stricter antitrust legislation can offer heightened protection to consumers without deterring business operations.
Please note that the Cartwright Act does not include provisions that could be considered analogous to Section 2 of the Sherman Act (anticompetitive unilateral conduct) or Section 7 of the Clayton Act (anticompetitive merger control). ↑
Illinois Brick Co. v. Illinois, 431 U.S. 720, 740–41 (1977). ↑
Union Carbide Corp. v. Superior Ct., 36 Cal. 3d 15, 19 (1984). ↑
See N. Pac. Ry. Co. v. United States, 356 U.S. 1, 8 (1958); Jefferson Par. Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 11–12 (1984); United States v. Microsoft Corp., 253 F.3d 34, 95 (D.C. Cir. 2001). ↑
Morrison v. Viacom, 66 Cal. App. 4th 534, 546 (1998); Cal. Bus. & Prof. Code §§ 16720, 16727 (2026). ↑
Morrison, 66 Cal. App. 4th at 542. ↑
Cal. Bus. & Prof. Code § 16755 (2026). ↑
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). ↑
