USA – CALIFORNIA Trends and Developments Contributed by: Eric Enson and Ann Rives, Crowell & Moring LLP
nia Attorney General to “approve” (and presum - ably reject) mergers and acquisitions. After considering and rejecting several pro - posals that would have mirrored federal law’s monopolisation standards or Europe’s abuse of dominance stands, the CLRC staff has pro - posed three options for the regulation of single- firm conduct in California. The first, which most closely resembles the federal Sherman Act Sec - tion 2 equivalent would make unlawful monopo - lies and monopsonies, along with an intent or conspiracy to create them. However, in its pro - posal, the CLRC staff also notes this proposal may not go far enough to “untether... California’s law from federal law” and could “limit California’s ability to effectively control competition” . The staff’s second “enhanced” provision would “capture the broad range of anticompetitive conduct that may not fall within the currently restricted scope” of federal law and would ban “restraints of trade” in addition to monopoly con - duct. However, it is unclear how “restraints of trade” would be applied, particularly for entities which do not have or are not seeking monopoly power. The third and most extreme proposal would be “clean break” from existing federal law on single-firm conduct and would make all “exclu- sionary conduct” unlawful. Again, similar to the “enhanced” provision, this proposal would not require a showing of monopoly or attempt to monopolise. In addition, this third proposal appears to concentrate more on harm to com - petitors rather than harm to competition and ultimately, California consumers. Earlier in the year, the CLRC also voted to draft a new law that would create California’s own merger approval and pre-merger notifica -
tion requirements, and further directed staff to consider a new standard for evaluating harm in merger reviews that is lower than that required under federal law. The CLRC justified these moves based on concerns that federal scrutiny of mergers is likely to be lax under the Trump administration and that California has its own unique interests when it comes to mergers. The staff will present additional memoranda on this issue later in the year along with additional legis - lative proposals to “address dominant firms’ mis - use of market power” a standard that has never been interpreted or analysed by any US court. The CLRC will meet again in June 2025 after a period of public comment on the proposals before voting on its submission to the legislature. Historically, The CLRC’s final recommendations have been adopted into law approximately 90% of the time. California’s Attorney General Focuses on California-Based Crimes, Increased Fines In speeches and public statements, the Cali - fornia Attorney General’s office has continued to focus on the possibility of bringing criminal prosecutions under the Cartwright Act, but has to date not filed any criminal antitrust charges. For more than a century, the Cartwright Act has expressly authorised the California Attorney General to bring criminal prosecutions of com - panies and individuals involved in conspiracies and agreements that unreasonably restrain trade. Violation of the Cartwright Act carries with it the possibility of significant criminal pen - alties against both corporations and individuals, including large fines and up to three years of prison time. Historically, the California Attor - ney General brought criminal prosecutions of the Cartwright Act focused on bid rigging and other types of collusive conduct affecting state
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