Unlawful Restraint of Trade in California Commerce

The Cartwright Act is codified at Cal. Bus. & Prof. Code § 16700 et seq. and prohibits any unlawful restraint of trade that substantially affects California commerce. California case law on restraint of trade largely follows the federal law developed under Section 1 of the Sherman Act, but there has slowly appeared a gap between California’s longstanding tradition of vigorous antitrust enforcement and the more permissive consumer-welfare approach increasingly used in the federal courts since the mid-1970s.

According to settled California case law, federal precedents under the Sherman Act constitute only persuasive authority for claims asserted under the Cartwright Act, since the California law is patterned after a draft version of the Sherman Act that never became federal law, but was adopted by several States, including California.

This gap between California and federal antirust law has slowly emerged even as federal antitrust enforcers at the FTC and U.S. Department of Justice have begun to invoke classical antitrust principles to challenge conduct that the modern consumer-welfare standards leave undisturbed.

The difference between the two bodies of law will likely give rise sooner or later to litigation over Congress’s dormant powers under the Commerce Clause of the U.S. Constitution: the central question will concern the extent to which California or any other State can regulate interstate trade and commerce that affect its own commerce: any such regulation will inevitably affect the commerce of other States and “interstate commerce” according to the modern, expansive definition afforded that term. These matters remain unresolved and await further development.

We have substantial experience litigating and advising clients about claims that arise under the Cartwright Act. We have litigated these claims in California state court and also in federal court, where they are routinely litigated alongside related federal antitrust claims.