California's Cartwright Act, enacted in 1907, is the state's primary antitrust law designed to preserve free and fair competition in the marketplace.
Codified in California Business and Professions Code sections 16720 through 16770, the Act targets agreements and practices that restrain trade, suppress competition, or manipulate prices within California.
Although it operates similarly to federal antitrust statutes such as the Sherman Antitrust Act, the Cartwright Act is broader in several important respects.
It applies specifically to commercial conduct affecting California markets and reaches certain business arrangements that may fall outside federal antitrust enforcement.
Antitrust violations under California's Cartwright Act involve unlawful agreements that restrain trade, like price-fixing, bid-rigging, and market allocation.
Because of this expansive scope, businesses and individuals may face allegations of Cartwright Act violations even when anti-competitive intent is not obvious.
Understanding how the Cartwright Act works, what conduct it prohibits, and the potential civil and criminal consequences is essential for anyone facing antitrust scrutiny in California.
Your best hope of a favorable outcome is with a skilled criminal defense attorney at Eisner Gorin LLP. To schedule a consultation, call (818) 781-1570 or contact us here.
Overview of the California Cartwright Act
The Cartwright Act prohibits combinations, agreements, or conspiracies between two or more parties that restrain trade or limit competition.
Unlike federal antitrust law, which often focuses on monopolization, the Cartwright Act extends to both horizontal agreements between competitors and certain vertical agreements between suppliers, distributors, or retailers.
The Act authorizes enforcement by the California Attorney General, local district attorneys, and private parties harmed by anti-competitive conduct. Violations may result in injunctions, monetary damages, treble damages, and criminal penalties, making early legal analysis critical.
How California Law Defines an Illegal “Trust”
California Business and Professions Code section 16720 defines a “trust” as a combination of capital, skill, or acts by two or more persons formed for anti-competitive purposes, including:
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Creating or carrying out restrictions in trade or commerce
Agreements designed to interfere with open market competition or restrict lawful business activity. -
Limiting production or increasing prices
Conduct intended to reduce supply or artificially raise the cost of goods or services. -
Preventing competition in manufacturing, transportation, or sale of goods
Actions that block competitors from entering or operating in the marketplace. -
Fixing or controlling prices charged to consumers
Establishing minimum prices, fixed price schedules, or coordinated pricing structures. -
Pooling or combining interests that affect market pricing
Merging competitive interests in a way that manipulates market conditions or pricing.
This broad statutory definition gives prosecutors and private litigants substantial discretion when alleging violations of the Cartwright Act.
What Activities Are Prohibited Under the Cartwright Act?
The Cartwright Act prohibits a wide range of anti-competitive business practices. Commonly alleged violations include the following.
Price-Fixing
Price-fixing occurs when competitors agree to set prices rather than allowing market forces to determine them. Agreements to establish minimum prices, fixed price ranges, or coordinated price increases violate the Act regardless of whether the resulting prices appear reasonable.
Market Allocation
Market allocation involves agreements between competitors to divide customers, geographic territories, or product markets to avoid competing with one another. Even informal or unwritten agreements may constitute unlawful conduct.
Bid-Rigging
Bid-rigging is a collusive practice in which competitors manipulate a bidding process to ensure a predetermined outcome. Common schemes include submitting intentionally inflated bids, rotating winning bidders, or agreeing in advance who will be awarded a contract. Bid-rigging undermines competition and often results in higher prices for buyers.
Tying Arrangements
A tying arrangement occurs when a seller conditions the sale of one product on the purchase of another. If the seller has sufficient market power and the arrangement restricts competition or consumer choice, it may violate the Cartwright Act.
Group Boycotts
Group boycotts involve agreements among competitors to refuse to do business with a particular individual or company, often with the goal of excluding that party from the market. These arrangements are closely scrutinized under California antitrust law.
Who Enforces the Cartwright Act?
The Cartwright Act may be enforced by multiple authorities, increasing potential exposure for alleged violators, including:
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The California Attorney General
Investigates statewide antitrust violations and brings civil or criminal enforcement actions. -
County district attorneys
Prosecute violations occurring within their respective jurisdictions. -
Private individuals or businesses
File civil lawsuits when harmed by anti-competitive conduct.
Civil Liability Under the Cartwright Act
Private parties injured by violations of the Cartwright Act may bring civil lawsuits seeking substantial remedies, including:
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Actual economic damages
Compensation for direct financial losses caused by anti-competitive conduct. -
Mandatory treble damages
Statutory damages equal to three times the actual loss. -
Attorney's fees and litigation costs
Recovery of legal expenses incurred in enforcing the statute. -
Injunctive relief
Court orders prohibiting ongoing or future anti-competitive behavior.
Because treble damages are mandatory upon proof of a violation, Cartwright Act civil cases can pose a significant financial risk.
Criminal Prosecution for Cartwright Act Violations
Although civil enforcement is more common, violations of the Cartwright Act may also result in criminal prosecution, particularly where conduct is intentional, fraudulent, or egregious. Criminal exposure may include:
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Misdemeanor or felony charges
Depending on the nature and severity of the violation. -
Substantial fines
Imposed by the court as part of sentencing. -
County jail or state prison sentences
For serious antitrust offenses. -
Additional related criminal charges
Such as conspiracy or fraud under California law.
Frequently Asked Questions About the Cartwright Act
What is the California Cartwright Act?
The Cartwright Act is California's primary antitrust statute prohibiting price-fixing, bid-rigging, market allocation, and other agreements that restrain trade or competition.
How does the Cartwright Act differ from federal antitrust law?
While similar to the Sherman Act, the Cartwright Act is broader and applies specifically to conduct affecting California markets, including certain vertical agreements not always covered under federal law.
Can Cartwright Act violations lead to criminal charges?
Yes. Although civil cases are more common, intentional or egregious violations may result in misdemeanor or felony criminal prosecution.
Who can bring a Cartwright Act lawsuit?
The California Attorney General, county district attorneys, and private individuals or businesses harmed by anti-competitive conduct may bring enforcement actions.
Why Early Legal Representation Matters in Antitrust Cases
Cartwright Act investigations are legally complex, document-intensive, and often involve parallel civil and criminal exposure. Early legal representation is critical for evaluating risk, responding to investigations, and protecting against severe financial and criminal penalties.
Speak With California Antitrust Defense Lawyers
If you or your business is under investigation for alleged violations of California's Cartwright Act, early legal guidance is essential.
Eisner Gorin LLP, based in Los Angeles, represents clients in complex state and federal matters involving antitrust allegations, white-collar investigations, and criminal defense.
If you have one phone call from jail, call us! If you are facing criminal charges,