California lawmakers are on the verge of resurrecting a long-buried antitrust philosophy\u2014one that once punished consumers in the name of protecting \u201cworthy men.\u201d <\/p>\n
Assembly Bill 1776, the so-called COMPETE Act, is marketed as a modernization of state antitrust law. In reality, it is a wholesale abandonment of the consumer welfare standard (CWS), the objective framework that has anchored antitrust enforcement for nearly half a century. If enacted, the bill would replace clear economic analysis with a free-floating mandate to protect \u201call trade participants,\u201d inviting judges to pick winners and losers based on subjective sympathies rather than measurable harm.<\/p>\n
To understand the danger, it helps to revisit the ghost California is trying to summon: the Supreme Court\u2019s 1966 decision in United States v. Von\u2019s Grocery Co. The case is infamous among antitrust scholars not because it protected consumers, but because it didn\u2019t. The government blocked a merger between two Los Angeles grocery chains that together held a paltry 7.5 percent of the market\u2014far too little to effectively raise prices or restrict output. Yet the Court struck down the deal anyway, invoking a populist desire to protect \u201csmall dealers and worthy men\u201d from the competitive pressures of modern retail.<\/p>\n
The problem was that consumers\u2014the \u201cworthy women\u201d\u2014were already voting with their feet. They wanted the supermarket revolution: lower prices, one-stop shopping, frozen foods, and the efficiencies of scale that only larger chains delivered. The Court, clinging to nostalgia for an obsolete market structure, tried to stop changing consumer tastes and \u201cmake the automobile stand still.\u201d In doing so, it punished the very innovations that were making life easier for working families.<\/p>\n
The COMPETE Act threatens to codify this same reactionary philosophy into California law. By decoupling state antitrust enforcement from the consumer welfare standard, the bill invites courts to protect whichever \u201cstakeholder\u201d they find most sympathetic\u2014whether a competitor, a supplier, an employee, or a would-be entrant. A business would have no way to know whether its conduct will be judged by its benefits to consumers or by a judge\u2019s preference for a rival \u201ctransaction partner.\u201d That uncertainty is not a feature; it is a deterrent to investment, expansion, and innovation.<\/p>\n
Worse, the bill weaponizes antitrust law against consumers. Under the COMPETE Act, plaintiffs would no longer need to show that a company priced below cost, exercised market power, or engaged in conduct capable of harming consumers. Everyday competitive behavior\u2014lowering prices, offering promotions, choosing not to contract with a supplier\u2014could be recast as unlawful simply because a smaller rival complains. When rules become this vague, businesses tend to \u201cstandardize upward\u201d: raise prices, reduce discounts, and avoid aggressive competition just to minimize litigation risk.<\/p>\n
This is not modernization. It is regression.<\/p>\n
California already possesses one of the broadest state antitrust toolkits in the country. The Cartwright Act, the Unfair Practices Act, and the Unfair Competition Law reach anticompetitive restraints, prohibit predatory tactics like secret rebates and locality discrimination, and allow lawsuits against virtually any \u201cunfair\u201d business act. The COMPETE Act would not fill a gap\u2014it would create a litigation gold rush. Private plaintiffs, armed with mandatory treble damages and vague liability standards, would have every incentive to sue first and negotiate later.<\/p>\n
In contrast, the consumer welfare standard grounds antitrust in measurable economic effects\u2014prices, output, innovation\u2014rather than populist sentiment or judicial intuition. It is flexible, adaptive, and aligned with how markets actually function. History shows what happens when enforcers prioritize the survival of \u201crandom market participants\u201d over the welfare of the public. They miss the next revolution of what people need and want.<\/p>\n
Abandoning that standard does not make antitrust more progressive. It makes it more arbitrary.<\/p>\n
The COMPETE Act gravely heightens the risk that Californians will miss the next wave of retail innovation, supply chain efficiencies, or technological advances that could lower costs in a state where affordability is already a crisis. The Act claims to protect competition. In practice, it protects competitors from having to compete.\u00a0<\/p>\n
In a state already struggling with some of the highest housing, grocery, and energy costs in the nation, the last thing California needs is an antitrust regime that deters lower prices, rewards lawyers over innovators, and insulates established companies from creative upstarts. Californians deserve better.<\/p>\n
Babette Boliek is a professor of law at Pepperdine University and former chief economist of the Federal Communications Commission.<\/p>\n","protected":false},"excerpt":{"rendered":"California lawmakers are on the verge of resurrecting a long-buried antitrust philosophy\u2014one that once punished consumers in the…\n","protected":false},"author":2,"featured_media":401511,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[7,9,8,964,975],"class_list":["post-401510","post","type-post","status-publish","format-standard","has-post-thumbnail","category-california","tag-california","tag-california-headlines","tag-california-news","tag-commentary","tag-opinion"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/401510","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=401510"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/401510\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/401511"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=401510"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=401510"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=401510"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}