It’s critical to act quickly and strategically. First, preserve all relevant documents like emails, contracts, pricing policies, by suspending routine document destruction. The Attorney General (AG), FTC or DOJ may be involved, so identifying the investigating agency and whether the case is civil or criminal is essential. California has ramped up antitrust enforcement, and criminal penalties under the cartwright act can be severe, including fines up to $1 million for corporations and jail time for individuals.

Next, consider potential legal defenses. You may argue the plaintiff suffered no direct harm (lack of standing), that the claim is past California’s four year statute of limitations, or that your actions had procompetitive benefits. If you receive a civil investigative demand (CID), be cautious, only provide what is legally required to avoid exposing unrelated risks. If the request is too broad, you can challenge it within 20 days.

Internally, it’s wise to conduct an audit with external legal counsel. Review business agreements, especially non-compete clauses, which are now largely banned under California’s S.B. 699 A.B. 1076, to ensure compliance. Employees should also be trained on what constitutes illegal coordination with competitors to avoid future liability.

If there’s a criminal risk, consider whether cooperation with authorities, such as seeking from the California AG or DOJ, might be beneficial. Keep in mind that penalties for violations like price-fixing or monopolization can be severe, including multi-million dollar fines and injunctions that may force business restructuring. Looking ahead, California’s antitrust laws are evolving, with proposals targeting single-firm conduct, labor market monopolies, and buyer-side monopolies (monopoly power). These changes could mean stricter enforcement and broader liability than federal law. Staying ahead of these developments updating compliance policies and engaging with regulators on upcoming reforms is crucial.