California Is Expanding Its Role in Merger Oversight: What Dealmakers Need to Know

If you are planning a transaction that requires a federal antitrust filing, California just added a step. Starting January 1, 2027, many merging parties will have to hand their federal merger paperwork directly to the California Attorney General.

The change arrived quietly. On February 10, 2026, Governor Newsom signed SB 25, the California Uniform Antitrust Premerger Notification Act. It takes effect at the start of 2027, which gives dealmakers a rare gift: a known compliance obligation with real lead time to prepare.

Here is what the law actually requires, what it does not do, and how to handle state regulatory risk in your deal documents.

What SB 25 Actually Does

The mechanics are narrower than the headlines suggest, so it helps to be precise.

Federal law already requires parties to large transactions to file a Hart-Scott-Rodino notification with the FTC and the Department of Justice. SB 25 does not change that. Instead, it requires certain HSR filers with sufficient California ties to submit a copy of that same filing to the state Attorney General.

The problem it solves

State attorneys general have long had authority to challenge anticompetitive mergers under federal antitrust law. What they lacked was information.

Federal agencies receive detailed HSR submissions. States generally could not access those materials without the parties’ consent. So a transaction could reshape a California market while the state learned about it from a press release.

SB 25 closes that gap. California becomes the third state to adopt this approach, following Washington and Colorado, both of which enacted similar laws in 2025. All three are based on a model act published by the Uniform Law Commission in 2024.

Why California matters more

The mechanism is the same as Washington and Colorado. The impact is not.

California’s economy is enormous and it is the center of gravity for American technology companies. Far more transactions will have California ties than had Washington or Colorado ties. If your company sells anything meaningful into this state, assume the analysis applies to you.

Who Has to File, and What

Two separate triggers exist, and they carry different obligations. This distinction is where most compliance mistakes will happen.

Trigger one: principal place of business

If your principal place of business sits in California and you are filing under HSR, you must submit to the Attorney General.

Filers in this category have the heavier burden. They must provide the HSR form plus a complete electronic copy of any additional documentary material submitted federally. That means the deal documents, presentations, and analyses that accompany a federal filing travel to Sacramento too.

Trigger two: California sales

The second trigger looks at revenue rather than location. It applies if you, or an entity you control, had annual California net sales of the goods or services involved in the transaction equal to at least 20% of the federal HSR size-of-transaction threshold.

That threshold moves. The FTC adjusts HSR figures annually, and with the size-of-transaction threshold at $133.9 million effective February 2026, the California sales test worked out to roughly $26.78 million. Because the statute references a percentage rather than a fixed number, the California figure updates automatically whenever the federal threshold does.

Sales-test filers get lighter treatment initially. They submit the HSR form, and they provide additional documentary material only if the Attorney General asks. When that request comes, the material is due within seven business days.

Deadlines, Fees, and Penalties

The compliance details are specific enough to calendar now.

The one business day rule

California requires submission within one business day of the federal HSR filing. Worth noting: Washington and Colorado require contemporaneous filing, so if you have built a multi-state process around those states, California’s timing differs slightly.

One business day is not much room. Practically, this means the state submission should be prepared alongside the federal one rather than treated as a follow-up task.

What it costs

The Attorney General may charge a filing fee of $1,000 for principal-place-of-business filers, or $500 for those filing under the sales test or responding to a document request.

What happens if you miss it

Penalties reach up to $25,000 per day of noncompliance. The statute provides notice and a three business day cure period before penalties begin to run, which is meaningful protection, though not much of a cushion.

Confidentiality provisions

California added two safeguards that Washington and Colorado did not include. Submitted materials must be destroyed or returned within 120 days after closing or the conclusion of related legal proceedings, whichever comes later. And the Attorney General must give five business days’ notice before sharing your materials with another state’s attorney general.

What SB 25 Is Not

This part matters, because overstating the law leads to bad planning.

SB 25 is not a state merger clearance regime. It creates no California waiting period, no suspensory obligation, and no requirement to obtain state approval before closing. You file, and your deal timeline proceeds under federal rules.

It also does not change substantive antitrust standards. There is no new burden of proof, no California-specific test for anticompetitive effects. The statute improves process and information flow, nothing more.

The broader reform question is separate

That said, something larger is under discussion. The California Law Revision Commission has been advancing proposals on antitrust law, including work on single-firm conduct and concerted action, and continues to consider broader reform touching mergers and acquisitions.

SB 25 deliberately stayed narrow and left those questions alone. Whether California eventually adopts a substantive state merger review standard remains genuinely open, and it is worth monitoring. Treat it as a possibility on the horizon rather than current law.

How State Review Actually Bites: The Charter and Cox Example

While SB 25 handles antitrust information sharing, California already exercises real transaction authority through other agencies. The recent Charter and Cox merger illustrates the point clearly.

On August 13, 2026, the California Public Utilities Commission voted unanimously to approve Charter’s acquisition of Cox, a transaction commonly valued around $34.5 billion. California was the final state approval the companies needed. The FCC had cleared the deal back in February.

The conditions attached

Approval came with strings. The CPUC adopted two settlement agreements plus additional conditions, which reporting described as including five-year low-income broadband commitments, substantial California network investment, digital inclusion funding, automatic credits for qualifying outages, and long-term compliance reporting.

Important distinction: this was a public utilities proceeding reviewing a transfer of control, not an antitrust review and not an action under SB 25. Different agency, different legal standard, different questions.

Why dealmakers should care anyway

The lesson generalizes. A transaction can clear federal antitrust review and still sit waiting on a California agency with its own mandate and its own timeline.

Charter and Cox announced in May 2025 and were still waiting on California in August 2026. That is the real risk profile of state-level review: not usually a blocked deal, but a slower one with conditions you did not price in.

If your business touches a regulated sector, healthcare, utilities, insurance, grocery, or pharmacy, sector-specific California notice requirements may apply on top of everything discussed above.

Building Regulatory Contingencies Into Deal Terms

Knowing the rules is step one. Reflecting them in your documents is where the protection lives.

Address timing directly

Outside dates need to accommodate realistic state review, not optimistic assumptions. Consider whether extension mechanics should trigger automatically when a state proceeding is pending.

Ask who bears the cost of delay, because someone will.

Allocate the conditions risk

Regulatory approval covenants deserve careful attention. If a state agency conditions approval on spending commitments or service obligations, which party absorbs that? A well-drafted burdensome condition provision answers the question before it becomes a dispute.

Assign compliance responsibility

Someone must own the SB 25 filing and hit that one business day window. Name them in the agreement rather than assuming it is obvious.

Diligence the sector exposure early

Identify every applicable state notification requirement during diligence, not after signing. Sector-specific rules carry their own timelines, and some run far longer than antitrust review.

Talk to Carbon Law Group Before You Sign

State-level transaction review is expanding, and California is moving faster than most states. Three states now have premerger notification laws, more are following, and California’s version reaches further than the others simply because of the size of the market.

For deals closing before 2027, SB 25 does not yet apply. For anything on a longer horizon, build it into your process now.

Pankaj Raval and the team at Carbon Law Group advise Los Angeles businesses on transaction structure, regulatory timelines, and the deal terms that allocate this kind of risk. We work with small and mid-sized companies where a surprise filing obligation or a six-month delay genuinely changes the economics of a transaction.

If you are contemplating a sale, acquisition, or investment round, contact Carbon Law Group at carbonlg.com. The provisions that protect you against regulatory delay are negotiable now and very difficult to add later.