Navigating antitrust compliance under California’s SB 54: What producers, suppliers, and industry conveners need to know

On June 15, 2026, Circular Action Alliance (CAA) submitted its inaugural California Extended Producer Responsibility (EPR) Program Plan to the Producer Responsibility Advisory Board, marking a key step in the implementation of the Plastic Pollution Prevention and Packaging Producer Responsibility Act (SB 54). The plan is now open for a 60-day public comment period through August 14, 2026.

One week after the submission, a coalition of 17 state attorneys general led by Nebraska filed a federal lawsuit challenging SB 54 on constitutional grounds. Pending further developments, companies are encouraged to prepare for compliance.

In the meantime, implementation of SB 54 continues to move forward: with source-reduction requirements for plastic packaging beginning in 2027 and more than 3,400 producers already registered with CAA California, the program is moving quickly from concept to reality. Given the collective nature of these source-reduction requirements, that reality comes with a set of antitrust compliance implications that participants in the packaging value chain are encouraged to understand.

How EPR can create antitrust risk

A modern packaging EPR program like SB 54 requires competing companies to work together through a single nonprofit producer responsibility organization (PRO). The PRO submits plans for state approval, sets fees for participating producers, funds recycling services, and works to meet performance requirements – all under ongoing government oversight. Because competitors coordinate on fees, data sharing, and joint procurement and design decisions, EPR programs inevitably bring key antitrust considerations, including related to competitor collaborations. The issue extends beyond producers. Suppliers, converters, co-packers, and industry associations and conveners also operate in this environment and must understand where the line falls between lower-risk and problematic coordination.

When competing companies gather in EPR forums, they are encouraged to establish strict guardrails. Discussions should generally focus on regulatory requirements, technical implementation, and general strategies tied to plan implementation. At the same time, companies are encouraged to avoid sharing sensitive competitive information such as prices, costs, profit margins, or company-specific supplier processes.

SB 54’s conditional antitrust shield and its limits

SB 54 provides an antitrust exemption at Public Resources Code § 42055. Under the exemption, certain actions taken by a PRO or by a producer participating in a PRO do not violate California’s main competition laws (i.e., the Cartwright Act, Unfair Practices Act, or Unfair Competition Law). However, this protection operates as a limited, conditional safe harbor rather than a general authorization to coordinate. It covers only activities directly tied to the creation, implementation, management, and cost-setting functions of an approved plan. It is not a blanket pass for any and all dealings among competitors.

Several key limitations apply. First, only activity that is narrowly tied to the approved plan is shielded. The exemption does not extend beyond what the plan requires or expressly authorizes. Coordination that is not necessary for plan implementation is not protected.

Second, certain conduct is always illegal under antitrust law. Naked price fixing among competitors, bid rigging, and agreements to divide markets fall outside any safe harbor.

Third, the California exemption only protects against California state antitrust claims. It does not automatically shield participants from federal antitrust liability under the Sherman Act. For protection from federal claims, companies must show that their conduct qualifies for immunity under the state-action doctrine, which requires that the state has clearly authorized the conduct and is actively supervising it. Because California’s exemption is written as a state-law safe harbor rather than a state-action immunity provision, federal protection depends on an adequate record of government oversight through plan approvals, reporting, and enforcement.

Finally, in addition to potential governmental enforcement, private parties – including competitors, service providers, customers, retailers, municipalities, recycling operators, and consumers in class actions – could raise antitrust claims related to the implementation of SB 54.

The evolving enforcement landscape

Making matters more uncertain, the regulatory landscape is in flux – but enforcement has sharpened. At the federal level, in December 2024, the United States Department of Justice (DOJ) and Federal Trade Commission (FTC) withdrew the 2000 Antitrust Guidelines for Collaborations Among Competitors, which businesses had relied on for decades. In 2026, the DOJ and FTC announced a joint inquiry to develop updated guidance, with a particular focus on data sharing. However, until new guidance emerges, businesses face regulatory uncertainty: the old rules are gone, but the agencies’ focus on competitor collaborations has intensified, leaving companies with less certainty about how such conduct will be evaluated.

At the state level, in 2025, California enacted Section 16756.1 of the Business and Professions Code, which regulates algorithmic pricing coordination and strengthens Cartwright Act penalties. Importantly, plaintiffs asserting Cartwright Act claims no longer need to allege facts tending to exclude the possibility of independent action, a change that loosens the pleading standard and is expected to allow more antitrust cases to survive early dismissal. Meanwhile, the Florida Attorney General’s investigation into the US Plastics Pact – examining whether voluntary industry sustainability goals could improperly steer competition – shows that antitrust scrutiny of environmental packaging initiatives is not merely hypothetical.

Key risk vectors

With these dynamics in mind, participants across the value chain are encouraged to consider the principal risk areas, including:

• Fees and cost allocation. SB 54 tasks the PRO with setting fees that producers pay to fund the program. Coordination on a common, plan-required fee structure is more likely to fall within the exemption when that coordination is narrowly tied to an approved plan, but extending that coordination to product pricing or other commercial terms is not.


• Information sharing. EPR programs require producers and the PRO to report detailed data on materials, volumes, packaging design, and recycling outcomes. If company-specific competitive information, especially current or forward-looking data, is shared among competitors beyond what the agency requires, antitrust exposure could increase.


• Standard setting. When PROs or industry groups develop design standards that move beyond what the state has approved, those standards could exclude competitors or lock out innovative approaches, potentially attracting antitrust scrutiny.


• Activity outside the plan. Industry-wide sustainability pledges, discussions about recycled-content pricing, or joint dealings with customers and suppliers that fall outside the approved plan are unlikely to be protected by the EPR exemptions.

Practical compliance

Antitrust compliance in the EPR context is not straightforward. SB 54 requires competitors to coordinate on fees, share data, and make collective decisions through the PRO – activities that would ordinarily raise serious antitrust concerns. Notably, the tension between EPR mandates and antitrust prohibitions makes the line between protected and unprotected conduct unclear. Businesses are encouraged to treat necessary collaboration as an area of potential risk unless it is narrowly tied to the statute, regulations, and an approved plan. Such risk must be actively managed throughout implementation.

The following principles could help producers, suppliers, and conveners manage risk:

• Stay within the four corners of the approved plan. When participating in PRO activities – voting on fees, contributing to policy discussions, or engaging in plan implementation – confirm that the activity is required or expressly authorized by the statute, regulations, or approved plan and that it is narrowly tied to implementation. Keep records of how your participation ties back to plan requirements. If challenged, this documentation could provide the foundation of a legal defense.


• Handle competitive information with care. Do not share company-specific costs, volumes, pricing, or forward-looking business plans directly with competitors. Ensure that any competitively sensitive information you provide is collected by the PRO or a neutral third party and, if shared more broadly, is aggregated or anonymized so that no company can identify a competitor’s individual data.


• Avoid conflicts of interest. If a company could benefit from a PRO decision – for example, if it is a service provider that bids on PRO contracts or a supplier whose products could be favored by certain design standards – consider abstaining from discussions or votes on those matters. Participants are encouraged to support processes that use objective criteria and competitive bidding, and to flag potential conflicts early. Keeping commercial interests separate from PRO governance could strengthen legal defenses.


• Discuss compliance approaches, not competitive strategies. Producers, suppliers, and conveners can – and often must – engage on matters related to SB 54 compliance and implementation of approved program activities. Conversations about which packaging formats are likely to quality as recyclable or compostable, how the PRO’s source-reduction pathways may operate in practice, or how regulatory guidance may be interpreted are more likely to be viewed as permissible when confined to compliance and plan implementation. By contrast, discussions that extend to pricing, customer or market allocation, supplier selection, or other commercial decision-making may raise antitrust considerations. The key distinction: information-sharing related to regulatory compliance may be more defensible but coordinating commercial decisions is not.


• Draw clear boundaries in EPR forums. In PRO meetings and industry gatherings, keep discussions focused on topics covered by, and necessary for the implementation of, the approved plan, such as regulatory compliance, technical implementation, and program operations. Steer clear of product pricing, customer strategies, market allocation, or other commercial matters unrelated to plan implementation. When it comes to policy advocacy, such as lobbying for changes to EPR rules, participants may wish to use established public processes, such as submitting comments, participating in hearings, or filing regulatory petitions, which are designed to facilitate stakeholder engagement with government decision-makers.

With CAA’s program plan now filed and the public comment window open, 2026 marks the transition from planning to implementation. Producers, suppliers, converters, and conveners are encouraged to assess their antitrust compliance practices, train their teams on the boundaries of lower-risk collaboration, and establish documentation and processes to actively manage risk and support their legal defenses as California’s program takes effect.

For more information on the intersection of EPR and antitrust laws, please contact the authors.