After months of legal warfare, Paramount Skydance and Attorney General Rob Bonta have settled their fight over Paramount’s $110 billion acquisition of Warner Bros. Discovery.

So who won?

Paramount gets Warner Bros. Bonta gets a long list of concessions. 

Both sides can declare victory.

But California taxpayers and businesses should be asking a different question: What happens the next time Washington clears a merger, only for Sacramento to demand a second bite at the regulatory apple?

That may prove to be the most important legacy of the Paramount fight. There were signs that Paramount was ready to leave California. It is now committed not only to remain in California, but also to scale a number of hurdles to meet the conditions of the settlement. 

The federal government cleared the deal in June after a “rigorous eight-month investigation” led by the U.S. Justice Department Antitrust Division’s career staff – concluding the merger was unlikely to restrain competition or harm consumers. Overseas regulators representing 68 jurisdictions also approved the merger. 

But that wasn’t enough for Bonta, who opposed the “unlawful merger” of “two entertainment behemoths,” and the 11 state attorneys general who joined the lawsuit. They argued the merger would reduce competition, raise prices, and limit film and television choices. Even as the parties came to terms over the weekend, Bonta declared the agreement wasn’t “a blessing of the broader merger,” and insists that “further consolidation in markets central to American economic life doesn’t serve the American economy, consumers, or competition well.” 

Given the concessions that were extracted by Bonta, he should be happy with the outcome. 

Not only will the company stay in California, it has to release 30 movies in each of the first two years and 32 in each of the following three. If Paramount doesn’t hit the minimum, it will have to pay a $30 million fine for each film below the target. Failing to hit the benchmark could also result in Paramount being forced to sell Miramax, a film and television production company in which it has a 49% ownership stake.

Another reported provision is Paramount’s promise to invest $1.5 billion in domestic U.S. film production. It will have to pay $9.5 million every year into a fund to train and develop the industry’s workforce, as well. 

While it won’t be free to sell its studio lots, Paramount will not have to divest any of its major assets and it was able to avoid the $7 million-a-day “ticking fee” that would have been paid to Warner shareholders for each day the sale dragged on beyond Sept. 30. 

Bonta also leveraged the appointment of “a trustee to monitor Paramount’s compliance” with the requirement that CBS News, already owned by Paramount, and CNN, which comes in the package as a Warner property, will have editorial independence. 

Critics from the left including actor Mark Ruffalo say Bonta gave up on the case even though he was winning, caving “under pressure” and being “too lenient” with Paramount. 

Bonta had to weigh an uncompromising strategy against the probability that Paramount would flee California to avoid the state’s well-known antagonism toward business, and he likely didn’t want to be known as the politician who was responsible for Hollywood losing its last major studio. 

But a win for Bonta isn’t necessarily the same as a win for California or the rest of the country. 

“It’s good that the settlement has been reached,” says PRI senior fellow Wayne Winegarden, “so the merger can go through. There are reasons the companies believe it will create a more competitive environment because it will create a strong competitor.” Markets filled with weak competitors need consolidation to remain healthy. 

Winegarden is concerned that even with the positives from the settlement, a dangerous precedent has been set. Companies now know they may have to clear Washington and then negotiate separately with Sacramento. With California antitrust law differing from – and in some respects reaching further than – federal law, Bonta has positioned the Golden State as America’s second antitrust capital.

This is troubling. 

Alden Abbott of the Mercatus Center says antitrust enforcement at the state level “should complement federal policy by addressing genuinely local harms and supplying useful evidence.” What it should not do is “operate as a serial veto over firms’ federally sanctioned actions” because it can create uncertainty, delay necessary mergers and increase business’ cost. 

Bonta’s victory might be more than the accommodations he squeezed out of Paramount. He might have pushed California closer to being a monopolist of antitrust threats and enforcement. 

Kerry Jackson is the William Clement Fellow in California Reform at the Pacific Research Institute, and co-author of “The California Left Coast Survivor’s Guide”