Suppliers and sellers doing business in California that rely on pricing algorithms or shared pricing tools should review price-setting processes in light of a significant update to California’s state antitrust law.
In October, California approved legislation that explicitly makes pricing algorithms subject to the antitrust protections in the Cartwright Act and prohibits any anticompetitive use of common pricing algorithms or coercion to adopt algorithm-derived prices, as well as lowering the pleading standard for Cartwright Act claims. California will define “common pricing algorithm” as “any methodology, including a computer, software, or other technology, used by two or more persons, that uses competitor data to recommend, align, stabilize, set, or otherwise influence a price or commercial term.” Importantly, the law is not limited to tools that use non-public competitor data.
At the federal level, both the DOJ and FTC have signaled an aggressive stance towards the use of algorithms trained on competitive data, withdrawing longstanding policy statements and “safety zones” related to information sharing between competitors, in part because of concern about how machine learning and artificial intelligence have allowed competitors to use shared non-public industry information in collusive and anticompetitive ways. But California’s law stands in contrast to recent cases, such as Gibson v. Cendyn Grp., 148 F.4th 1069, 1076 (9th Cir. 2025), in which algorithmic conspiracy allegations failed because there was no indication that confidential, non-public competitor data was used by the computer pricing algorithms. California’s law will make it easier for California plaintiffs to assert anticompetitive algorithm claims under state law.