Cartwright Act: violations.

Led by Assembly Member Aguiar-Curry, the measure seeks to curb cross-entity use of common pricing algorithms by adding prohibitions tied to contracts, combinations, or conspiracies that restrain trade, while also adjusting the pleading standard for related antitrust actions. The proposal adds new provisions to the Business and Professions Code that address algorithmic pricing practices and the way such claims are alleged in court, with definitions intended to distinguish practice that relies on competitor data from other pricing approaches.

The core prohibitions focus on using or distributing a common pricing algorithm in the context of a contract, agreement, or conspiracy that restrains trade, and on coercing others to adopt prices or other terms recommended by an algorithm for similar products or services in California. Key terms are defined to include: a common pricing algorithm as a method used by two or more entities that uses competitor data to influence a price or a commercial term; a commercial term encompassing price, level of service, availability, and output; and the scope of “distribute” to cover selling, licensing, or providing access to the algorithm. The measure explicitly states that it does not impair existing antitrust laws and broadens the types of terms that could be implicated beyond price alone.

In parallel, the bill alters civil procedure by permitting a complaint to state a Cartwright Act violation based on the plausible existence of a contract, combination, or conspiracy to restrain trade, without requiring allegations that exclude the possibility of independent action. This shift could affect how early-stage antitrust claims are evaluated and may influence subsequent discovery and litigation dynamics, while maintaining alignment with traditional enforcement channels under the antitrust framework. The text notes that penalties or specific enforcement mechanisms are not spelled out within the new provisions, raising questions about how criminal, civil, and regulatory remedies would be applied.

Implementation considerations and broader context aside, the measure broadens the act’s reach by treating algorithmic coordination that relies on competitor data as within scope of antitrust prohibitions and by clarifying that pleading standards for these claims may be more permissive at the outset. It also introduces definitional scope that could affect pricing practices, licensing or distribution of pricing tools, and the treatment of non-price terms as potential elements of improper coordination. Textual notes indicate a no-reimbursement stance for local agencies, though accompanying analysis signals consideration of local program costs, leaving some aspects—such as effective date and specific penalties—open to later clarification.