California Preventing Algorithmic Collusion Act of 2025.

Senator Hurtado's California Preventing Algorithmic Collusion Act establishes new regulations governing the use of pricing algorithms that process confidential competitor data, aiming to prevent implicit price coordination among market competitors. The legislation prohibits distributing pricing algorithms or their recommendations to multiple competitors when those algorithms process confidential market data, and bars companies from using such algorithmic recommendations if they know a competitor employs the same system.

The act creates an affirmative defense for companies that conduct documented due diligence before implementing algorithmic pricing recommendations, such as obtaining written assurances that the systems do not incorporate competitor data. Violations accrue separately for each authorized algorithm user, each recommendation instance, and each month of continued use. The provisions exempt cases where all processed competitor data is more than one year old, as well as credit scoring tools subject to federal reporting laws.

Enforcement authority rests with the Attorney General, district attorneys, county counsels, and city attorneys, who may pursue civil actions seeking restitution, punitive damages, and penalties up to $25,000 per violation. Courts determining penalties must weigh factors including violation severity, persistence, willfulness, and the defendant's cooperation and financial circumstances. The act operates alongside existing antitrust statutes while establishing distinct oversight of algorithmic pricing practices that could enable tacit collusion through automated systems.