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Antitrust / Competition

United States: California Modernizes Antitrust Law to Tackle Pricing Algorithms

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In brief

On October 6, 2025, Governor Gavin Newsom announced that California enacted a series of laws that included an amendment to California’s antitrust statute, the Cartwright Act. He declared that the series of bipartisan legislation “further protects families by creating stronger consumer protections and increasing affordability.” Specifically, the antitrust amendment prohibits the use or distribution of “common pricing algorithms” that rely on competitor data or facilitate coordinated pricing. Two days later, Governor Newsom signed a second bill1 into law dramatically increasing penalties for Cartwright Act violations—raising corporate criminal fines, individual criminal fines, and giving courts discretion to apply civil penalties for misconduct. 

Key takeaways

  • California’s amended antitrust statute features increased criminal penalties and civil fines, highlighting the state’s efforts to invigorate antitrust enforcement and a willingness to seek higher penalties in forthcoming Cartwright cases involving collusion facilitated by pricing algorithms.
  • California has been successful at bringing antitrust cases under the Cartwright Act as separate violations from the federal Sherman Act. These amendments continue to emphasize the importance of state-specific compliance measures for companies that operate in California and participate in Californian commerce.
  • Companies should reassess their use of pricing software to determine whether it relies on competitors’ data when recommending or setting pricing or other commercial terms. 
  • Corporate compliance policies and training materials should be updated to reflect the increased penalties for California State antitrust violations, which now may include utilizing or developing pricing algorithms based on competitors’ data, as well as coercing others to adopt algorithm-recommended pricing or commercial terms.

In more detail

This week, Governor Newsom signed into law two bills – AB 3252 and SB 7633 – amending the state’s primary antitrust law, the Cartwright Act.  AB 325 is intended “to provide clarity in the Cartwright Act’s application to algorithmic collusion,” which can be used to facilitate tacit collusion without explicit agreements to fix prices. 

AB 325 amends the Cartwright Act by explicitly prohibiting the use or distribution of a common pricing algorithm when it is used to coordinate prices or commercial terms among competitors. A “common pricing algorithm” is defined broadly to include “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.” “Price” includes not only consumer-facing pricing, but also employee or independent contractor compensation. The legislation targets both the developers of such algorithms and the businesses that knowingly use them to engage in collusion.

Additionally, AB 325 prohibits pressuring another party to adopt an algorithm-recommended price or other commercial term, including the level of service of output, for the same or similar products or services.

As amended, under the Cartwright Act, plaintiffs also no longer need to allege facts that exclude the possibility of independent action; instead, it is sufficient for plaintiffs to present plausible allegations of a contract, combination, or conspiracy to fix prices or commercial terms using a common pricing algorithm. This aspect of the amendment may induce an increase in private litigation alleging collusion through the use of common pricing algorithms across industries.

The second of the two bills, SB 763, dramatically increases the maximum penalties that may be imposed for Cartwright Act violations. In connection with the Bill, California Attorney General Rob Bonta released a statement noting that “too many wealthy corporations see penalties for breaking the law as simply the cost of doing business. SB 763 would sharpen the teeth of a century-old law.”4

The changes to the criminal and civil penalties include:

  • Corporate fines: Increased from $1 million to $6 million per violation.
  • Individual fines: Raised from $250,000 to $1 million.
  • Civil penalties: Up to $1 million per violation, based on severity and persistence.

Collectively these amendments underscore the state’s efforts to prioritize its antitrust and unfair competition law enforcement. These moves mirror a growing state-level trend to regulate algorithmic pricing and strengthen antitrust enforcement. Notably, New York has enacted a law requiring disclosure of algorithmic pricing based on personal data, while Colorado, Massachusetts, Ohio, Illinois, Hawaii, Maine, and Vermont have proposed their own laws taking aim at various uses and forms of algorithmic pricing.

With respect to California law, clients should  recognize that both California State Courts and federal district courts have recognized the extraterritorial reach of the Cartwright Act, meaning Carwright Act claims can be brought against companies headquartered or doing business outside of California as long as there is a sufficient nexus to the state. In previous interpretations of the Cartwright Act, the Ninth Circuit has stated that the Cartwright Act can be lawfully applied where more than a “de minimis” amount of the defendant’s alleged conspiratorial activity took place in California.5 Specifically, clients should be aware that having offices in California, entering into commercial agreements in California, or having employees in California that are connected to the use of pricing algorithms may create a sufficient nexus under the new amendments to sustain a Cartwright Act claim.

1 Bill Text – SB-763 Conspiracy against trade: punishment.
2 A.B. 325, 2025–2026 Leg., Reg. Sess. (Cal. 2025) (enacted as Chapter 338, Statutes of 2025), https://sjud.senate.ca.gov/system/files/2025-06/ab-325-aguiar-curry-sjud-analysis.pdf.
3 S.B. 763, 2025–2026 Leg., Reg. Sess. (Cal. 2025) (enacted as Chapter 426, Statutes of 2025), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB763.]
4 Attorney General Bonta, Senator Hurtado Unveil Bill to Sharpen California’s Antitrust Law | State of California – Department of Justice – Office of the Attorney General
5 AT&T Mobility LLC v. AU Optronics Corp., 707 F.3d 1106, at 1113 (9th Cir. 2013).

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Jeff Martino is a partner in the Firm's North America Antitrust & Competition Practice Group and National Security Practice Groups. He brings an in-depth understanding of a wide variety of white collar and fraud related matters to his antitrust litigation and investigations practice. Jeff is co-lead of the Firm's Global Cartel Task Force and represents multinational corporations and their boards and executives in high-stakes criminal and civil investigations by the US Department of Justice (DOJ) and other federal and state agencies. Jeff draws upon his extensive criminal investigations, litigation, and enforcement experience to advise clients through sensitive matters pertaining to international cartel actions and white collar investigations. Prior to joining Baker McKenzie, Jeff spent nearly two decades at the DOJ and his last five years as Chief of DOJ Antitrust Division's New York Office. He also served in the U.S. Attorney Office for the District of Arizona where he was the Deputy Chief of the Public Corruption and Financial Crimes Unit. He has extensive experience as "first chair" on trials and investigations in the most complex areas of criminal antitrust, market manipulation, and consumer protection.

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Byron Tuyay is a senior associate in Baker McKenzie's North America Antitrust & Competition Practice Group in Los Angeles. He has represented individuals and corporations on matters involving a broad range of antitrust law issues arising from investigations conducted by the US Department of Justice, Federal Trade Commission, and international competition authorities.
Byron was an Assistant United States Attorney at the US Attorney's Office for the Central District of California where he prosecuted a wide variety of federal crimes including white collar crimes and COVID-19 related fraud schemes, coordinated multi-agency investigations, and conducted federal criminal jury trials. As a federal prosecutor, Byron also briefed and argued appeals before the United States Court of Appeals for the Ninth Circuit.
Before Joining the US Attorney's Office, Byron was an attorney at a global law firm where he practiced antitrust and competition law.

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Marisa Dieken is an associate in Baker McKenzie's North America Antitrust & Competition Practice Group, based in Washington, DC. Marisa advises clients on a broad range of antitrust law issues before the Department of Justice, Federal Trade Commission, and foreign competition authorities. Prior to joining Baker McKenzie, Marisa worked for the US Department of Justice as a trial attorney. While at the DOJ, Marisa led pre-merger investigations in telecommunications, media, and technology sectors, and contributed to on a wide array of civil merger and conduct investigations. She also worked on litigation teams for the Division including US v. AT&T/Time Warner and US v. American Airlines/Jetblue.

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