The Cartwright Act is California’s state-level antitrust statute, and it has historically prohibited agreements between competitors that restrain trade: traditional price-fixing, market allocation, and bid-rigging. AB 325 amends the Cartwright Act to address a modern variation of the same problem: businesses that do not directly communicate about price, but instead each subscribe to the same third-party pricing algorithm that recommends or sets prices using aggregated market and competitor data, potentially producing the same coordinated-pricing effect as an old-fashioned price-fixing agreement.

AB 325 prohibits the use or distribution of "common pricing algorithms" as part of an anticompetitive agreement, and separately creates liability for a business that coerces a competitor into adopting algorithm-recommended prices. This provision responds directly to a wave of litigation nationally against revenue-management software providers in industries ranging from multifamily housing to hospitality, where multiple competitors used the same third-party algorithm and prices moved in parallel across the market.

Concrete example: A group of commercial property owners in Santa Clara County each license the same third-party pricing tool, which sets suggested lease rates using pooled, non-public rent data from all of the tool’s subscribers, including direct competitors. Even though no owner ever discusses pricing directly with another, the shared algorithm functions as a channel for coordinated pricing. Under the amended Cartwright Act, that arrangement, and any coercion used to get a reluctant landlord to adopt the tool’s pricing, can now form the basis of an antitrust claim.

Beyond the pricing-algorithm provisions, AB 325 makes a separate and arguably more consequential change: it adds Section 16756.1 to the Business and Professions Code, establishing a new pleading standard for all Cartwright Act claims, not just algorithm-related ones. Under the new standard, a complaint survives a motion to dismiss if it alleges facts making a conspiracy plausible. The plaintiff no longer has to plead facts that "tend to exclude the possibility of independent action," a significantly higher bar that many federal antitrust plaintiffs have struggled to clear under parallel federal case law.

In practical terms, this means more Cartwright Act cases will survive the pleading stage and proceed into discovery, where the cost and exposure of litigation increases substantially for defendant businesses.

Businesses throughout Silicon Valley that rely on third-party pricing, revenue-management, or dynamic pricing tools should not assume that using a vendor’s software insulates them from Cartwright Act exposure. The relevant question is no longer only "did we talk to a competitor about price," but "does the tool we use pool or share data with competitors in a way that produces coordinated pricing outcomes."

Companies on the receiving end of a Cartwright Act claim involving a shared pricing tool should expect that claim to survive early motion practice more often than it would have before January 1, 2026, given the new pleading standard.

Business owners using or considering pricing software should ask their vendor directly whether the tool incorporates competitor-specific or non-public data from other subscribers, and should document the independent business rationale behind any pricing decision influenced by the tool. Businesses that have been pressured by a vendor, franchisor, or industry group to adopt a particular pricing algorithm should be especially cautious, since AB 325 separately targets coercive conduct.

McLellan Law Group advises businesses throughout Saratoga, San Jose, and Santa Clara County on Cartwright Act compliance and represents both plaintiffs and defendants in California antitrust litigation.