By Ann O’Brien, Leo Caseria & T.J. Benedict (Sheppard Mullin)
In this piece, authors Ann O’Brien, Leo Caseria & T.J. Benedict (Sheppard Mullin) go over California’s newly enacted AB325, signed by Governor Gavin Newsom on October 6, 2025. The law targets the use and distribution of certain algorithmic pricing tools — a notable move as policymakers increasingly scrutinize algorithmic pricing practices. Unlike prior proposals focused narrowly on rental housing, AB325 applies across all markets beginning in 2026. However, because a violation still requires conspiracy or price coercion, its practical scope may largely mirror existing enforcement under the Cartwright Act.
The authors explain that AB325 bans the use or distribution of a “common pricing algorithm” when tied to agreements restraining trade, and prohibits coercing others into adopting prices generated by such tools. The law defines common pricing algorithms broadly to include methods or technologies using competitor data to influence pricing or commercial terms, without distinguishing between public and private data sources. It applies to individuals and business entities alike.
The law amends the Cartwright Act and therefore carries its private right of action, opening the door to civil litigation. Importantly, AB325 does not reach internally developed, proprietary pricing tools used exclusively within a single company. As the authors note, the legislation focuses on shared or common algorithms that may facilitate coordination, leaving internal pricing systems outside its scope.