20250SB__038495AMD INTRODUCED 2025-02-14 AMENDED_SENATE 2025-04-08 AMENDED_SENATE 2025-04-24 AMENDED_ASSEMBLY 2025-06-26 AMENDED_ASSEMBLY 2025-07-17 2025 SB AMD Introduced by Senator Wahab LEAD_AUTHOR SENATE Wahab

An act to add

Chapter 40 (commencing with

Section 22949.85) to Division of the Business and Professions Code, relating to business. business Preventing Algorithmic Price Fixing Act: prohibition on certain price-setting algorithm uses. Existing law governs various business practices in this state, including certain laws relating to the use of technology. Existing law, commonly known as the Cartwright Act, identifies certain acts that are unlawful restraints of trade and unlawful trusts and prescribes provisions for its enforcement through civil actions.

This bill, the Preventing Algorithmic Price Fixing Act, would prohibit a person from selling, licensing, providing, or using a price-setting algorithm, as defined, with the intent or reasonable expectation that it be used by or more competitors, as defined, in the same market if the person knows or should know that the algorithm processes nonpublic data, as defined, to set either: (1) a price or supply level of a good or service or (2) a rent or occupancy level of rental property.

The bill would provide a user of a price-setting algorithm an affirmative defense to liability if the user exercised reasonable due diligence, as specified. The bill would authorize the Attorney General or a district attorney, city attorney, or county counsel to file a civil action for violations of these provisions, as specified, including for a civil penalty of up to $1,000 per violation, as specified. This bill would declare that a contract that violates these provisions is to that extent void and that its provisions do not limit the applicability of antitrust laws.

MAJORITY NO YES NO NO NO NO NO NO NO NO The people of the State of California do enact as follows:

SECTION 1. This act shall be known, and may be cited, as the Preventing Algorithmic Price Fixing Act.

SEC. 2.

Chapter 40 (commencing with

Section 22949.85) is added to Division of the Business and Professions Code , to read: 40. Price-Setting Algorithm 22949.85. (

a) A person shall not sell, license, provide, or use a price-setting algorithm with the intent or reasonable expectation that it be used by two or more competitors in the same market if the person knows or should know that the algorithm processes nonpublic input data to set either of the following:

(1) A price or supply level of a good or service.

(2) A rent or occupancy level of rental property. (

b) It shall be an affirmative defense to liability for a user of a price-setting algorithm who demonstrates by the preponderance of the evidence that they exercised reasonable due diligence, including obtaining written assurances from the person selling, licensing, or providing the algorithm that the algorithm does not process nonpublic input data. (c)

(1) For a person who sells, licenses, or provides a price-setting algorithm in violation of subdivision (a), each authorized user of, or user under a license for, the price-setting algorithm constitutes a separate violation.

(2) For the purposes of a person who uses a price-setting algorithm in violation of subdivision (a), each calendar month of use constitutes a separate violation. (

d) The Attorney General or a district attorney, in the name of the people of the State of California, or a city attorney or county counsel, in the name of the city or county, may file a civil action for a violation of this

section to recover actual damages or for injunctive relief, restitution, or civil penalties of up to one thousand dollars ($1,000) per violation, or any combination of those remedies. The court shall award reasonable attorney’s fees and costs to the Attorney General, district attorney, city attorney, or county counsel, as applicable, if they are the prevailing party in the action. (

e) A contract that conflicts with this

section is to that extent void. (

f) This

section does not limit the applicability of antitrust laws. (e)</xhtml:p>"?> (

g) For the purposes of this section: (1) “Artificial intelligence” means an engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence a physical or virtual environment. (2) “Antitrust laws” has the same meaning as defined in the Clayton Act (15 U.S.C.

Sec. 12), and includes

Section of Title of the United States Code, including provisions commonly known as the Cartwright Act (Chapter 2 (commencing with

Section 16700) of Part of Division 7). (2)</xhtml:p>"?> (3) “Nonpublic input data” means data that is confidential, nonpublic, and sensitive information of competitors, but does not include data that was collected more than one year before the use or distribution of the price-setting algorithm. (3)</xhtml:p>"?> (4) (A) “Price-setting algorithm” means a software, computer system, computer process, algorithmic program, or artificial intelligence that processes nonpublic input data for the purpose of producing a pricing or rental strategy. (B) “Price-setting algorithm” does not include a multiple listing service, as that term is defined in

Section of the Civil Code. (4)</xhtml:p>"?> (5) “Competitors” means two or more persons or business entities, including landlords, that offer similar or substitutable goods, services, or real property for lease in the same relevant market to the same or overlapping customer base.