SB295 - California Preventing Algorithmic Collusion Act of 2025.

Amended IN Assembly September 02, 2025 Amended IN Assembly July 14, 2025 Amended IN Assembly June 27, 2025 Amended IN Assembly June 26, 2025 Amended IN Senate May 05, 2025 Amended IN Senate April 10, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 295 Introduced by Senator Hurtado (Coauthor: Senator Cortese) February 06, 2025 An act to add Chapter 8 (commencing with Section 17370) to Part 2 of Division 7 of the Business and Professions Code, relating to business regulations. LEGISLATIVE COUNSEL'S DIGEST SB 295, as amended, Hurtado. California Preventing Algorithmic Collusion Act of 2025. Existing law establishes the Attorney General as the head of the Department of Justice, with charge of all legal matters in which the state is interested, except as specified. Existing law imposes various responsibilities on the Attorney General related to consumer protection, including, among others, the supervision of charitable trusts and the enforcement of antitrust laws. 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 would enact the California Preventing Algorithmic Collusion Act of 2025, to prohibit a person person, as described, from distributing or making recommendations based on the use of a pricing algorithm to 2 or more competitors, as defined, under specified circumstances, if the person knows or should know that the pricing algorithm processes competitor data, as defined. This bill would also prohibit a person from using the recommendation of a pricing algorithm that processes competitor data, as specified, if the person knows or should know that the pricing algorithm uses or incorporates competitor data. The bill would establish an affirmative defense to liability under this prohibition for a person who demonstrates by a preponderance of evidence that they exercised reasonable due diligence before using the recommendations of a pricing algorithm, as specified. The bill would specify when the use, recommendation, or distribution of a pricing algorithm constitutes separate violations. The bill would declare that these provisions do not apply if all of the competitor data processed by the pricing algorithm was collected more than one year before the use, recommendation, or distribution of the pricing algorithm. The bill would declare that a contract that violates these provisions is to that extent void. This bill would authorize the Attorney General, a district attorney, a county counsel, or a city attorney to bring a civil action for violation of the above-described provisions to seek restitution, punitive damages, a civil penalty of up to $25,000 per violation, and other appropriate relief, as provided. The bill would declare that its provisions shall not impair or limit the applicability of antitrust laws. laws, as defined. The bill would exempt from its provisions the development, distribution, output, or use of a credit score or other computational tool either subject to specified law or provided by a commercial credit reporting agency, as specified. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Chapter 8 (commencing with Section 17370) is added to Part 2 of Division 7 of the Business and Professions Code, to read: CHAPTER 8. California Preventing Algorithmic Collusion Act of 2025 17370. This chapter shall be known, and may be cited, as the “California Preventing Algorithmic Collusion Act of 2025.” 17371. For purposes of this chapter, the following definitions apply: (a) “Antitrust laws” has the same meaning as defined in the Clayton Act (15 U.S.C. Sec. 12), and includes Section 45 of Title 15 of the United States Code, and this part, including provisions commonly known as the Cartwright Act (Chapter 2 (commencing with Section 16700)). “Antitrust laws” also includes Section 1853.5 of, Article 4 (commencing with Section 1855) of Chapter 9 of Part 2 of Division 1 of, and subdivision (b) of Section 1861.03 of, the Insurance Code. (b) “Commercial term” means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of goods, commodities, or products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available. (5) (4) Property rental rate, lease term, or occupancy level. “Commercial term” does not include listings, advertisements or other information regarding rental properties on a multiple listing service, as defined in Section 1087 of the Civil Code. (c) “Competitor data” means the confidential, nonpublic, competitively sensitive information of two or more competitors in the same market. (d) “Competitors” means two or more businesses that offer a similar good, commodity, product, rental property, or service in the same market to the same customer base. (e) “Distribute,” “distribution,” and “distributing” include selling, licensing, providing access to, or otherwise making available by any means, including through a subscription or the sale of a service. (f) “Person” has the same meaning as defined in Section 16702. Any insurer, as defined by Section 23 of the Insurance Code, including, but not limited to, any insurer subject to the provisions of Article 10 (commencing with Section 1861.01) of Chapter 9 of Part 2 of Division 1 of the Insurance Code and any advisory organization subject to the provisions of Article 4 (commencing with Section 1855) of Chapter 9 of Part 2 of Division 1 of the Insurance Code, shall be exempt from Sections 17372 to 17374, inclusive. (g) “Price” means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any good, commodity, product or service, including compensation paid to an employee or independent contractor for services provided. “Price” includes rental rate. (h) “Pricing algorithm” means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state. 17372. (a) (1) A person shall not distribute a pricing algorithm, or make recommendations based on the use of a pricing algorithm, to two or more competitors with the intent or reasonable expectation that the pricing algorithm or the recommendations be used by the competitors to set the price or commercial term of similar goods, commodities, products, rental property, or services in the same market if the person knows or should know that the pricing algorithm processes competitor data. (2) A person shall not use the recommendation of a pricing algorithm that processes competitor data to set a price or commercial term of a good, commodity, product, rental property, or service if the person knows or should know that the pricing algorithm uses or incorporates competitor data and that the pricing algorithm or the recommendation of the pricing algorithm was used by a competitor to set or recommend a price or commercial term of a similar good, commodity, product, rental property, or service in the same market. (b) It shall be an affirmative defense to liability under paragraph (2) of subdivision (a) if the person demonstrates by a preponderance of evidence that they exercised reasonable due diligence before using the recommendation of a pricing algorithm, including, but not limited to, obtaining written assurances from the person distributing the pricing algorithm, or making recommendations based on the pricing algorithm, that the pricing algorithm does not process competitor data. (c) (1) For a person who distributes a pricing algorithm in violation of paragraph (1) of subdivision (a), each authorized user of the pricing algorithm constitutes a separate violation. (2) For a person who makes recommendations based on the use of the pricing algorithm in violation of paragraph (1) of subdivision (a), each instance in which the person makes a recommendation constitutes a separate violation. (3) For a person who uses the recommendation of a pricing algorithm in violation of paragraph (2) of subdivision (a), each calendar month of use constitutes a separate violation. (d) This section does not apply if all of the competitor data processed by the pricing algorithm was collected more than one year before the use, recommendation, or distribution of the pricing algorithm. 17373. The Attorney General, a district attorney, a county counsel, or a city attorney may bring a civil action for a violation of Section 17372 in any court of competent jurisdiction to seek to recover, as applicable, any of the following: (a) (1) Restitution. (2) Punitive damages. (3) A civil penalty of up to twenty-five thousand dollars ($25,000) per violation. In assessing the amount of the civil penalty, a court shall consider any relevant circumstances presented by any of the parties to the case, including, but not limited to, all of the following: (A) The nature and seriousness of the misconduct. (B) The number of violations committed by the defendant. (C) The persistence of the defendant’s misconduct. (D) The length of time over which the misconduct occurred. (E) The willfulness of the defendant’s misconduct. (F) The defendant’s assets, liabilities, and net worth. (G) The extent to which the defendant cooperated with the Attorney General’s or district attorney’s, county counsel’s, or city attorney’s investigation and litigation. (b) Injunctive relief. (c) Reasonable attorney’s fees and costs. 17374. A contract that violates a provision of this chapter is to that extent void. 17375. Nothing in this chapter shall impair or limit the applicability of antitrust laws. 17376. This chapter shall not apply to the development, distribution, output, or use of a credit score or other computational tool either subject to the Fair Credit Reporting Act (15 U.S.C. Sec. 1681 et seq.) or provided by a commercial credit reporting agency, as defined in Section 1785.42 of the Civil Code, and not used to facilitate direct coordination of commercial terms among competitors.