California AB 325 Is Effective January 1, 2026: A Game-Changer for Algorithmic Pricing Litigation
California’s new law AB 325 takes effect January 1, 2026, and businesses need to be ready. The law targets algorithm-driven pricing, banning the use or sharing of common pricing algorithms and making it illegal to pressure companies into following algorithmic price recommendations. It also lowers the bar for filing Cartwright Act claims, making enforcement easier. With SB 763 raising penalties for violations, companies should watch closely and take steps now to ensure compliance before the new rules kick in.
Pricing algorithms come in a variety of forms, including dynamic pricing that adjusts based on inventory or market conditions, personalized pricing based on customer history, rule-based pricing using predefined criteria, machine learning–driven pricing like regression models, cost-plus pricing that adds a set margin to the cost of goods, and bundle pricing that offers discounts for multiple items, among others.
The litigation risk is escalating:
1. New Focus on the Code: The economic defense of a pricing algorithm is no longer enough; litigators must be prepared to deconstruct the algorithm itself to demonstrate its pro-competitive rationale.
2. More Cases to Discovery: By rejecting the federal antitrust pleading hurdle, AB 325 means more algorithmic collusion claims will survive early dismissal, pushing clients into data-intensive discovery.
For litigators, this means early case assessment must now include a deep forensic dive into economic behavior. At Vega Economics, our experts assist in using economics to guide you through this new era of algorithmic scrutiny.