Bill Text: CA SB295 | 2025-2026 | Regular Session | Introduced
Bill Title: California Preventing Algorithmic Collusion Act of 2025.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced) 2025-02-19 - Referred to Coms. on JUD. and PUB. S. [SB295 Detail]
Download: California-2025-SB295-Introduced.html
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 introduced, 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 require a person, as defined, upon request of the Attorney General, to provide to the Attorney General a written report on each pricing algorithm, as defined, identified in the request. The
bill would require specified officers to certify, under penalty of perjury, the accuracy of the report. By expanding the crime of perjury, this bill would impose a state-mandated local program.
This bill would prohibit a person from using or distributing any pricing algorithm that uses, incorporates, or was trained with, competitor data. The bill would prohibit a person from distributing a pricing algorithm, or making recommendations based on the use of a pricing algorithm that uses, incorporates, or was trained with, competitor data, as specified. The bill would declare that a contract that violates these provisions is to that extent void.
This bill would authorize the Attorney General or a district attorney to bring a civil action for violation of the above-described provisions to seek, among other recoveries, specified civil penalties or other appropriate relief, as provided. This bill would include in these recoveries
forfeiture of charter rights, franchises, or privileges and powers exercised by a defendant corporation or association, dissolution of the defendant corporation or association, and revocation of the powers, franchises, or functions of a defendant foreign corporation or association, as provided.
This bill would require a person that has $5,000,000 or more in annual revenue that uses a pricing algorithm to recommend or set a price or commercial term to make certain disclosures, as specified, including to a customer, before the customer purchases the relevant product or service, that the price or a commercial term is set or recommended by a pricing algorithm. The bill would provide that failure to comply with these disclosure provisions constitutes an unfair trade practice, as specified. The bill would authorize the Attorney General to bring a civil action for violation of these disclosure provisions.
The
California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YESBill 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)).
(b) “Commercial term” means any of the following:
(1) Level of service.
(2) Availability.
(3) Output, including quantities of products produced or distributed or the amount or
level of service provided.
(4) Rebates or discounts made available.
(c) “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.
(d) “Person” has the same meaning as defined in Section 16702.
(e) “Price” means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.
(f) “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) Upon written request by the Attorney General, a person shall, no later than 30 days after the date of the written request or any later date approved by the Attorney General, provide to the Attorney General a written report on each pricing algorithm identified in the request.(b) Each report pursuant to subdivision (a) shall include all of the following:
(1) Information on whether the person is responsible for the development or distribution of the pricing algorithm, or whether a third party is responsible for the development or distribution of the pricing algorithm, including the identity and contact information of any other person responsible for the development or
distribution of the pricing algorithm.
(2) Information on whether the pricing algorithm autonomously sets prices or commercial terms and whether there is human review of any recommendation or decision of the pricing algorithm.
(3) An explanation of the rules or processes that the pricing algorithm uses to set or recommend prices or commercial terms.
(4) A description of all data the pricing algorithm uses to set or recommend prices or commercial terms, including data used to train the algorithm.
(5) All sources and collection processes, including the frequency of collection, of any data that the pricing algorithm uses to set or recommend prices or commercial terms.
(6) Whether the pricing
algorithm engages in price discrimination by setting or recommending different prices or commercial terms for the following:
(A) Different customers seeking identical or nearly identical products or services, and if so, the factors used in differentiating among those customers.
(B) Different employees or independent contractors providing substantially similar services, and if so, the factors used in differentiating among those employees or independent contractors.
(7) Any changes made to the pricing algorithm between the date of receipt of the request under subdivision (a) and the date of certification under subdivision (c).
(c) The chief executive officer, chief economist, chief technology officer, or a corporate officer of similar authority of a
person shall certify, under penalty of perjury, the accuracy of a report under subdivision (a) submitted by the person.
(d) This section shall not be construed to do either of the following:
(1) Limit the ability of the Attorney General to issue a civil investigative demand, to issue a subpoena, to seek discovery in the course of litigation, or to otherwise obtain information through other means available to the Attorney General.
(2) Restrict the use of information submitted in a report under subdivision (a) in the course of a formal investigation, enforcement action, litigation, trial, or other proceeding, in accordance with the confidentiality procedures applicable to that proceeding.
17373.
(a) A person shall not use or distribute any pricing algorithm that uses, incorporates, or was trained with competitor data.(b) A person shall not distribute a pricing algorithm, or make recommendations based on the use of a pricing algorithm that uses, incorporates, or was trained with competitor data, to two or more persons with the intent or reasonable expectation that the pricing algorithm or its recommendations be used to set the price or commercial term of a product or service in the same market or a related market.
(c) A person shall not use a pricing algorithm or the recommendation of a pricing algorithm that uses, incorporates, or was trained with competitor data to set
a price or commercial term of a product or service if the pricing algorithm or the recommendation of the pricing algorithm was used by another person to set or recommend a price or commercial term of a product or service in the same market or a related market.
17374.
(a) The Attorney General or a district attorney may bring a civil action for a violation of Section 17373 in any court of competent jurisdiction to seek to recover, as applicable, one or more of the following:(1) A civil penalty of one of the following:
(A) Not less than ten thousand dollars ($10,000), adjusted for inflation on the basis of the California Consumer Price Index, for each day during which the violation occurred or continues to occur.
(B) The sum of the price of each product or service sold using the pricing algorithm in violation of subdivision (a).
(2) Forfeiture of charter rights, franchises, or privileges and powers exercised by a defendant corporation or association, and for the dissolution of the corporation or association.
(3) Revocation of the powers, franchises, or functions of a defendant foreign corporation or association. Upon the revocation, the foreign corporation or association shall be prohibited from doing any business in this state. Upon receipt of a certified copy of the judgment and decree of any court of competent jurisdiction finding any foreign corporation or association guilty of violating this chapter and ordering a revocation of its powers, franchises, or functions of a corporation in this state, the Secretary of State shall revoke the license of any such corporation or association heretofore authorized to do business in this state.
(4) Reasonable attorney’s fees and costs.
(5) Other appropriate relief, including an injunction or other equitable relief.
(b) Any injunction against a violation of this chapter, whether interim or final, shall cover every article, product, or service, and not merely the particular article, product, or service involved in the action. For purposes of this subdivision, “article, product, or service” includes, among other things, a pricing algorithm.
(c) Any person, who, either as a director, officer, or agent of any firm or corporation or as an agent of any person, violating the provisions of this chapter, assists or aids, directly or indirectly, in that violation is responsible therefor equally with the person, firm, or corporation for which they act.
(d) Nothing in this section shall impair or
limit the applicability of antitrust laws.
17375.
(a) A person that has five million dollars ($5,000,000) or more in annual revenue that uses a pricing algorithm to recommend or set a price or commercial term shall make, in a clear manner, the following disclosures:(1) To a customer, before the customer purchases the relevant product or service, that the price or a commercial term, as applicable, is set or recommended by a pricing algorithm.
(2) To a current or prospective employee or independent contractor that the price or commercial term for services rendered as an employee or independent contractor is set or recommended by a pricing algorithm.
(b) (1) If applicable, a disclosure under subdivision (a) shall state that the pricing algorithm sets or recommends different prices for the following:
(A) Different customers seeking identical or nearly identical products or services.
(B) Employees or independent contractors providing substantially similar services.
(2) If applicable, a disclosure under subdivision (a) shall do both of the following:
(A) State that the pricing algorithm was developed or distributed by a person other than the person making the disclosure.
(B) Provide the identity of the person that developed or distributed the pricing algorithm.
(c) If the Attorney General has reason to believe that a person has violated subdivision (a) or (b), the Attorney General may bring a civil action against the person in any court of competent jurisdiction in this state to seek to recover one or both of the following:
(1) A civil penalty of not less than five thousand dollars ($5,000), adjusted for inflation on the basis of the California Consumer Price Index, for each day during which the violation occurs or continues to occur.
(2) Other appropriate relief, including an injunction or other equitable relief.
(d) Nothing in this section shall impair or limit the applicability of antitrust laws.
