In an article published in Law360, Pillsbury partner Mark Krotoski and attorney Vinny Sidhu wrote about A.B. 325, a California law signed on Oct. 6 that significantly expands enforcement and the risk of higher criminal penalties and civil remedies for the use or distribution of shared pricing algorithms.

The new law, the authors note, amends the Cartwright Act -- California’s antitrust statute -- to make it unlawful for businesses to use or distribute a “common pricing algorithm” in certain coordinated efforts that restrain trade or fix prices or commercial terms, and adds a new prohibition on coercing another firm to adopt an algorithm’s recommended price or term for similar products or services  Another new law (SB 763) also significantly increases the criminal and civil penalties for violations of the Cartwright Act.

Users of pricing algorithms should consider the new, broader California standards along with the standards under the federal Sherman Act based on recent and ongoing litigation, the authors say. Users should also take steps to mitigate the risk of government enforcement and private antitrust litigation at the federal and state levels.

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