California Boosts Antitrust Enforcement With Two New Laws

SB 763: Heightened Penalties and Cumulative Remedies

The enacted version of SB 763 increases penalties for both corporate and individual violators of the Cartwright Act. Maximum criminal fines for corporate violators increase from $1 million to $6 million per violation, while top fines for individual violators increase from $250,000 to $1 million per violation.¹ In addition, the bill adds a provision to the Cartwright Act (Cal. Bus. & Prof. Code § 16755.1) that allows for civil penalties of up to $1 million per violation. Courts may impose these penalties based on a list of factors, including the nature and seriousness of the misconduct, the number of violations committed, persistence, and the defendant’s cooperation (or lack thereof) with the State’s Attorney General.

SB 763 also adds a new Section 16762 to California’s Business and Professions Code, which confirms that the remedies and penalties under the Cartwright Act are “cumulative” — both with respect to other Cartwright Act remedies, as well as those available under other state causes of action. This clarification potentially enhances the Attorney General’s ability to seek layered remedies and heightens the potential exposure for violators.

California State Senator Melissa Hurtado (D-Bakersfield) — who authored the legislation — issued a statement celebrating the passage. She proclaimed that the new law will further the state’s goals of “hold[ing] those” who engage in anticompetitive behavior “responsible” for any “suffering” their actions have caused. California Attorney General Rob Bonta also weighed in, stating that California is taking action and increasing penalties “for wealthy corporations looking to illegally profit at the expense of workers, consumers, and honest businesses.”

AB 325: Algorithmic Pricing Restrictions and Pleading Standard Clarification

AB 325 advances two principal objectives: restricting the use of common pricing algorithms and clarifying the pleading standards for Cartwright Act claims.

(1) Restrictions on Common Pricing Algorithms

AB 325 expressly prohibits the use or distribution of “common pricing algorithms” — defined to include any methodology used by two or more persons that uses competitor data to recommend, align, stabilize, set, or otherwise influence a price or commercial term — in the form of a contract, combination, or conspiracy to restrain trade or commerce. It also prohibits the use or distribution of a common pricing algorithm where a person coerces another person to set or adopt a recommended price or commercial term recommended by the common pricing algorithm for the same or similar products or services in California.

The newly enacted statute differs from federal courts’ treatment of common pricing algorithms in one key respect. Federal courts applying the Sherman Act often distinguish between algorithms that use confidential competitor data and publicly available competitor data, with the latter enjoying relatively favorable treatment.² At least facially, AB 325 does not recognize this distinction and thus may be more strict in application.

(2) Clarified Pleading Standards Under the Cartwright Act

AB 325 also adds Section 16756.1 to the Business and Professions Code, which purports to clarify the pleading standard for Cartwright Act claims. It provides that a complaint satisfies the pleading requirement if it contains factual allegations showing that the existence of a contract, combination in the form of a trust, or conspiracy to restrain trade or commerce is “plausible,” without the need for the plaintiff to allege facts tending to exclude the possibility of independent action. It is unclear if this clarification was necessary. As previously discussed, California courts already appear to have adopted this understanding of pleading requirements.³

That said, this provision may serve as a legislative warning against future attempts to impose a heightened “tend to exclude” standard at the pleading stage.  Thus, while this may not functionally move the needle on Cartwright Act pleading standards, the newly enacted provision may remind courts and litigants alike that “tend to exclude” factors are best evaluated at the summary judgment phase, not on demurrer. Practically, this recognition may prompt an increase in Cartwright Act claims, or at least cause courts to think twice before sustaining demurrers.

Conclusion

As California continues to increase the penalties and frequency of antitrust enforcement action, firms doing business in the state should remain alert to the increasingly hawkish approach legislators and public and private enforcers are taking towards perceived anticompetitive conduct.

¹ This increase — while significant — actually reflects a toned-down approach compared to earlier versions of the bill. For example, the first iteration of the bill would have allowed for corporate fines as high as $100 million per violation.

² See, e.g., Gibson v. Cendyn Grp., LLC, No. 2:23-cv-00140-MMD-DJA, 2024 WL 2060260, at *4 (D. Nev. May 8, 2024), aff’d, 148 F.4th 1069 (9th Cir. 2025) (“[C]onsulting public sources to see your competitors’ rates in reaching decisions about how to price hotel rooms does not violate the Sherman Act.”)

³ See, e.g., G.H.I.I. v. MTS, Inc., 147 Cal. App. 3d 256, 265 (1983); see also In re Cal. Gasoline Spot Mkt. Antitrust Litig., No. 20-CV-03131-JSC, 2022 WL 3215002, at *1 (N.D. Cal. Aug. 9, 2022).