Senate committee hears lengthy debate on AB 325 to target algorithmic price‑fixing

Assemblymember (author of AB 325) opened a long hearing on AB 325, saying the bill updates California's antitrust law to address modern tools that can enable illegal price fixing through software and algorithms. The author said the bill has been narrowed through multiple rounds of amendments to add safe harbors for good‑faith behavior, exempt ordinary end users, and remove joint and several liability to avoid penalizing small businesses for actions by larger firms.

Antitrust lawyers and former federal officials who testified in support described cases and patterns they say show digital tools can be used to coordinate pricing across industries. Lee Heppner, an antitrust attorney with the American Economic Liberties Project, said many third‑party platforms are being used as "hubs" that erode independent business decision‑making and that the bill is designed to restore that independence. "When third‑party software providers tell businesses ‘no, you can't set your own price,' we lose that independent decision‑making authority," Heppner testified.

Doha Meke, identified as a senior fellow at the University of California, Berkeley School of Law and a former senior official at the U.S. Department of Justice Antitrust Division, told the committee algorithmic coordination has already led to harmful outcomes and urged passage. "If we cannot tackle algorithmic collusion today, the next iteration of this problem is right around the corner," Meke said, describing the combination of data and algorithms as enabling surveillance pricing and other hard‑to‑detect schemes.

Opponents included the California Chamber of Commerce and trade groups representing technology and business interests. Eric Ensign, an antitrust attorney for the California Chamber of Commerce, said housecleaning amendments moved the bill in the right direction but warned the coercion language is vague and the definition of a "common pricing algorithm" remains too broad. "If that's the goal — to attack collusion — the definition should be targeted toward competitors using identical algorithms and the same inputs," Ensign said.

Chris McHale of the Civil Justice Association of California also urged caution, noting potential exposure under the Cartwright Act and the high remedies available in antitrust suits, and underscoring the need for clear pleading standards and governor‑level cooperation on language.

Committee members questioned witnesses on whether pricing tools can also lead to price decreases and asked for concrete examples of coercive arrangements. Support witnesses pointed to litigation and investigations nationwide alleging platforms make it difficult for businesses to deviate from recommended prices — for example by creating appeal processes that reject deviations a majority of the time — and argued the bill is narrowly aimed at coercive practices rather than ordinary competitive dynamic pricing.

The author told the committee she had accepted multiple amendments, including language from the California Chamber, and asked for the committee's support. A motion was made later in the hearing and the committee recorded the bill passed out of committee (tally recorded in the hearing roll: yes 7, no 0).