California Clarifies Antitrust Pleading Standard, Creates Uncertainty on ‘Coercive’ Uses of Algorithmic Software

In this piece, authors Minna Lo Naranjo, Rishi P. Satia, Braden T. Fairweather, Joshua M. Goodman & J. Clayton Everett, Jr. (Morgan Lewis) explore California’s newly enacted AB 325, which amends the Cartwright Act and introduces a new liability basis tied to “coercing” the adoption of prices recommended by common pricing algorithms. Taking effect on January 1, 2026, the law also clarifies that the Cartwright Act’s pleading requirements are more permissive than federal standards. The authors note that lawmakers narrowed earlier drafts to avoid chilling innovation, instead focusing on coercive uses of shared pricing tools and creating uncertainty for companies distributing or using algorithmic pricing software.

The article explains that the statute prohibits using or distributing common pricing algorithms as part of unlawful collusion and adds liability where a party coerces others to adopt algorithm-generated pricing or commercial terms. A common pricing algorithm is defined broadly as any technology used by two or more parties that leverages competitor data to influence pricing. The undefined term “coerce” creates ambiguity over what conduct and evidence will be required to establish liability, though the law appears aimed at intentional pressure rather than inadvertent or passive use. Unlike proposals in other states, California’s law does not distinguish between public and non-public data inputs, creating further compliance questions.

A second major development is the law’s new pleading standard, which states that a complaint under the Cartwright Act need only allege facts making a conspiracy “plausible,” without needing to exclude independent conduct at the pleading stage. This departs from the federal Twombly standard, which requires more than allegations of parallel behavior alone. While California courts may still expect plaintiffs to allege something beyond bare parallelism to meet plausibility, the change lowers the initial bar for conspiracy claims under state law and may impact litigation involving algorithmic pricing and competitor conduct more broadly…

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