Preventing Algorithmic Price Fixing Act: prohibition on certain price-setting algorithm uses.

Plain English Breakdown

The bill summary and digest do not provide specific information about the enforcement mechanisms beyond authorizing civil actions by the Attorney General and local prosecutors.

Preventing Algorithmic Price Fixing Act

This act makes it illegal for businesses to use certain algorithms to set prices or rental levels if they know these algorithms will be used by competitors and involve secret data.

What This Bill Does

• It prohibits people from selling, licensing, providing, or using price-setting algorithms intended for two or more competing companies in the same market if the person knows or should know that the algorithm processes nonpublic data to set prices or rental levels.
• Users of these algorithms can avoid penalties if they show they did their best to ensure the algorithm wasn't being used illegally.
• The Attorney General and local prosecutors can sue people who break this law and get fines up to $1,000 for each violation.
• Contracts that go against this act are not valid.

Who It Names or Affects

• Businesses using or selling price-setting algorithms
• Competing companies in the same market

Terms To Know

Algorithm

A set of instructions that a computer uses to solve problems or make decisions.

Nonpublic data

Information that is not available to the public and kept secret by companies.

Limits and Unknowns

• The bill does not specify what happens if businesses accidentally use these algorithms without knowing they are illegal.
• It's unclear how this act will be enforced in practice.

Official Summary Text

SB 384, as amended, Wahab.
Preventing Algorithmic Price Fixing Act: prohibition on certain price-setting algorithm uses.
Existing law governs various business practices in this state, including certain laws relating to the use of technology.
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, the Preventing Algorithmic Price Fixing Act, would prohibit a person from selling, licensing, providing, or using a price-setting algorithm, as defined, with the intent
or reasonable expectation
that it be used by 2 or more competitors, as defined, in the same market if the person knows or should know that the algorithm processes nonpublic data, as defined, to set either: (1) a price or supply level of a good or service or (2) a rent or occupancy level of rental property. The bill would provide a
person
user of a price-setting algorithm
an affirmative defense to liability if the
person
user
exercised reasonable due diligence, as specified. The bill would authorize the Attorney General or a district attorney, city attorney, or county counsel to file a civil action for violations of these provisions, as
specified, including for a civil penalty of up to $1,000 per violation, as specified.
This bill would declare that a contract that violates these provisions is to that extent void and that its provisions do not limit the applicability of antitrust laws.

Current Bill Text

Download Bill PDF