California’s New Algorithmic Pricing Law Is Focus of Gas Station Antitrust Lawsuit

The lawsuit largely follows what has now become a common model for consumers challenging use of algorithmic pricing software, emphasizing industry adoption, allegedly higher prices, and marketing materials released by the software provider. The plaintiffs claim the California gas stations delegated their pricing decisions to a common algorithm, which gave them access to confidential, nonpublic information and allowed them to artificially raise gas prices. The plaintiffs also allege that the higher gas prices cannot be explained by market forces, such as the conflict with Iran.

However, unlike other algorithmic pricing lawsuits which have focused primarily on the federal antitrust law, the Sherman Act, the new gas station lawsuit claims only violations of California’s antitrust law, the Cartwright Act. The Act was amended last year, effective January 2026, to, among other things, confirm its application to algorithmic pricing tools and allow for a potentially more plaintiff-friendly pleading standard than the one applicable to Sherman Act cases. 

Background on the New California Law

The lawsuit is one of the first to reference recent changes to the California law. In particular, the plaintiffs allege, citing Section 16729(a) of the Act, that recent amendments confirmed what was always the intent of the Act, that “[i]t shall be unlawful for a person to use or distribute a common pricing algorithm as part of a contract, combination in the form of a trust, or conspiracy to restrain trade or commerce in violation of this chapter.”

Other amendments are also relevant to algorithmic pricing issues.  For example, Section 16729(b) of the Act now provides, “[i]t shall be unlawful for a person to use or distribute a common pricing algorithm if the person coerces another person to set or adopt a recommended price or commercial term recommended by the common pricing algorithm price or commercial term recommended by the common pricing algorithm for the same or similar products or services in the jurisdiction of this state.” 

The amendments also changed the pleading standard applicable to cases filed under the Cartwright Act.  Section 16756.1 provides, “[n]otwithstanding any other law, in a complaint for any violation of this chapter, it is sufficient to contain factual allegations demonstrating that the existence of a contract, combination in the form of a trust, or conspiracy to restrain trade or commerce is plausible, and the complaint shall not be required to allege facts tending to exclude the possibility of independent action.”  

Takeaways

As noted above, this is only the latest in a string of similar lawsuits challenging use of algorithmic pricing software. In addition, algorithmic pricing tools and related information exchange services remain a focus of government investigations, throughout the United States and abroad. While the matters are in their early stages and court rulings on the claims have been mixed, companies should continue to carefully monitor use of new software applications and benchmarking services, particularly those that employ an algorithm to price or manage inventory or use data from third parties.