Item 16 - Ordinance Prohibiting Anti-Competitive Automated Rent Price-Fixing

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Ordinance Prohibiting Anti-Competitive Automated Rent Price-Fixing February 17, 2026 Page 2 5 5 8 3 spent an extra $3.8 billion in rent in 2023; Los Angeles renters in units managed with algorithms paid an average of $408 more annually, compared to renters in units not managed with algorithms. Overview of Legislation Addressing Algorithmic Pricing and Antitrust AB 325 Cartwright Act: Violations Assembly Bill 325, enacted on October 6, 2025 and effective January 1, 2026, amends the Cartwright Act to further expand the scope of conduct prohibited under California antitrust law. The bill clarifies that the use of a “common pricing algorithm” may constitute unlawful price fixing when used as part of a contract, combination in the form of a trust, or conspiracy to restrain trade or commerce. AB 325 addresses concerns that pricing software and algorithmic tools can function as mechanisms for coordinating prices, rental rates, or supply levels. By amending the Cartwright Act, AB 325 clarifies that the use of shared or common pricing algorithms may be treated as evidence of a concerted practice when the effect of such use is to artificially influence prices in the real estate market. AB 325 does not impose an outright ban on pricing software, instead the bill operates primarily as a clarification of liability standards within the existing antitrust law framework. Enforcement of the Act continues to rely on state or local prosecutors or private parties bringing antitrust actions. Proposed bill - SB 384 Preventing Algorithmic Price Fixing Act Senate Bill 384, the Preventing Algorithmic Price Fixing Act, would make it unlawful for a person to sell, license, provide, or use a “price-setting algorithm” with the intent or reasonable expectation that it will be used by two or more competitors in the same market, when the person knows or should know that the algorithm relies on nonpublic data to determine either: 1) the price or supply of a good or service, or 2) the rent or occupancy level of rental property. Unlike AB 325, SB 384 creates a standalone prohibition on a “price-setting algorithm” when it is intended or can be reasonably expected to be used by two or more competitors in the same market and processes nonpublic data. SB 384 would allow a user of such an algorithm to claim an affirmative defense if they exercised specified reasonable due diligence. It would also authorize the State Attorney General, as well as certain local prosecutors, to bring civil actions for violations, including seeking civil penalties of up to $1,000 per violation. As of February 2026, SB 384 has advanced through the Senate floor and various committees; and is currently undergoing Second Committee Review. Federal and State Antitrust Litigation Antitrust lawsuits have been filed against third-party revenue management companies, including RealPage, Inc. and Yardi Systems, Inc., as well as landlords who are using alleged rent-fixing conspiracies. The lawsuits allege that these companies are enabling unlawful rent-fixing. In August 2024, the United States Department of Justice (DOJ) filed an antitrust lawsuit against RealPage accusing the company of unlawfully reducing market competition and artificially raising rents. Eight state Attorneys General, including