Fuel-pricing software faces California gas price-fixing lawsuit
A proposed class action says Kalibrate’s AI-powered tools helped gas station operators coordinate higher prices across California.
By Maya Lindqvist · Senior Technology Correspondent
3 min read
A proposed class action filed in federal court accuses major gas station operators of using Kalibrate’s fuel-pricing software to coordinate higher gasoline prices in California. The case matters for drivers in a state that already pays among the country’s highest pump prices, and it adds fuel retailing to a growing set of antitrust fights over algorithmic pricing.
The lawsuit, filed Monday, names operators including Marathon and Circle K and alleges violations of California antitrust law. According to the complaint, Kalibrate’s system let competitors share sensitive cost, volume and pricing information through a common platform rather than set prices independently.
The plaintiffs describe Kalibrate as the “central nervous system” of an alleged effort to reduce retail price competition among gas stations. The complaint says the software encourages users to avoid undercutting nearby rivals and warns that lower prices could set off a “downward spiral.”
Kalibrate, headquartered in Manchester, England, operates in more than 70 countries. The company did not respond Wednesday to a request for comment, according to The Associated Press.
The lawsuit also names BP, Speedway, EG America, Walmart and Albertsons as defendants. Together, the defendants operate more than 1,700 gas stations in California, according to the complaint. The companies did not immediately respond to requests for comment, the AP reported.
How the complaint says the software worked
The plaintiffs allege that Kalibrate’s tools allowed stations in the same market to raise prices at roughly the same time. One feature cited in the complaint, called a “restoration” tool, allegedly helps most stations in an area lift prices together and by a large amount.
The complaint says academic research on algorithmic fuel-pricing software found average price increases of about 6 cents a gallon. In markets where many stations used the technology, the increase reached as much as 30 cents a gallon, according to the lawsuit.
The plaintiffs argue that even small increases carry large consequences in California because of the amount of fuel sold in the state. The complaint says each additional cent per gallon costs California drivers $134 million a year statewide.
The lawsuit seeks to represent California drivers who bought gasoline at stations using Kalibrate software since June 2022. The case has been filed as a proposed class action, meaning a court would have to certify the class before it could proceed on behalf of that group.
Algorithmic pricing draws wider scrutiny
The case follows other antitrust actions involving software that regulators and plaintiffs say can push prices higher. The Justice Department sued RealPage over allegations that its software helped landlords raise rents, and it sued Agri Stats over claims that data-sharing helped meatpackers inflate grocery prices.
The Justice Department has settled both of those lawsuits in the past year, according to the AP. State attorneys general are still pursuing claims against RealPage and several property management companies.
California Gov. Gavin Newsom, a Democrat, signed a bill last year stating that the state’s antitrust law applies to pricing algorithms. The new lawsuit relies on that legal backdrop as it argues that competitors can coordinate prices through technology without direct backroom agreements.
Gasoline prices have climbed worldwide since the start of the Iran war, the AP has reported. The California lawsuit focuses on whether software used by station operators added unlawful pressure at the pump inside the state.
This story draws on original reporting from Fortune.