A federal lawsuit filed in California on Monday alleges that an AI-powered fuel pricing software has enabled gas station operators to engage in illegal collusion, resulting in higher prices at the pump. The proposed class action accuses major companies, including Marathon and Circle K, of violating state antitrust laws through their use of Kalibrate, a fuel-pricing system employed worldwide.
The complaint describes Kalibrate as the "central nervous system" behind a coordinated effort to suppress retail price competition among gas stations. According to the lawsuit, the software facilitates synchronization of elevated prices and actively discourages users from undercutting competitors, warning that doing so could provoke a "downward spiral" of prices.
The plaintiffs contend that Kalibrate allows gas stations to relinquish control over pricing decisions and sensitive business information to the software, which then enables operators to avoid competitive pricing strategies and maintain higher consumer prices. Californians already face some of the highest gas prices in the nation, exacerbated by global supply disruptions linked to the ongoing conflict in Iran.
This suit marks the latest in a growing trend of legal actions targeting algorithmic pricing systems, which federal authorities and state officials argue contribute to rising costs for consumers. Similar lawsuits include the U.S. Department of Justice's recent suits against RealPage, accused of aiding landlords in raising rents, and Agri Stats, alleged to have helped the meatpacking industry inflate grocery prices. While the DOJ has reached settlements in these cases, additional litigation remains active.
California’s response to concerns about algorithm-driven price coordination included legislation signed last year by Governor Gavin Newsom. The law establishes that state antitrust statutes expressly apply to pricing algorithms, providing legal grounds for challenges like the current case.
Kalibrate, headquartered in Manchester, England, serves clients in over 70 countries but has not publicly commented on the allegations. The lawsuit characterizes the alleged collusion as a form of cartel-like behavior facilitated by AI, contrasting it with traditional price-fixing conspiracies conducted through secret meetings. Instead, the complaint notes that technology now allows competitors to fix prices without explicit agreements, using tools such as a “restoration” feature that reportedly helps nearly all gas stations in a given area simultaneously raise prices substantially.
Research cited in the suit suggests that algorithmic fuel-pricing software leads to average price increases of approximately six cents per gallon, with spikes up to 30 cents in regions where the system is widely used. Given the volume of fuel sold statewide, the lawsuit estimates that a one-cent price increase translates to an annual additional cost of $134 million to California drivers.
In addition to Marathon and Circle K, the complaint names BP, Speedway, EG America, Walmart, and Albertsons as defendants, noting that these companies operate more than 1,700 gas stations across California. None of the defendants has responded publicly to the lawsuit.
The case aims to represent all California consumers who have purchased fuel at stations utilizing Kalibrate software since June 2022.