California Drivers Sue Gas Station Operators Over Alleged AI Price-Fixing Scheme

California drivers have filed a proposed class action accusing major gas station operators and a fuel-pricing software company of using artificial intelligence to keep gas prices higher than they would be in a competitive market.

The lawsuit, filed June 22 in federal court in Sacramento, names Kalibrate, the company behind an AI-powered fuel-pricing tool, along with gas station operators including BP, Circle K, Marathon Petroleum, 7-Eleven, Walmart, Albertsons and EG America, now known as Cumberland Farms.

The retailers are accused of operating more than 1,700 gas stations in California and relying on the same pricing system to coordinate pump prices instead of setting them independently.

Kalibrate’s software, the filing states, uses data from competing gas stations to recommend fuel prices and can send price changes to pumps, store signs and point-of-sale systems. The drivers claim that process allowed competing retailers to align prices through a shared tool while avoiding the kind of direct communication usually associated with price-fixing

The alleged price impact is central to the damages claim. The drivers allege areas where Kalibrate’s technology was used saw average gas price increases of about 6 cents per gallon. The complaint also claims prices rose by as much as 30 cents per gallon in areas where a high percentage of stations used the system. The filing says each one-cent increase in gasoline prices costs California drivers about $134 million per year.

The case centers on the Cartwright Act, California’s main antitrust law. Antitrust laws are designed to protect competition by barring companies from agreeing to fix prices, divide markets or limit the forces that normally push businesses to compete for customers. Price-fixing claims often involve direct agreements between competitors, but the California motorists argue the same result can occur when companies allegedly depend on a shared pricing system that uses competitor data to guide prices.

California’s newer algorithmic pricing law is also central to the filing. Assembly Bill 325, which took effect Jan. 1, added language to the Cartwright Act addressing common pricing algorithms. The law covers software or other technology used by two or more people that relies on competitor data to recommend, align, stabilize, set or influence prices or other business terms. The filing argues Kalibrate’s fuel-pricing tool falls within that framework because it allegedly used competitor information to guide gas prices across competing stations.

The legal issue is not whether a company may use software to help set prices. Businesses routinely use data, costs, demand and market conditions to decide what to charge. The question raised by the case is whether a shared algorithm crosses the line when competitors allegedly use it to coordinate prices rather than make independent pricing decisions.

The drivers also bring claims under California’s Unfair Competition Law, arguing the alleged pricing system was unlawful and unfair because it was tied to claimed antitrust violations.

A separate part of the filing points to a feature the consumers describe as allowing price “restoration.” They say the tool can raise prices across a market after one or more stations lower them, weakening competition because stations that might otherwise cut prices to attract drivers could move back toward a shared price level.

The suit arrives as regulators, lawmakers and courts are paying closer attention to pricing tools that use large amounts of business data to recommend what companies should charge. Dynamic pricing is not automatically illegal, and companies may use technology to respond to market conditions.

California drivers already face some of the highest gasoline prices in the country, making the alleged increases a central part of the proposed class action. The consumers are asking the court to decide whether the named companies and Kalibrate unlawfully added to those costs through alleged algorithmic coordination.

The proposed class seeks damages, restitution, disgorgement of profits, attorneys’ fees and an injunction barring the challenged conduct.

Kalibrate has denied the allegations, saying it disagrees with the claims and intends to defend itself. Walmart has said it would address the accusations in court.