Key facts
- A federal lawsuit alleges AI software from Kalibrate enabled gas station operators in California to collude on prices.
- The lawsuit names major brands including Marathon, Circle K, BP, Speedway, EG America, Walmart, and Albertsons as defendants.
- Plaintiffs claim Kalibrate's software coordinates high prices and discourages competitive pricing among gas stations.
- Research cited in the suit suggests algorithmic fuel-pricing software can increase prices by 6 to 30 cents per gallon.
- The lawsuit seeks to represent California drivers who bought gas at stations using Kalibrate software since June 2022.
A federal class action lawsuit filed in California alleges that AI-powered software has been used by gas station operators to illegally collude and inflate prices at the pump. The suit names major fuel retailers, including Marathon and Circle K, along with the software provider Kalibrate, accusing them of violating antitrust laws.
Plaintiffs describe Kalibrate as the "central nervous system for a conspiracy to extinguish retail price competition among gas stations," stating that the software enables users to avoid competing and charge higher prices. The lawsuit claims that Kalibrate promises to coordinate high prices and discourages users from lowering their prices, which could trigger a "downward spiral."
Research cited in the lawsuit suggests that average price increases of about 6 cents per gallon, and up to 30 cents per gallon in markets with high adoption of the technology, have resulted from such algorithmic pricing. The suit highlights that a single cent increase at the pump can cost California drivers $134 million annually.
This lawsuit follows similar accusations against software companies for allegedly driving up costs. The Department of Justice has pursued cases against RealPage for alleged rent price-fixing and Agri Stats for alleged meatpacking industry price inflation. California Governor Gavin Newsom signed a bill last year to clarify that state antitrust law applies to pricing algorithms, which the lawsuit states paved the way for this action.
Kalibrate, headquartered in Manchester, England, operates in over 70 countries. The defendants, which collectively operate more than 1,700 gas stations in California, include BP, Speedway, EG America, Walmart, and Albertsons. None of the named defendants immediately responded to requests for comment.