In a groundbreaking legal case, a federal lawsuit filed on Monday alleges that AI-powered software has enabled gas station operators across California to engage in illegal collusion, driving up prices at the pump. The proposed class action lawsuit targets major gas station chains, including Marathon and Circle K accusing them of violating California’s antitrust laws through the use of Kalibrate a global fuel-pricing software system.
The plaintiffs describe Kalibrate as the central nervous system for a conspiracy to extinguish retail price competition among gas stations. According to the lawsuit, the software helps coordinate high prices and discourages users from pricing their gas lower than competitors, warning that doing so would trigger a downward spiral.
How AI is Changing the Game in Price Fixing
The lawsuit highlights how technology has evolved the mechanisms available to competitors to fix prices. Instead of the traditional image of competitors making secret deals over cigars in a smoky back room the price-fixing is now done through AI. One of the tools mentioned in the lawsuit is a restoration feature that allows nearly all gas stations in an area to raise their prices simultaneously and by a significant amount.
Research into algorithmic fuel-pricing software found average price increases of about 6 cents per gallon, with some markets seeing increases as high as 30 cents per gallon where many stations use the technology. The lawsuit estimates that a single cent increase at the pump drains approximately $134 million from California drivers’ wallets every year across the state.
The Broader Context of Algorithmic Pricing
This lawsuit is not an isolated incident. It follows a pattern of legal actions against software companies accused of driving up the cost of living for millions in the U.S. The Department of Justice has recently sued RealPage for helping landlords drive up rent prices and Agri Stats for aiding the meatpacking industry in inflating grocery prices. Both lawsuits have been settled in the past year, though various state attorneys general continue to pursue actions against RealPage and numerous property management companies.
In response to growing concerns over algorithmic pricing, Democratic california governor Gavin Newsom signed a bill last year stating that state antitrust law applies to pricing algorithms. This legislation has paved the way for the recent lawsuit against Kalibrate.
The Defendants and Their Response
The defendants in the lawsuit, which also include BPSpeedwayEG AmericaWalmart and Albertsons collectively operate more than 1,700 gas stations in California. None of the defendants immediately responded to requests for comment. Kalibrate, headquartered in Manchester, England and operating in more than 70 countries, also did not respond to a request for comment.
The lawsuit seeks to represent California drivers who bought gas at stations using Kalibrate software since June 2026. As the legal battle unfolds, it will undoubtedly shed more light on the intersection of technology and antitrust law, and the implications for consumers.
