California Drivers Sue Fuel Giants Over Alleged AI-Driven Gas Price Hikes

According to Reuters, which first reported the lawsuit on June 22, plaintiffs filed the case in federal court in Sacramento against BP, Marathon Petroleum, 7-Eleven, Walmart, Circle K, Albertsons and pricing software company Kalibrate. Reuters reported that the drivers contend the companies used an AI-based pricing platform that relied on competitors’ pricing data to help set retail fuel prices across California.

The complaint alleges that the companies violated California’s Cartwright Act, the state’s primary antitrust statute, by participating in a system that reduced competition among fuel retailers. Plaintiffs argue that the pricing technology enabled stations to align pricing decisions rather than compete independently, resulting in higher gasoline prices for consumers. Reuters reported that the lawsuit also cites California Assembly Bill 325, which took effect on Jan. 1 and was designed to address concerns surrounding algorithmic price-fixing and the use of automated systems in setting market prices.

The lawsuit claims gasoline prices increased by as much as 30 cents per gallon in regions where the Kalibrate system was widely adopted. Plaintiffs further allege that even small increases in fuel prices can have substantial statewide effects because of California’s large gasoline market. Reuters reported that the complaint estimates each additional cent per gallon costs California drivers roughly $134 million annually.

The defendants collectively operate more than 1,700 fuel stations in California, according to the complaint. The lawsuit seeks unspecified monetary damages on behalf of consumers who allegedly paid inflated gasoline prices. Reuters reported that the companies either declined to comment or did not immediately respond to requests for comment.

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Growing Regulatory Focus on Algorithmic Pricing

The California case emerges amid broader scrutiny of algorithmic pricing systems across multiple industries. Regulators and antitrust enforcers in the United States have increasingly examined whether software platforms that aggregate market information can facilitate coordinated pricing behavior among competitors, even in the absence of direct communication between companies.

Federal antitrust officials, including the U.S. Department of Justice and the Federal Trade Commission, have signaled growing interest in the competitive implications of AI-assisted pricing tools. Antitrust experts have warned that algorithmic systems capable of monitoring competitors’ prices and recommending pricing strategies may create new challenges for traditional competition enforcement, particularly when multiple firms rely on the same software provider.

The issue has gained prominence in recent years through litigation involving revenue-management software used in housing markets and other sectors, where plaintiffs and regulators have alleged that shared pricing algorithms can weaken competitive pressures. Companies that use such systems have generally argued that pricing software helps businesses respond more efficiently to market conditions and does not constitute unlawful coordination.

California’s High Fuel Prices Under Continued Scrutiny

The lawsuit arrives as California continues to record the highest average gasoline prices in the United States. Reuters reported that AAA data showed California’s average price for regular gasoline at $5.58 per gallon, compared with a national average of $3.93.

Fuel prices in the state have long attracted attention from policymakers, consumer advocates and industry groups. Analysts have attributed California’s higher prices to a combination of factors, including environmental regulations, fuel specifications, taxes, refinery constraints and supply disruptions. The new lawsuit adds allegations of anticompetitive pricing practices to that ongoing debate.

Source: Reuters