Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AI software allowed California gas stations to raise prices, suit alleges, (Jun 25, 2026)

By Jody Coultas, J.D.

The proposed class argues that California’s fuel prices are high due to an illegal algorithmic price-fixing scheme orchestrated by an algorithmic pricing company and the largest fuel retailers.

AI software used by gas stations across California allowed fuel retailers to conspire to raise prices in violation of antitrust law, a class action complaint filed in the federal district court Sacramento, California alleges. Consumers in California allege that one of the reasons Californians are paying some of the highest prices in the nation is an illegal algorithmic price-fixing scheme orchestrated by the algorithmic pricing company Knowledge Support Systems, Inc. d/b/a Kalibrate and some of the state’s largest fuel retailers. The lawsuit contends that the use of the AI software violated California’s Cartwright Act and Unfair Competition Law (Casciani v. Knowledge Support Systems, Inc., No. 2:26-at-01044 (E.D. Cal. Jun. 22, 2026)).

Since roughly 2015, gasoline prices in California have been 40 to 50 cents per gallon higher than can be explained by input costs such as the price of crude oil or regulation and taxes, the complaint alleges. One explanation is companies at the retail level making the conscious decision to charge higher prices than they are able to obtain in other parts of the country. Since the beginning of the 2026 war in Iran, California gasoline prices have spiked even higher. As of June 2026, the price spread between California and the rest of the United States has widened, with Californians paying a premium of approximately $1.68 per gallon above the national average.

Historically, retail pricing for gasoline has been fiercely competitive. Gas stations would seek to attract customers by undercutting the prices of other nearby gas stations. However, AI software offered by Kalibrate allows retail fuel sellers to avoid this competition, according to the complaint. Kalibrate’s software includes a pricing algorithm that sets fuel prices at the pump for Kalibrate’s gas station customers. The algorithm then automatically sets the gas station’s fuel price at its pumps, signage, and points of sale. The software uses public and nonpublic data funneled from competing gas stations in an area to help its users to coordinate and charge higher prices to consumers.

The use of Kalibrate Fuel Pricing has restrained competition and allowed gas stations to raise prices. By stifling the price-cutting retail competition that previously characterized local gasoline markets, the gas retailers eliminated the competitive dynamic that historically drove local retail prices down. In a competitive market, it would be against each company’s self-interest to keep prices high and refrain from competition, because they would lose customers to price-cutting competitors. The suit also argues that, absent collusion, it would be against each company’s self-interest to provide non-public, commercially sensitive data to a software company that also sets prices for its competitors, particularly where that software company itself acknowledges that the benefit of the software is limited if it is used only to streamline fuel pricing.

Kalibrate own advertising claims that its AI software will increase margins and total profits for its users by raising prices while selling fewer gallons overall. In one brochure, Kalibrate offers an example of how following its fuel strategy “would result in a volume decrease of -2.2%—but a total profit increase of $587 per site per week.” The suit also cites publicly available information from a number of the retailers stating that the use of the Kalibrate software allowed them to increase margins by more than $1.00 per gallon. Using a study on the effects of algorithmic retail fuel pricing, the suit contends that the mean overcharge for gasoline at stations using Kalibrate Fuel Pricing is roughly 6 cents per gallon and can be as high as 30 cents per gallon.

In a request for injunctive relief, the consumers argue that only court intervention will end the “nocompetition zones” that are draining the budgets of California drivers already feeling the pain at the pump. “Because consumers are rooted in their local communities and bound by its geography, commuting daily to work and school, they have no choice but to continue making purchases in these rigged markets. The Court must enjoin this conduct to restore the fundamental right of every Californian to benefit from honest, free competition on the street corners of their local communities.”

The suit also noted that Canada’s Department of Justice commenced an inquiry into Kalibrate Fuel Pricing in 2024.

The lawsuit has named as defendants: Marathon Petroleum Corp., Marathon Petroleum Company LP, 7-Eleven, Inc., Speedway LLC, EG America, LLC, BP Products North America, Inc., TravelCenters of America Inc., TA Operating LLC, TA Franchise Systems LLC, Walmart Inc., Sam’s West, Inc. d/b/a Sam’s Club, Circle K Stores, Inc., TMC Franchise Corporation, Albertsons Companies, Inc., Doe Corporations 1-10, and Knowledge Support Systems, Inc. d/b/a Kalibrate.

The Case is No. 2:26-at-01044.

Attorneys: Constantine P. Economides (Dynamis LLP) for Joel Casciani, Paola Hartman and Crystal Turnbough.

Companies: Knowledge Support Systems, Inc. d/b/a Kalibrate

News: Antitrust AINews CaliforniaNews