A new class action accuses four of the biggest names in California gas, BP, Marathon, 7-Eleven, and Walmart, of quietly using the same piece of AI software to push pump prices higher in lockstep.
The lawsuit, filed in California state court last week, claims the companies all licensed pricing software from a firm called Kalibrate, which uses competitor data to recommend daily price points. The plaintiffs argue that when rivals all hand their numbers to the same algorithm and then act on what it tells them, the result is not really competition. It is a slower, more polite version of price fixing.
"While families struggle to afford the commute to work, defendants have conspired to put an end to competition, joining an AI-powered trust to ensure that no matter where a driver turns, the price for gas remains artificially inflated," the complaint reads.
Kalibrate has been here before. Canada's Competition Bureau looked at the company's tools last year and noted in a federal court filing that Kalibrate "urges gas retailers to resist lowering their prices to attempt to win market share." The company denies wrongdoing and says only a handful of Canadian retailers actually use the product. But that single line from regulators is the kind of thing that tends to show up in plaintiff briefs for years.
The reason this case matters beyond California is that it lines up almost exactly with a fight the Department of Justice has been picking for two years now. RealPage, the apartment pricing software accused of doing the same thing to rents, recently agreed to stop sharing competitor data after the DOJ went after it. Private landlord settlements in that case have totaled around $360 million, with Greystar alone paying $50 million and Equity Residential paying $56 million. RealPage's software had become so dominant that nearly 60% of final apartment prices landed within 2.5% of what the algorithm suggested.
The DOJ has been laying the groundwork for cases exactly like the gas station one. Principal Deputy Assistant Attorney General Roger Alford called algorithmic price-fixing "old crime, new code" in a speech last year, warning that if the government did not push back, the practice would spread across digital markets. Assistant Attorney General Gail Slater put it more directly in announcing the RealPage settlement, saying that "competing companies must make independent pricing decisions, and with the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement."
The defense will not be subtle either. Kalibrate's tools, like RealPage's, technically only offer recommendations. Companies are free to ignore them. And not every algorithmic pricing case has stuck. A Nevada federal judge tossed similar claims against Las Vegas hotels last year, finding that the plaintiffs could not show the hotels actually coordinated through the software, partly because they had signed up at very different times over a decade.
California is a tougher venue. The state attorney general's office just settled a separate algorithmic rent-pricing case for $7 million, and California's gas market is already one of the most heavily scrutinized in the country thanks to a transparency law passed in 2023.
The interesting thing about this lawsuit is not whether the gas station chains lose. It is that the legal theory behind it is now portable. Once a court accepts that rivals quietly feeding their numbers into the same algorithm can look like a conspiracy, the playbook works on hotels, airlines, insurance, anywhere a single software vendor has become the de facto pricing brain of an industry. Companies that have spent the last few years quietly outsourcing their pricing decisions to AI vendors are about to find out whether they bought a productivity tool or a legal exposure. The defendants will argue the algorithm is just a suggestion. Regulators have already decided that a smoke-filled room with a Wi-Fi connection is still a smoke-filled room.
