Prices are going up at the pump nationwide, but in California a court will soon decide if consumers may have paid too much for gas.
Three energy companies must face claims that they conspired for years to jack up prices of key gasoline components in California, causing consumers to pay artificially inflated prices at the pump, a federal judge ruled Monday.
U.S. Magistrate Judge Jacqueline Scott Corley refused to dismiss the bulk of a consumer class action against SK Trading International Co. Ltd., SK Energy Americas Inc. and Vitol Inc.
The companies allegedly started scheming to raise the prices of alkylates, primary ingredients for mixing gasoline, in 2015 after an explosion at an ExxonMobil refinery in Torrance, California. The accident impaired the refinery’s ability to refine alkylates from February 2015 through June 2016, causing supply disruptions and higher prices. It also gave the energy firms an opportunity to jack up alkylates prices even higher while masking the cause as a mere supply disruption, according to the lawsuit.
Emails from Vitol executives, which were cited in the lawsuit, show they planned to keep their cooperation with the SK firms confidential. In seeking to dismiss the suit, the energy companies argued there is nothing illegal about forming a joint venture and deciding not to publicize it.
Judge Corley conceded that point but found claims that the joint venture was actually a “sham” were credible.
“The [consolidated class action complaint] plausibly alleges that the so-called joint venture was a subterfuge for an illegal price-fixing conspiracy,” Corley wrote in her 22-page ruling.
Vitol and SK’s supply contracts with ExxonMobil tied the price of alkylates to prices publicized in a daily market report published by the Oil Price Information Service (OPIS), a private subscription service.
According to the lawsuit, SK and Vitol agreed to manipulate trades they reported to OPIS to jack up prices for alkylates. This required the companies to take a loss on trades reported to OPIS, but they more than made up for it through alkylate sales to ExxonMobil, the lawsuit contends.
The judge dismissed claims for injunctive relief based on alleged violations of the Sherman Antitrust Act. Corley found the lawsuit failed to show the price-fixing scheme was ongoing and that consumers will keep being overcharged without court intervention. The plaintiffs will get another chance to advance that claim in an amended complaint.
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