SK Energy, Vitol Anticompetitive Acts on California Gasoline Class Action

According to the complaint for this class action, a 2015 explosion at a Torrance, California refinery provided an opportunity for several companies to manipulate the gasoline market in that state, resulting in higher prices at the pump. The complaint names SK Energy Americas, Inc., SK Trading International Co., Ltd., and Vitol, Inc. as defendants. While another class action has been brought under California state laws, this one brings suit under the antitrust Sherman Act and other federal laws.

The class for this action is all persons or entities who bought gasoline at retail in California between February 18, 2015 and such time as the adverse effects of the anticompetitive conduct stop.

The explosion occurred on February 18, 2015 at an ExxonMobil refinery that supplied about 20% of the gasoline in Southern California and 10% for the state overall. Gasoline contract prices rose on the spot market as a result.

Because California has higher emissions standards than other states, gasoline from other parts of the country cannot be substituted in that market. California-standard gasoline is called California Reformulated Gasoline Blendstock for Oxygenate Blending, or CARBOB. If California supplies fail, gasoline must be brought in by ship. The immediate shutdown of the Torrance facility, and its later operation at limited capacity therefore caused disruption in California supplies of gasoline.

The complaint alleges that Vitol and the SK companies had already been making agreements on anti-competitive behavior since at least 2014. The two lead traders at the companies had been colleagues at Vitol previously, which helped facilitate their planning. However, the complaint claims the accident gave them cover for their price-fixing schemes.

According to the complaint, the companies reached agreements to “raise, fix, and otherwise manipulate” the price of refined gasoline in California in late February, after the explosion. The complaint alleges the companies “carried out this scheme by manipulating OPIS-reported price during pricing windows for large contracts.” OPIS is the Oil Price Information Service, LLC, the most widely-used reporting service in California.

The complaint alleges that the manipulations were accomplished through a number of means:

  • Inflation of trades
  • Loss-leader transactions
  • High deal of the day transactions
  • First deal of the day price inflations
  • Market-spiking trades for premium gasoline
  • Wash trades
  • Prearranged trades

In addition, the complaint claims the companies made secret agreements to share profits. While they referred to these as “joint ventures,” the complaint alleges they were unlawful arrangements to avoid competition.

The complaint alleges, “The price spikes caused by [the companies’] illegal conduct were not consistent with prior actual or perceived supply disruptions in California. Nor were the spot market price spikes explained by any actual decrease in gasoline production following [the] Torrance Refinery explosion.”

California announced an investigation in 2019, and the state attorney general filed a lawsuit against the companies in May 2020.

Article Type: Lawsuit
Topic: Antitrust
No case events.
Tags: Antitrust, Collusion and Price Fixing, Energy, Price Manipulation