[co-author: Stephanie Kozol]*
California Attorney General (AG) Rob Bonta announced a $50 million settlement with Vitol, Inc. (Vitol) and SK Energy Americas Inc. along with its parent company SK Trading International (collectively SK), to resolve a lawsuit involving allegations of antitrust violations and unfair competition in California’s gasoline market. The AG accused the companies of inflating gasoline prices after an oil refinery in Torrance, CA exploded in 2015.
According to the complaint, Vitol and SK engaged in various unlawful practices including wash sales, accommodation trades, and prearranged trades, to manipulate the benchmark prices reported on the California gasoline spot market. The California AG has tied its authority to investigate, sue, and settle the claims with Vitol and SK under California’s new law, SBX1-2, which increased California regulators’ power to monitor the oil industry. The law allows, among other things, the California Energy Commission to establish a maximum gross gasoline-refining margin and aims to combat the consequences of price gouging.
As part of the settlement, Vitol and SK are required to provide California’s Energy Commission with:
- A daily report of information regarding each transaction occurring in the preceding day.
- A weekly report including:
- Inventory volume by type (e.g., gasoline, gasoline blending components, diesel fuel, or renewable fuels); and
- Copies of all contracts or agreements with producers, petroleum product transporters, petroleum product marketers, petroleum product pipeline operators, terminal operators, or any other entity that trades in petroleum products.
Why It Matters
The lawsuit and settlement are consistent with increased regulatory scrutiny of the oil industry by certain AGs. This settlement, however, reflects a unique theory. While much of the regulatory interest has been focused on emissions and environmental harm, this settlement serves as a reminder that regulators have many tools in their toolbelts to regulate industry participants. When it comes to the oil industry, AGs have added incentives to target major oil companies to appease constituents, further regulatory objectives, and obtain substantial resolutions from profitable companies.
Additional articles on state AG offices in the antitrust space include:
*Senior Government Relations Manager
