Date
24 March 2017
Travis Kalanick  must face claims he conspired with drivers to ensure they charge prices set by an algorithm in the Uber smartphone app, according to a US district Judge. Photo: Reuters
Travis Kalanick must face claims he conspired with drivers to ensure they charge prices set by an algorithm in the Uber smartphone app, according to a US district Judge. Photo: Reuters

Uber chief must face price-fixing lawsuit, says judge

A US judge has cleared the way for antitrust lawsuits against Uber’s chief executive after the ride-hailing company failed to win dismissal of price-fixing charges.

Travis Kalanick must face claims he conspired with drivers to ensure they charge prices set by an algorithm in the Uber smartphone app, US District Judge Jed Rakoff ruled.

The scheme includes “surge pricing” during periods of peak demand, Reuters reports.

Passengers led by Spencer Meyer of Connecticut claimed that drivers conspired with Kalanick to charge fares set by the algorithm, with an understanding that other Uber drivers would do the same, even if they might fare better acting on their own.

Rakoff said the plaintiffs “plausibly alleged a conspiracy” to fix prices in this manner and could also pursue claims that Kalanick’s actions drove out rivals such as Sidecar, enabling Uber to command 80 percent of mobile-app generated ride shares.

“The advancement of technological means for the orchestration of large-scale price-fixing conspiracies need not leave antitrust law behind,” the judge wrote.

Meyer’s lawsuit seeks class-action status on behalf of Uber passengers nationwide who have used the app and a subclass of passengers subjected to surge pricing.

Uber takes a share of the revenue that drivers generate.

“We disagree with this ruling,” Uber said in response to a request for comment on behalf of Kalanick and the San Francisco-based company.

“These claims are unwarranted and have no basis in fact.”

Andrew Schmidt, a lawyer for Meyer, welcomed the decision.

“In creating Uber, Kalanick organized price-fixing among independent drivers who should be competing with one another on price,” he said.

“Today’s decision confirms that apps are not exempt from the antitrust laws.”

Uber, valued at more than US$50 billion in recent funding rounds, was not named as a defendant.

– Contact us at [email protected]

RA

EJI Weekly Newsletter

Please click here to unsubscribe