Uber CEO to face price-fixing antitrust lawsuit
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. US District Judge Jed Rakoff ruled that Travis Kalanick must face claims he conspired with drivers to ensure they charge prices set by an algorithm in the Uber smartphone app. 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% of US app-generated rides. “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 disputes the claims stating they “have no basis in fact.”

Travis Kalanick, the chief executive of Uber, has failed to win the dismissal of an antitrust lawsuit accusing him of scheming to drive up prices for passengers who use the popular ride-hailing service.

District judge Jed Rakoff in Manhattan said on Thursday that Kalanick must face claims he conspired with drivers to ensure they charge prices set by an algorithm in the Uber smartphone app to hail rides, including “surge pricing” during periods of peak demand.

Led by Spencer Meyer of Connecticut, passengers 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 do better by 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% 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. The San Francisco-based company did not immediately respond to requests for comment. A spokesman for Kalanick’s law firm referred a request for comment to Uber.

“In creating Uber, Kalanick organized price fixing among independent drivers who should be competing with one another on price,” Meyer’s lawyer Andrew Schmidt said. “Today’s decision confirms that apps are not exempt from the antitrust laws.“

Uber was not named as a defendant, despite being valued at well over $50bn in recent funding rounds.

Rakoff said in a footnote that Uber passengers are subject to “user agreements” requiring them to resolve various disputes through arbitration.

He said that while claims in the lawsuit against Kalanick were “intimately founded in and intertwined with” the user agreements, Kalanick had not sought to compel arbitration, and passengers were not barred from suing him in federal court.