As A Reward for Introducing Price Competition into the Taxi Monopoly, Uber Gets Sued for Price Fixing
After failing to get a class-action lawsuit dismissed, Uber CEO Travis Kalanick will go to court over price fixing claims. A US district court judge in New York ruled Kalanick has to face the class of passengers alleging that he conspired with drivers to set fares using an algorithm, including hiking rates during peak hours with so-called surge pricing. According to Reuters, district court judge Jed Rakoff ruled the plaintiffs "plausibly alleged a conspiracy" to fix pricing and that the class action could also pursue claims the set rates led to the demise other services, like Sidecar.
I guess this is the downside of calling all their drivers independent contractors -- it leads Uber potentially being vulnerable to accusations of price fixing among these contractors. Of course, taxi cartels have been fixing prices for decades, but that is government-assisted price-fixing so I suppose that is OK. It would be ironic that the first price competition introduced into the taxi business in decades is killed based on antitrust charges.
As with just about all modern anti-trust cases, this has little to do with consumer well-being and more about the well-being of supply chain participants (ie the drivers) and competitors (ie Sidecar and taxis).
mesocyclone:
It is an interesting side effect.
April 1, 2016, 5:49 pmRich R:
I've been doing Uber on the side for awhile now and while I can't speak for other drivers, I can tell you that I certainly would not conspire with Uber on the surge pricing deal. I understand the concept of trying tweak the supply and demand curves (supposedly entice drivers to the area mostly to boost the supply) but the reality is that most of the time, the surge either entices people to wait a bit until it clears or by the time I get in the surge zone it clears.
April 2, 2016, 7:13 amNoumenon72:
Kevin Drum's market-based antitrust law would work here.
April 2, 2016, 11:47 amGospace:
Which shows that surge pricing works as designed.
April 4, 2016, 8:06 amDan Wendlick:
So launch DABLE (Dutch Auction-based legal enhancement). Change the app to allow a potential customer to state "I've got $20 and need to get to the airport from downtown. Any takers?" Yes, the price will get bid up during surge periods, but it will be bid up by the customers not by the provider.
April 4, 2016, 8:33 am