Uber to face lawsuit from passengers over price-fixing
Uber failed to win the dismissal of an antitrust lawsuit against the company for driving up prices
Uber will face claims it has attempted to drive up prices for passengers by using tactics such as "surge pricing" during busy times, after failing to win the dismissal of an antitrust lawsuit.
The order comes from US district judge Jed Rakoff, reports Reuters, who supports passenger claims that Travis Kalanick, CEO of Uber, has conspired with the company's drivers to fix prices with an algorithm present in Uber's smartphone app.
The plaintiffs have "plausibly alleged a conspiracy" to fix prices, according to Rakoff, which allowed the company to command 80 per cent of ride shares generated by mobile apps.
"The advancement of technological means for the orchestration of large-scale price-fixing conspiracies need not leave antitrust law behind," Rakoff said.
Kalanick has displayed disagreement with Rakoff's comments, with Uber calling them "unwarranted" and with "no basis in fact".
Footnotes in Uber's user agreements state that customers are required to resolve disputes via arbitration. However, Rakoff said that Kalanick had not compelled that arbitration take place and passengers thus did have the ability to sue in federal court.
The lawsuit is being led by passenger Spencer Meyer, who claims that Uber drivers collaborated with Kalanick to charge prices set by the algorithm. Meyer's case also claims that Kalanick knew other drivers would follow suit, regardless of if their drivers could do better without it.
Meyer is seeking class-action status in representation of Uber customers nationwide, along with a subclass for passengers that fell victim to alleged 'surge pricing'.
"In creating Uber, Kalanick organized price-fixing among independent drivers who should be competing with one another on price," Andrew Schmidt, a lawyer of Meyer's stated. "Today's decision confirms that apps are not exempt from the antitrust laws."
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