The lawsuit filed by Connecticut man Spencer Meyer, which seeks class action status, alleges that the head of Uber Technologies is involved in a massive price-fixing operation designed to raise fares for Uber customers. The allegations have been dismissed by Uber co-founder and chief executive Travis Kalanick, who argued that coordinating and fixing prices across Uber's massive network of drivers would be 'physically impossible'.
However, a federal judge has disagreed. On Thursday, US District Judge Jed Rakoff gave the go-ahead to Mr Meyer's lawsuit, finding that it was plausible that Uber is violating US antitrust lawyers. A pricing algorithm built into the Uber application coordinates prices among hundreds and thousands of drivers which Uber claims are independent contractors and as such may be illegal, the judge found.
Mr Meyer's lawsuit alleges that Mr Kalanick designed the Uber app 'to become a price fixer' as ostensibly independent Uber drivers 'do not compete' but rather coordinate pricing via the algorithm, including pricing fluctuations and surges for things such as poor weather, public holidays, peak traffic periods and multiple passengers.
'The capacity to orchestrate such an agreement is the 'genius' of Mr Kalanick and his company, which, through the magic of smartphone technology, can invite hundreds of thousands of drivers in far-flung locations to agree to Uber's terms,' wrote Rakoff.
'The fact that Uber goes to such lengths to portray itself—one might say even disguise itself—as a mere purveyor of an 'app' cannot shield it from the consequences of operating as much more,' he ruled.
Uber, which is not itself named as a defendant in the lawsuit, has dismissed the allegations. A statement from the company said: 'These claims are unwarranted and have no basis in fact. In just five years since its founding, Uber has increased competition, lowered prices and improved service.'
Sources: ABA Journal; Bloomberg Technology
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