Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Uber charged with attempted monopolization of vehicle-for-hire services market, (Mar 17, 2016)

By Linda O’Brien, J.D., LL.M.

Transportation network company Uber Technologies has eliminated competition and attempted to obtain a monopoly in the vehicle-for-hire transportation services market by conducting a taxicab operation while intentionally evading the statutory regulations governing taxicab companies, according to a complaint filed by a taxicab trade association and 75 taxi companies in the federal district court in Philadelphia (Philadelphia Taxi Association, Inc. v. Uber Technologies, Inc., March 15, 2016).

Philadelphia Taxi Association, Inc. is a trade association consisting of taxicab companies in the City of Philadelphia. The Philadelphia Parking Authority (PPA) is the city agency authorized to regulate the vehicle-for-hire transportation industry. Uber Technologies is an international transportation network company that has developed a software application that allows users to request rides from independent, third party drivers who provide transportation services.

According to the complaint, compliance with PPA regulations requires substantial financial outlay. To operate a vehicle-for-hire within Philadelphia, the vehicle must have a PPA Certificate of Public Convenience” and a medallion. In September 2014, the value of a medallion was $550,000. Certificate and medallion holders may only use the services of drivers who have obtained a drivers certificate in compliance with PPA regulations, including passing an English proficiency test, providing a Social Security card, having a valid driver’s license, and passing a motor vehicle records review. Certificate and medallion holders also must post a $10,000 surety bond.

In October 2014, Uber, marketing itself as a transportation network company (TNC), entered the market for vehicle-for-hire transportation services within the City and County of Philadelphia. By engaging in predation, Uber did not: (1) secure a Certificate of Public Convenience or a medallion; (2) assume legal responsibility for the vehicles or drivers used to provide Uber’s services; (3) post a bond; or (4) pay a prevailing minimum wage rate to its drivers, the plaintiff claims. By denominating itself as a TNC, Uber allegedly sought to evade the statutory regulations and conduct a taxicab operation by owning no vehicles and not employing drivers.

The complaint states that Uber’s conduct was designed to destroy competition in the vehicle-for-hire transportation services market. Uber drivers use their own vehicles to transport members of the riding public and, in many instances, did not have proper commercial insurance needed to protect the riding public. Furthermore, Uber drivers have evaded all of the required statutory regulations and did not incur the substantial cost they would have if they complied with the requirements set forth by the PPA.

Uber has launched a campaign to drive individual taxicab companies—all of whom participant in the medallion system—out of business, the complaint charges. Uber sends representatives to train stations and airports where taxi drivers congregate and offers those drivers monetary inducement and applications to become Uber drivers. In the past 18 months, Uber has succeeded in getting 1,200 taxi drivers to leave the individual taxicab companies and go to work for Uber. The loss of those drivers has caused medallion cabs owned by individual taxicab companies to sit idle, resulting in decreased income. Additionally, the value of medallions has decreased from $550,000 in October 2014 to $80,000.

The plaintiffs assert claims for tortious interference with present and prospective contractual relations, unfair competition, and attempted monopolization in violation of Section 2 of the Sherman Act. The action seeks declaratory relief, compensatory and treble damages, and any other just and proper relief.

The case is No. 2:16-cv-01207-JS.

Attorneys: John F. Innelli (John F. Innelli, LLC) and Stephen R. Bolden (Fell & Spalding) for Philadelphia Tax Association, Inc.

Companies: Philadelphia Taxi Association, Inc.; Uber Technologies, Inc.

News: Antitrust PennsylvaniaNews