Antitrust, UCL and Privacy

Competition: Fall 2019, Vol 29, No. 2

LET ME RIDE: NO SHORT-CUTS IN THE ANTITRUST ANALYSIS OF RIDE HAILING

By Daniel Bitton, David Pearl and Patrick Shaw1

The ride-hailing industry, and gig economy more generally, is under pressure. On the one hand, there has been a push in the California legislative and judiciary branches to treat drivers and other gig economy participants as employees of gig economy companies. On the other hand, ride-hailing companies like Uber have faced antitrust lawsuits, including claims that their centralized pricing algorithms amount to Section 1 Sherman Act price fixing among drivers.

Some have suggested that ride-hailing companies like Uber and Lyft face a catch-22: if their drivers are classified as employees they would have to comply with costly labor regulations, but if their drivers are deemed to be independent contractors Uber and Lyft could be considered to be illegally fixing prices because the companies determine how much drivers charge riders on their platforms.2 In the authors’ view, this is a false analytical choice. It is certainly true that if drivers are employees of a ride-hailing company, the company could not be liable for fixing prices with them under Section 1. But, it does not logically follow that ride-hailing companies incur Section 1 liability for setting prices of rides purchased through their app if drivers are, instead, viewed as independent contractors. To the contrary, there is a legitimate question whether ride hailing pricing amounts to unilateral conduct, a vertical restraint or a horizontal restraint—all of which differ analytically for purposes of determining potential antitrust liability under Section 1.

Moreover, ride-hailing apps and pricing algorithms do not fit the types of historical practices that always or nearly always restrict competition or decrease output—conduct for which courts have deemed per se antitrust analysis appropriate. Given their relatively recent advent, it is the view of these authors that the rule of reason should be applied to analyze whether pricing algorithms like the ones Uber and Lyft and other gig economy companies use provide procompetitive market benefits.

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