A copy of my objection of GSA award of Govermentwide Rideshare/Ride-hail Passenger Services to Uber

Please find enclosed an official request that asks the United States Federal Trade Commission (US-FTC) and the United States Department of Justice (US-DOJ) to investigate anticompetitive practices of Uber Technologies an alleged violation of the Sherman Antitrust Act of 1890 in connection with possible price-fixing practices.

Attn: Antitrust Division Office of Operations
Department of Justice
950 Pennsylvania Ave., NW Room 3322
Washington, DC 20530
Attn: Office of Policy and Coordination
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Ave., NW Room CC-5422
Washington, DC 20580

What companies or organizations are engaging in conduct you believe violates the antitrust laws?

Uber Technologies (DBA Uber USA, LLC)
1455 Market St #400
San Francisco, CA 94103
(866) 576–1039

Why do you believe this conduct may have harmed competition in violation of the antitrust laws?

Please see below original request made on April 20, 2020 to GSA asking the United States government to rescind their Contract Award Number: 47QMCB20T0001 Govermentwide Rideshare/Ride-hail Passenger Services award to Uber Technologies.

Uber is a price-fixing scheme. The United States government must offer contracts only to those companies that obey the antitrust and labor law.

To add weight to these accusations, today, the State of California sued Uber Technologies Inc. for allegedly violating a state law designed to give gig-economy workers the benefits of employees.

https://www.bloomberg.com/news/articles/2020-05-05/uber-lyft-sued-by-california-officials-over-driver-benefits

Online labor platforms like Uber, Lyft, Handy, Amazon Home Services, Postmates, DoorDash, and Instacart have perfected a process where workers deal bilaterally with gigs whose employers have none of the standard obligations of employers, while the platform operates the entire labor market to its own benefit — what some antitrust experts call a “for-profit hiring hall.”

Uber drivers are not employees, so then they must be independent businesses, and hence Uber setting the terms on which they transact with customers, including fixing the prices charged to customers, constitutes a violation of the Sherman Act’s ban on restraints of trade.

Similar practices are now used by nationwide real estate services such as Opendoor Partner Agents Program, Redfin Partner Agents Program, Realtor-dot-com Opcity Partner Agents, and others to price-fix services of independent agents as means to collect a rake. This is the “Uber model” for real estate.

In case of Uber, the government is now actually spends taxpayers’ money to directly engage with the company that breaks federal antitrust regulations and state labor law.

As long as Uber Technologies is able to price fix services of independent contractors, Venture Capital will freely flow into similar propositions in other, seemingly unrelated industries.

The United States government cannot allow itself to spend even a dime to promote unfair industry practices. A contract worth $810,000,000 must be placed under a stringent review by the FTC, the DOJ and the GSA, provided the severity of these violations.

Mon 4/20/2020 6:48 PM
Kimberly Spangler, Na Lin,

With respect, GSA Govermentwide Rideshare/Ride-hail Passenger Services mentioned should not be awarded Uber Technologies because Uber is a price-fixing scheme. The United States government must offer contracts only to those companies that obey the antitrust and labor law.

“For the avoidance of doubt: Uber itself does not provide transportation services, and Uber is not a transportation carrier. It is up to the Transportation Provider to offer transportation services, which may be requested through the use of the Application and/or the Service. Uber only acts as an intermediary between you and the Transportation Provider. The provision of the transportation services by the Transportation Provider to you is therefore subject to the agreement (to be) entered into between you and the Transportation Provider. Uber shall never be a party to such agreement.” Source: Uber Terms of Service.

Of course, when Uber states that “it shall never be a party to an agreement,” this statement simply does not hold water. Each trip is a separate contract between the rider and the driver, yet Uber replaces bargained-for consideration elements in these contracts with a price-fixed amount by calculating an upfront price.

According to Uber, “in the United States, upfront prices are based on the estimated length and duration of the trip. Estimates can vary based on demand patterns and real-world factors like traffic.” Uber holds absolute control over the pricing of all trips, as well as the distribution mechanism of the supply side.

“Before booking a trip, riders are shown the price they’ll pay at the end of the ride. Riders then have the confidence to request more trips, generating more demand for drivers.” As much as this may seem like a great deal to consumers, Uber is not interested in more demand for drivers as much as it is interested in a fee that comes attached to each trip.

Uber has a financial incentive to lower the price for each trip to generate more demand because the revenue of the price-fixing network is tied to the aggregate amount of transactions it can generate.

Uber states that all the transportation services are offered directly by drivers who operate as independent contractors, literally thousands of small independent businesses. At the same time, Uber actively determines the price all these small businesses charge for their services.

Uber drivers do not compete against each other on price, nor do they establish pricing. Uber’s direct coordination of pricing, including surge pricing, is not an open market. This is a price-fixed network experience.

Over the last four years, Uber was able to stop legal action initiated by private parties by forcing plaintiffs into arbitration to settle price-fixing disputes privately. While recently passed California’s AB 5 aims to reclassify Uber’s drivers from independent contractors to employees, Uber actively argues that it is a platform and not a transportation service, therefore not bound by this new law.

Regardless, private party lawsuits and laws such as California’s AB 5 are not legitimate substitutes for full enforcement of the Sherman Act.

Uber Technologies has been a subject of several private antitrust legal cases in the United States and abroad. The main argument behind litigation rests with the fact that Uber does not actually provide services to consumers directly, instead, drivers are independent contractors and not employees.

Antitrust law generally holds that price setting activities are permissible within business firms, but bars them beyond firm boundaries. The antitrust law’s firm exemption strictly applies to entities that a platform have a direct control over, such as employees. The core of Uber’s business model is the coordination of consumer prices across drivers as means to deliver upfront fares calculated by an algorithm. Uber has managed to avoid directly litigating this antitrust problem by compelling a consumer (Meyer v. Uber Technologies, Inc.) lawsuit to be moved into arbitration.

In the 1951 antitrust case United States v. Richfield Oil Co. the court ruled unequivocally for the government on the grounds that Richfield Oil Co. exercised de facto control over “independent business men,” in contravention of the antitrust laws, despite the fact that they were not employees of the company. This has become the basis for delineation between the realm of labor and antitrust: if subordinate entities are “independent business men” and not employees, it is illegal to exercise control. The United States Supreme Court affirmed the same basic principle against coercion of non-employees by vertical supply contract in the 1964 case Simpson v. Union Oil Co. of California.

Online labor platforms like Uber, Lyft, Handy, Amazon Home Services, DoorDash, and Instacart have perfected a process where workers deal bilaterally with gigs whose employers have none of the standard obligations of employers, while the platform operates the entire labor market to its own benefit — what some antitrust experts call a “for-profit hiring hall.”

Uber drivers are not employees, so then they must be independent businesses, and hence Uber setting the terms on which they transact with customers, including fixing the prices charged to customers, constitutes a violation of the Sherman Act’s ban on restraints of trade.

I hold no stock or any positions of Uber, and I have no direct interest to compete with Uber. My main interest resides with interests of open e-commerce marketplaces. In the United States all service providers must be able to offer services to consumers, other businesses, and the government as a free-market experience. As long as companies such as Uber are able to establish rates for contractors who they refuse to hire directly, they are not just breaking the law, they are breaking free market forces.

Uber itself admits to possible antitrust violations in its own S-1 filing:

“Competition authorities closely scrutinize us under U.S. and foreign antitrust and competition laws. An increasing number of governments are enforcing competition laws and are doing so with increased scrutiny, including governments in large markets such as the EU, the United States, Brazil, and India, particularly surrounding issues of predatory pricing, price-fixing, and abuse of market power. Many of these jurisdictions also allow competitors or consumers to assert claims of anti-competitive conduct. For example, complaints have been filed in several jurisdictions, including in the United States and India, alleging that our prices are too high (surge pricing) or too low (discounts or predatory pricing), or both. In December 2018, a purported assignee of Sidecar, an early competitor in the ridesharing business, filed a lawsuit against us asserting claims under both federal and California law based on allegations that we engaged in anti-competitive conduct. If one jurisdiction imposes or proposes to impose new requirements or restrictions on our business, other jurisdictions may follow. Further, any new requirements or restrictions, or proposed requirements or restrictions, could result in adverse publicity or fines, whether or not valid or subject to appeal.” Source: https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm

The United States government must help legitimate companies offer competitive services to consumers, I see no way around this. Please note my objection as an official request to revoke above mentioned contract to Uber Technologies.

Instead, please find ways to offer said contract to another ride-hailing service that allows drivers to set rates independently and competitively, or a legitimate transportation service that hires drivers as employees and has control over them in accordance with antitrust law,

Author: Litesand

Antitrust, real estate, e-commerce, fintech, proptech, bigtech

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