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On antitrust law and taxi permits

Two follow-up points from my story earlier this week about the antitrust lawsuit filed by almost 30 cab companies against the ride-sharing service Uber:

– Maryland’s antitrust law provides exemptions for a variety of entities, including labor organizations, regulated insurance providers and nonprofits established for religious or charitable reasons. Also exempt are public service companies regulated by the Public Service Commission. Uber and the cab companies, of course, are fighting a battle before the PSC as to whether Uber should be considered a common carrier and subject to regulatory oversight like the cab companies.

One lawyer I spoke with said that if Uber seeks to dismiss the lawsuit, the cab companies could use the antitrust exemption to bolster their claim that Uber is subject to PSC oversight. In other words, the lawsuit is setting an elaborate trap for Uber to show they should be regulated. Alas, Dwight Kines, vice president for the Mid-Atlantic Region for Veolia Transportation, which owns and operates two of the largest plaintiffs in the lawsuit, said that was not a consideration in filing suit.

– One part of the lawsuit I didn’t have a chance to elaborate on is the allegations made on behalf of the taxi drivers. The Washington Post had an interesting story last month about how valuable cab drivers’ permits (or medallions) across the country have been taking a hit because of ride-share services. The lawsuit in Maryland states Uber boasts every one of its “fully utilized cars grosses more than $100,000 a year.” But that’s only possible, the cab companies allege, because Uber has lower operational costs by ignoring regulations and illegally sets higher prices among its drivers.

The more people using their smartphones to find a ride, the argument goes, the less people using the more strictly-regulated taxi cab services. And the drivers playing by the rules are the ones that suffer, the plaintiffs claim.

“Uber uses those [income] claims to solicit drivers who would otherwise contract with Plaintiffs, and cause drivers who are currently affiliated with Plaintiff Cab Associations to breach affiliation agreements,” the lawsuit states.

Kines told me there are about 1,100 taxi permits in Baltimore, 750 of which are owned by individual drivers. Yellow Cab and Checker Cab, the two big cab companies, oversee 550 permits, 400 of which are owned by individuals.

“We absolutely feel we have to do something on their behalf,” Kines said of the individual permit holders.

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