Uber Moves to Dismiss Defunct Competitor’s Antitrust Claims

Uber has filed a motion to dismiss SC Innovations’ antitrust claims, originally filed in December 2018. The suit was filed in the California Northern District Court. The antitrust case alleged that Uber acted as a monopoly.  SC Innovations is represented by McKool Smith, as well as Quinn Emanuel Urquhart & Sullivan. Uber is represented by Gibson, Dunn & Crutcher. SC Innovations is the successor in interest to Sidecar, a now-defunct rideshare competitor to Uber.

The motion asked the court “to dismiss, with prejudice, the claims brought by Plaintiff SC Innovations Inc.” The motion noted that the Court dismissed the claims in SC Innovations’ First Amended Complaint, finding that the “factual allegations did not support a conclusion that Uber violated the Sherman Act.” SC Innovations failed to allege “market power” or “a cognizable probability of recoupment.” SC Innovations was given the opportunity to amend these deficiencies in its complaint; however, Uber argues that the Second Amended Complaint does not address and fix these problems.

Uber stated that SCI failed to show that Uber had market power. SCI claimed that “Uber possesses the unilateral power to engage in certain kinds of ‘price discrimination.’”  These include forcing passengers to pay surge pricing and charging different customers different prices; SCI has claimed that these are ways for Uber to charge “supra-competitive” prices. Uber believed that these points have no legal merit and are not sufficient to satisfy the market power claim of the Sherman Act. Price discrimination may show some market power, Uber conceded, but not enough to declare a monopoly.

SCI claimed that ride-sharing apps are part of a two-sided market. “‘[T]wo-sided platforms often exhibit what economists call ‘indirect network effects,’ which ‘exist where the value of the two-sided platform to one group of participants depends on how many members of a different group participate.’” For example, “the more riders Uber has, the more drivers it is able to attract, and the increased driver availability attracts even more riders.” SCI also stated that through various means, its main competitor Lyft has been negatively affected by Uber’s low prices and is likely susceptible to more loss. However, Uber claimed that SCI relied on an oligopoly model to support its claims, instead of the unilateral market power it had purported elsewhere. Uber claimed that SCI’s claims were again inadequate to meet the standards under the Sherman Act.

A hearing on the motion to dismiss is scheduled for April 3.