In a recent decision, the Third Circuit upheld a November 2016 district court decision to dismiss a complaint by the Philadelphia Taxi Association and 80 taxi companies, finding that there was no violation of antitrust laws. The Third Circuit found that the entrance of ride-sharing firms such as Uber and Lyft actually increased competition in the Philadelphia market, citing lower costs and increased rides available to consumers.
Taxi cabs and taxi cab companies in Philadelphia operate under the Philadelphia Parking Authority (“PPA”), which issues medallions and sets standards for vehicle safety and driver regulations. When Uber entered the market in October 2014, a medallion was worth approximately $545,000. Uber operated illegally for the next two years without acquiring medallions or submitting to the regulation of the PPA. This allowed Uber to operate at a substantially lower cost according to the appellant cab companies. By the time Pennsylvania approved legislation that would allow Uber to operate under the oversight of the PPA, the value of a medallion had dropped to about $80,000 and more than 1,000 cab drivers had left their cab companies to become Uber drivers.
The Third Circuit found that, while Uber may have hurt the profitability of the cab companies and decreased the value of the medallions, Uber actually increased competition in the market. The Third Circuit also noted that although Uber was operating illegally (not under the oversight of the PPA), this did not mean that it was violating antitrust laws or harming competition. Specifically, the Third Circuit found that the appellants failed to prove their attempted monopolization claim and that (1) as long as lower prices are not predatory they are beneficial to consumers; (2) Uber’s ability to operate at lower costs was the result of greater efficiency and therefore not anticompetitive; and (3) cab drivers switching to become Uber drivers did not decrease competition in the market because they were continuing to work as drivers in the same market. The Third Circuit further found that nothing in Uber’s business model “reflect[ed] specific intent to monopolize.” Finally, the Third Circuit found no evidence based on market share that Uber could establish monopoly power, because there are no barriers to entry into the market and other ride-hailing apps, such as Lyft, would act as a check on any attempt to establish a monopoly. In sum, the Third Circuit upheld that there was no attempt to monopolize the market and that harm to a business competitor does not equal harm to competition.