Judge dismisses Uber antitrust suit with leave to amend

Uber Technologies Inc. has temporarily fought back an antitrust lawsuit accusing it of driving competitors out of business through anticompetitive practices and predatory pricing.

Defunct ride-hailing pioneer Sidecar Technologies Inc. cannot sue the ride-hailing giant for antitrust violations because it does not have monopoly power, ruled a U.S. magistrate judge in San Francisco.

Magistrate Judge Joseph Spero dismissed the lawsuit against Uber, finding it "cannot rely on allegations that an oligopoly made up of Uber and Lyft has the power to control prices," in an order issued on Monday.

Sidecar was allowed the chance to revise its antitrust claims. Its allegations arguing violations of California's Unfair Practices Act for below-cost pricing were entirely dismissed because Uber is exempt from the claim as a "transportation network company" subject to regulation by the state Public Utilities Commission.

Sidecar failed to successfully argue Uber has sufficient monopoly power to "control prices or exclude competition," Spero wrote, pointing to Lyft Inc.'s presence as a major competitor in the market. Plaintiffs' attorneys instead alleged Lyft chooses not to compete against Uber in price, fearing retaliation that could put it out of business.

"Sidecar does not allege that Uber has the power to raise market prices above competitive levels simply by reducing its own output, or that Lyft could not respond to such a reduction by increasing its own output," the magistrate judge wrote. He added, "Such oligopoly power must 'slip past' the Sherman Act's prohibitions."

But Spero found plaintiffs could reasonably argue Uber has the monopoly power to unilaterally raise market prices.

Uber commands 70% of the U.S. ride-hailing market compared to 30% for Lyft, according to the complaint. SC Innovations, Inc. v. Uber Technologies, Inc., 18-CV07440 (N.D. Cal., filed Dec. 11, 2018).

Sidecar must file its amended complaint by Feb. 4.

-- Winston Cho