SAN FRANCISCO (CBS SF) – Flywheel Taxi sued Uber in an antitrust lawsuit in federal court in San Francisco Wednesday, alleging that the ride-booking company is seeking to gain monopoly power "by forcing a race to the bottom through predatory pricing tactics."
Flywheel Taxi, formerly known as Desoto Cab Co., is San Francisco's oldest taxi company, operating since the 1930s.
The lawsuit alleges that 7-year-old Uber, based in San Francisco and now a worldwide company, is attempting to destroy competition through below-cost pricing propped up by venture capital and "shifting many of the costs and nearly all of the risks" to its drivers and passengers.
"Once its competitors have been removed, Uber, free of the constraints of competition, will be free to implement unfettered price increases for its services, and consumers will be left with no choice but to pay the prices—however exorbitant—demanded by Uber," the lawsuit warns.
The lawsuit says that ride services such as Uber, which connect passengers and drivers through a mobile phone app, and traditional taxi companies together form a market that the suit calls the "San Francisco Ride-Hail Market."
It alleges that Uber has now captured 70 percent of that market and caused the city's taxi industry to experience a 65 percent decline in ridership and lose more than 30 percent of its drivers since 2012.
The alleged monopolization violates the federal Sherman Antitrust Act, the lawsuit claims.
The lawsuit also accuses Uber of violating federal and state laws by allegedly making false statements to drivers about the incomes of Uber and taxi drivers and misleading the public about Uber's prices relative to taxi prices, safety practices and tipping policy.
It asks for an injunction against Uber and the triple-damages financial compensation allowed by law for antitrust violations.
Uber said in a statement, "We compete with lots of ways to get around, especially car ownership. Our goal is to provide a credible alternative to the private car. Our technology lets us make our network more efficient over time."
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