Uber as For-Profit Hiring Hall: A Price-Fixing Paradox and its Implications

Sanjukta Paul
University of California, Los Angeles (UCLA)

August 2, 2016

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2817653

Abstract:     
The conventional antitrust norms against price-fixing prohibit coordination of prices of services. Two currently pending antitrust cases involving Uber, one arising from its relationship to Uber drivers (Chamber of Commerce v. City of Seattle) and the other arising from its relationship to Uber riders (Meyer v. Kalanick), reveal a paradox that inheres in the regulation of Uber's business model. Uber simultaneously benefits from the nonenforcement of price-fixing norms in the consumer market and from the enforcement of price-fixing norms between itself and drivers. In developing this argument, I offer a model for understanding Uber’s activity that differs from -- or at least, does not require -- a position often taken by worker advocates, that Uber is selling ride services and is legally the employer of Uber drivers, and which also differs from Uber’s own position, that it is a technology firm that does not sell ride services at all. I suggest that Uber’s relationship to riders and drivers can rather be understood as a twist on a familiar creature of organized labor: the hiring hall. This model has the advantage of accounting for Uber’s claim that it is not selling ride services, while also explaining how it is that Uber derives an economic benefit from price coordination in a market for services. I argue that more generally, the labor exemption from antitrust law has interacted with price-setting by firms in services markets in a peculiar way, effectively shielding such firms from antitrust scrutiny even where they engage labor outside the bounds of employment, and thus outside the conventional bounds of the labor exemption. Where true, this creates an internal inconsistency in the regulation of workers and firms dealing in services.

Number of Pages in PDF File: 24

Keywords: labor, antitrust, price-fixing, labor exemption, collective action, collective bargaining, independent contractor, gig economy, employee, services