Uber Accused of Predatory Pricing by San Francisco Cab Firm

(Bloomberg) -- Uber Technologies Inc. was sued by a taxi company in its hometown over claims it's relying on its billions in venture capital to drive competitors out of business through predatory pricing.

The complaint filed in San Francisco federal court Wednesday comes as the ride-hailing giant continues to face strident opposition from taxi drivers in the U.S. and abroad as it has expanded to build its business, valued at about $69 billion.

Flywheel Taxi, which calls itself the city's oldest and largest cab company, alleges that Uber illegally subsidized fare cuts starting in 2013 to undercut competing taxi services.

“Uber has been able to maintain below-cost pricing for its UberX and UberXL services in the San Francisco Ride-Hail Market due to vast reserves of capital invested with the expectation of reaping extraordinary future returns,” according to the complaint. “In adopting this approach, Uber has veered from free market principles and artificially deflated fares of UberX and UberXL to prices below cost in an effort to drive competitors” from the market.

Uber said it's goal is “to provide a credible alternative to the private car.”

“We compete with lots of ways to get around, especially car ownership,” Matt Kallman, a Uber spokesman, said in an e-mail. “Our technology lets us make our network more efficient over time, and innovations like uberPOOL are further lowering prices, making ridesharing more available to more people.”

To read about Uber teaming up with GM on car-sharing, click here

Flywheel Taxi is asking the court to award damages for antitrust violations and to triple them under federal law. The cab company is also seeking a court order barring Uber from making “false statements” about its prices relative to taxis, and passenger safety.

The cab company is also suing the California Public Utilities Commission in the same court, alleging that the state regulator has prevented cities and counties from regulating operations of on-demand transportation services and has failed to set the same stringent standards on ride-hailing services that are applied to the taxi industry.

The case is Desoto Cab Co. v. Uber Technologies Inc., 3:16-cv-06385, U.S. District Court, Northern District of California (San Francisco).

--With assistance from Eric Newcomer To contact the reporter on this story: Kartikay Mehrotra in San Francisco at kmehrotra2@bloomberg.net. To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net, Peter Blumberg