London cabbies claim foul play against Uber – Financial Times

When Croatian footballer Mario Mandzukic scored his extra-time winner in the World Cup semi-final, he not only prevented the trophy “coming home” to England, he ensured the losing team’s players would not be coming in to a £217,000 bonus. But no English players are now trying to sue him for loss of earnings. So why do London’s black cab drivers — those self-professed experts on the beautiful game — think they have a legal claim against their nemesis: Uber?

Last week, the Licensed Taxi Drivers’ Association said it was seeking advice from law firm Mishcon de Reya about a potential class action against the US car-booking app. It suggested that London’s traditional cabbies had each lost £10,000 a year since they ran into competition from Uber in 2012.

However, the idea that Mishcon de Reya might think it legitimate to cry foul poses a bigger question: can businesses really sue competitors just for being competitive?

Initial reactions to the cab drivers’ claims have expressed scepticism — and a certain derision toward the precedents they would set. “Horse breeders . . . to sue the inventor of the internal combustion engine?” pondered one Financial Times reader, commenting on the LTDA move. Lawyers stress that disruptive technologies were perfectly legal then, and remain so today.

“Generally, the law is in favour of competition,” points out Adrian Magnus, partner at law firm Dentons. “There are significant laws to protect competition on price, innovation, service and quality.” Hence, bricks-and-mortar retailers cannot sue Amazon just because it offers lower prices and faster delivery. While some jurisdictions have specific laws on “unfair competition”, Mr Magnus notes this is more of a civil law concern, and there is no immediate equivalent under English law. “If a customer goes elsewhere, that’s business.”

In fact, as any World Cup video referee will tell you, there needs to be an obvious infringement for penalties to result.

Meriel Schindler, partner at law firm Withers, cites four examples where a company’s competitive behaviour might be deemed to break an existing law.

First, one company stealing another’s technology. Allegations of this nature kept Apple and Samsung in a seven-year patent dispute, which they only settled last month. In the case of taxi-hailing technology, though, “Uber’s clearly not doing that,” Ms Schindler says.

Second, one company passing off its goods or services as another’s. Nestlé spent years trying to prevent rivals from offering a chocolate bar in the same shape as its four-fingered KitKat — but last week lost an appeal over trademarking the “distinctive” shape. Uber’s taxis, however, do not pretend to be distinctive black cabs.

Third, one company poaching another’s employees, in breach of an ‘anti-compete’ clause. Advertising group WPP may wish Martin Sorrell, its former boss, was so bound now that he has left and started outbidding it for assets. Black cab drivers, by contrast, cannot be poached as they are all self-employed.

Fourth, one company winning a licence or contract in a process that has been run unfairly. In the UK, outsourcing group Serco has challenged the Ministry of Defence’s decision to award a fire service contract to its main competitor Capita, over aspects of the procurement process. But this is a legal challenge to the process, not to the other company involved. Uber does not control the London licensing process — as a move to revoke its licence in 2017 proves.

So, might the black cab drivers be better advised to pursue the licensing body, Transport for London? Some argue that the “knowledge” of routes they were required to learn, to earn the right to drive an “official” black cab, implied they were joining a regulated monopoly. By licensing Uber, TfL reneged on that implicit deal, the logic goes.

If there were to be such a claim, it would not be about competition but “quasi misrepresentation”, says Mr Magnus. He explains that such claims may arise if a business franchise is sold as the only one in a lucrative area, and then several others are licensed. But misrepresentation cannot be claimed if someone makes an assumption that turns out to be wrong. With London taxis, “where is the evidence to support that claim?” he asks. Cab drivers, like football’s penalty-seeking divers, may not feel much evidence is needed. Courts and referees generally do.