Consumer Protection or Antitrust Problem

The Company: Uber Inc

The ability to operate in the gray areas of conventional regulatory mechanisms has characterized the massive growth of Uber over the years. The company provides a smartphone application that helps drivers to connect with customers who are in need of a drive. The application allows the users to schedule and arrange logistic services and transportation with third party providers. Founded in 2009 and based in San Francisco, the company operates in different parts of the world.

The laws relating to consumer protection or antitrust problem are fundamental in ensuring companies working in various sectors of an economy complies with legal and ethical requirements of business operations. There exist laws such as consumer protection and antitrust regulations that prevent companies from engaging in deceptive marketing, false advertising, unfair trade practices and other unethical behaviors among others. The key issues that the laws deal with are how to handle inappropriate business dealings. Based on such problems, Uber Inc. has been in the limelight for many litigations over different legal issues will be discussed in the paper.

The Legal Concepts That Relate to Consumer Protection or Antitrust

The legal concept that relates to consumer protection or antitrust involves antitrust and trade regulation laws. The law protects commerce and trade from monopolies, unfair restraints, and price fixing. The Clayton Act and the Sherman Act primarily govern the law. Nevertheless, different states have different antitrust laws. The legal concept of the law relates to the protection it offers the affected customers and employees in the industry. The Department of Justice carries out a role in the investigations of the antitrust issues pertaining the law. The remedies include criminal and civil penalties, injunctions, cancellation of contracts and divestiture.

Given the nature of the business that the company deals in, it has over the years, made headlines in the media due to a series of lawsuits. The legal battles have been high in 2016 and 2017. The company has faced challenges in many states due to its perceived monopoly in the taxi business as well as other issues that relate to the antitrust. The company is not in taxi business but rather in the dispatch or tech business. That means it operates in a “trust” business that requires building trust among and between strangers (MacDonald, 2016). The dynamics of the business have led to many challenges that the company has faced. In 2014, the antitrust aspect of the company characterized an alleged rape of a female passenger in Delhi, which resulted in a complete ban of the company’s operations in the region (MacDonald, 2016). Besides, the organization has also been in the news for anti-competitive behaviors, privacy violations that have led to difficulty for the company to make some consumers trust their services. Every business is built on trust, and in this case, when a customer hops into a taxi, he/she engages in the exchange of trust.

Legal Topics Discussed In the Text and How They Apply To the Company

The topics discussed in class include the law of administrative agencies, the employment relationship and immigration laws and laws of debtor-creditor relations. The law of administrative agencies entails common law, statutes, and directives that the Office of Information and Regulatory Affairs issues. The laws apply to Uber based on the lawsuits for non-compliance as shows in the next sections of this paper. The laws define the responsibilities and powers of administrative agencies. The employment relationship and immigration laws regulate and solve issues relating to employment and immigration while laws of debtor-creditor relations uphold the contracts between the parties and issues pertaining such relations (Bagley, 2015). Based on the company analysis, there were issues between the company and its independent and professional drivers in respect to the lack of uniformity in pricing and inadequate employment conditions. Debtor-creditor relations relate to the company relationship with other stakeholders.

The Ethical Dilemma and Ethical Frameworks That Apply To the Management Decision

The challenge or ethical dilemma is how the company can sustain the trust between it with the drivers and between drivers and customers. For instance, the company has a challenge in deciding whether to continue the use of UberX as a market strategy while some of its drivers feel the model adversely affect professional drivers. Many of the problems that the company faces are from antitrust laws other than labor standards. The lawsuits also include classification of the driver in some states or countries. The challenge is whether all independent drivers of the company making use of the app implements the surge pricing at the same time and charge the same price hence trust issues among the drivers (Woo & Bales, 2016). Therefore, the antitrust issues that characterized the operations of the company include the ill-treatment and inadequate security of customers, discrimination, and lack of coordination of the price of app-ordered car rides, collusions for on-demand car rides and employment conditions of its workforce, the drivers (Steinbaum, 2016). The lawsuits have also been directed the the company’s CEO. However, the CEO, in recent turbulence aired in CNN said that they have been learning a lot from the past problems and the company is taking steps toward a better future (Fiegerman, 2017).

As aforementioned, the antitrust laws and the legal suits that characterize the company operations have affected it in relations to the decisions that the management makes when dealing with the situations. Therefore, there is a need for the managers to apply adequate ethical frameworks in guiding their decisions about the issues that affect the company. Notably, there exists business ethics deficiency on matters relating to antitrust (Hemphill, 2004). While ethical concerns do not play an adequate role in the formal analysis of antitrust, judgment plays a fundamental role in business decisions. Therefore, an ethical component of judgment should guide the ethical framework in the aspect of the responsibility of the management to its stakeholders.

Ethical principles are incorporated in ethical frameworks which guide and supports decision-making by making possible, the evaluation of the vital aspects of a situation. The two framework that would help in decision making in this regard include the duty framework and consequentialist framework (Ferrell & Fraedrich, 2015). The duty framework looks into the duties and obligations that the management has in every situation while considering the ethical obligations. It helps the decision makers do the right thing such as complying with antitrust laws. On the other hand, the consequentialist framework concentrates on the future impact of a course of action. As such, it would help the management to do what is desirable in every situation. Notably, the management has not been keen on applying such frameworks hence the lawsuits.

 

References

Bagley, C. E. (2015). Managers and the legal environment: Strategies for the 21st century. Cengage Learning.

Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson Education.

Fiegerman, S. (2017). Airbnb CEO weighs in on Uber crises: ‘We are all learning. Retrieved from http://money.cnn.com/2017/03/13/technology/airbnb-ceo-uber/index.html

Hemphill, T. A. (2004). Antitrust, dynamic competition, and business ethics. Journal of Business Ethics, 50(2), 127-135.

MacDonald, C. (2016). Uber Is Built on Trust [Ethics Opinion]. IEEE Technology and Society Magazine, 35(2), 38-39.

Steinbaum, M. (2016). Uber’s Antitrust Problem. Retrieved from http://prospect.org/article/uber%E2%80%99s-antitrust-problem

Woo, C. P., & Bales, R. A. (2016). The Uber Million Dollar Question: Are Uber Drivers Employees or Independent Contractors?.

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