October 26, 2015

Uber free to operate in Nevada, but what about everybody else?

By Anastasia P. Boden Attorney

A recent article details the unsuccessful attempt to shut Uber out of Nevada.

The piece contains interesting tid-bits about the bullying and scandal that plagued Uber’s fight, but it doesn’t tell the full story.  Though it focuses on the particular plight of Uber, anti-competitive tactics have long been used in Nevada to shut out new transportation enterprises.  Part of the reason for the “painfully long lines” is because limousine and taxi companies have long been privy to a state-sponsored monopoly privilege, which forces all new businesses to go through a Competitor’s Veto licensing procedure before opening up shop or expanding in the state.

PLF clients Ron and Danell Perlman thus encountered the very same opposition Uber encountered years ago, when they applied to the Nevada Transportation Authority (NTA) for permission to add additional limousines to their Reno fleet.  When they filed their application, a competitor protested, and they were forced to attend a government hearing and attempt the futile task of proving to state bureaucrats that the market demanded their services.  It is difficult, if not impossible, to prove in advance that the market will sustain a business—that’s part of what makes entrepreneurs so brave.  Nevertheless, one would think Ron and Danell would know best whether there a need for more limousines in the state—as they’re the ones running a business there.  Unconvinced, state officials denied their application on the basis that there was no market for their services and thus any additional competition would harm their competitors.

Fortunately for Uber, it was able to muster the political capital necessary to get a special bill passed to allow it operate in the state under a new type of license for “transportation network companies.”  But unlike Uber, the Perlmans are still subject to the unfair and unconstitutional Competitor’s Veto procedure.  Around the same time that the Uber bill passed, both houses of the state legislature passed a bill that repealed the Competitor’s Veto law, but Governor Brian Sandoval vetoed the repeal bill days later based on purported “safety” grounds.

Of course, any safety justifications are absurd.  If anything, the irrational Competitor’s Veto procedure forces NTA to spend time and money enforcing the explicity anti-competitive licensing procedure that would be better spent policing actual health and safety concerns.  The legislature won’t meet again until 2017 to reconsider the repeal bill.  In the meanwhile, PLF’s lawsuit on behalf of the Perlmans challenging Nevada’s Competitor’s Veto law continues.

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