In March 2024, Uber reached a settlement agreement worth nearly 272 million Australian dollars to compensate taxi and hire-car drivers who were financially impacted by the rideshare company’s entry into the Australian market.

The settlement, which resulted from class action lawsuits, was initially viewed as a victory for the affected drivers and vehicle owners. However, there are growing concerns over how much of the settlement will reach the harmed individuals, as a significant portion of the funds may be deducted for legal and administrative costs.

The case, one of Australia’s largest class action settlements, was filed on behalf of over 8,000 taxi and hire-car owners and drivers across multiple states, including Victoria, New South Wales, Queensland, and Western Australia. These drivers and operators argued that Uber’s aggressive market entry led to substantial losses in both income and the value of their taxi licences.

While significant, the settlement has sparked several questions surrounding the distribution of the funds. The Supreme Court of Victoria is set to hold a hearing later this year to determine whether the proposed settlement will be approved.

One of the most contentious aspects of the settlement is the unclear distribution of the 272 million dollars. Although the exact amount to be allocated for legal fees, funding costs, and settlement administration expenses is still under discussion, early reports suggest that a substantial portion of the settlement will be deducted before it reaches the affected drivers.

According to George Kapnias, Managing Director of Southern Cross Chauffeur Drive, lawyers from Maurice Blackburn have informed him that approximately 37 million dollars will be allocated to the law firm, with an additional 82 million dollars directed towards funders in England. These deductions would leave a significantly reduced sum for the drivers.

Kapnias, whose company is involved in the Australian chauffeur industry, voiced concerns about the fairness of the settlement process. He argued that the drivers would ultimately receive very little compensation for their losses. Kapnias criticized the law firm Maurice Blackburn, suggesting they had taken advantage of the situation, capitalizing on an industry lacking proper representation.

Kapnias also pointed out the broader implications of the settlement, including the loss of a valuable revenue stream for state governments. He highlighted that, prior to Uber’s arrival, taxi licences in Victoria were sold for significant sums, with individual licences often valued at hundreds of thousands of dollars. However, due to the rapid expansion of Uber and other rideshare services, the value of these licences has drastically decreased. Kapnias noted that the state government now sells licences for a mere 57 dollars per year.

In addition to the financial losses experienced by drivers, Kapnias expressed concerns for the generation of Greek migrants who had invested in the taxi industry during the 1960s and 1970s. Many of these individuals, now retired, had spent decades building their businesses and relied on their taxi licences for long-term income. However, with the arrival of Uber, many found their investments rendered virtually worthless.

Kapnias shared personal stories of drivers who had worked in the industry for 40 years, diligently following the rules, paying their taxes, and relying on their businesses to secure their retirement. He lamented that Uber’s entry into the market left them without the financial security they expected to enjoy later.

As the Supreme Court hearing approaches, all eyes will be on how the settlement is approved and distributed. Drivers, many of whom feel they have been wronged, hope the final settlement will provide more than just a token gesture. The outcome of this case could have lasting implications for class action settlements in Australia, especially those involving large corporations like Uber, and whether they will be structured to ensure that the actual victims of the situation receive a fair share of the compensation.