The Australian Competition and Consumer Commission (ACCC) is proposing to deny authorisation of the ihail taxi booking app, in a blow for taxi’s industry’s fight against ride-sharing services such as Uber.The ACCC has issued a draft determination proposing to block ihail, a joint venture between Cabcharge, along with Yellow Cabs, Silver Top Taxi Service, Black and White Cabs and Suburban Taxis.
“The ACCC considers that the ihail app would have a significant impact on competition in the taxi industry, which could impact prices and quality of service,” ACCC chairman Rod Sims stated of the proposed app.
“The ACCC accepts this app would provide a more convenient way for consumers to book taxi services, but in the draft determination the ACCC takes the view that this comes at too big a cost to competition.”
The ACCC estimates the initial shareholders in ihail, which would initially operate in major metropolitan and regional centres across Australia and some cities overseas, represent around half of all taxis in Australia, Sims stated, and a larger share in metropolitan regions.
“This would guarantee that from its launch, the ihail app would have a larger fleet of taxis, in a broader range of locations, than any existing taxi booking apps,” he commented. “Depending on the rate of take-up of the ihail app amongst other taxi networks, it could potentially grow to include all taxi networks in any area.
“There are a number of apps that already provide access to large fleets of taxis across multiple locations. The growth in these existing apps is being driven by competition to attract drivers and customers. ihail will achieve a potentially dominant position from launch – not through competition, but because of the larger fleet of taxis its ownership structure delivers.”
Sims stated the ACCC considers that the proposed arrangements would likely “produce significant public detriments”.
“They will reduce competition between taxi networks in supplying services using the ihail app and, the arrangements may tip the market towards ihail becoming the dominant booking app,” he commented.
“If it becomes the dominant booking app, it may also reduce competition by impacting the commercial viability of existing apps operated by individual taxi networks, as well as those operated by third parties such as goCatch and ingogo.”
Sims noted that a requirement that passengers only pay for fares booked with ihail through the app could also impact competition.
“The ACCC is concerned that this requirement will shut out opportunities for Cabcharge’s competitors to provide non-cash payment processing services to ihail customers, and that this would significantly reduce competition between taxi payment processing providers more generally because emerging providers would have a reduced customer base that they could compete to supply,” he commented.
The ACCC has additionally raised concern at a proposal to allow passengers to pay an extra amount above the metered fare at the time of booking a taxi
“The ACCC is concerned that the upfront priority dispatch payment could reduce access to taxis during peak periods for financially disadvantaged sections of the community,” Sims stated.
