The Australian Competition and Consumer Commission (ACCC) has issued a draft determination which proposes to deny authorisation to taxi booking app company, ihail, for joint venture arrangements between Australian and international taxi networks and other participants in the taxi industry.
The company aims to launch and operate a new smartphone taxi booking app that if launched, would initially operate in major metropolitan and regional centres across Australia and some cities overseas. The initial members of the joint venture include Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis and Cabcharge (ASX: CAB).
It would provide passengers with a single taxi booking platform and access to the closest available taxi in their area from participating networks, regardless of which taxi network the driver belongs to. Passengers will only be able to pay for fares booked with ihail through the app and Cabcharge will process all payments.
ACCC chairman, Rod Sims, said the industry body wants to deny authorisation of the launch of the ihail app as it would have a significant impact on competition in the taxi industry, which could impact prices and quality of service.
“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,” he said.
In addition, he mentioned it 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.
“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,” he added.
Sims also said 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.
“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,” Sims said.
The proposal also allows passengers to offer to pay an extra amount above the metered fare at the time of requesting a taxi. This is designed to encourage drivers to accept their booking over other fare requests.
The ACCC is seeking submissions from ihail and interested parties in relation to its draft determination, before making a final decision in the coming months.