More woes for taxi industry: ACCC proposes to deny ihail app

The Australian Competition and Consumer Commission is proposing to block Australian and other taxi companies and networks from joining together to launch a new smartphone taxi booking app, in a response to Uber, claiming it will have “a significant impact on competition in the taxi industry”.

The ihail app would initially operate in major metropolitan and regional centres, and some cities overseas, giving passengers access to the closest available taxi, regardless of which taxi network the driver belonged to.

ihail is owned by taxi networks in Australia, including Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis, and listed group Cabcharge. The move to block the new app would come as a blow to the taxi industry, which has had its services come under threat from alternative ridesharing companies like Uber.

“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,” said ACCC Chairman Rod Sims.

“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 watchdog said it estimates that the initial ihail shareholders will represent more than half of all taxis in Australia, and a larger share in the metropolitan areas where the app would operate.

“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 … 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,” said Sims.

He said existing apps already provide access to large fleets of taxis and growth in these existing apps is being driven by competition to attract drivers and customers. ihail on the other hand would potentially achieve a dominant position from its launch — not through competition, but because of the larger fleet of taxis its ownership structure delivers.

The ACCC is now seeking submissions from ihail Pty Ltd and interested parties in relation to its draft determination, before making a final decision in November/December 2015.

Image courtesy of Mic under CC

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