“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in conspiracy against the public, or in some contrivance to raise prices.”
Adam Smith (1776)
It is time for the taxi companies to accept that competition has come to their long-protected industry.
Better to expend energy on improving services and affordability rather than striking back with anti-competitive behaviour. At last, may the force be with Australian consumers.
The ACCC has just issued a draft determination to deny another concerted anticompetitive movement from the taxi industry to set up the cartel-like booking app ihail.
In principle, the app could streamline the booking and payment procedures of different taxi networks, making it easier – and hopefully more reliable – for consumers to use. But the problem lies in the details of the proposal.
First, the initial members of the ihail joint venture — Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis and Cabcharge — would right from the start control up to 80% of the market. That is, a marketplace dominance not due to excellence and efficient services, but from outright collusion from supposedly competing networks.
Further, such artificial oligopoly could also be used to squash the fast-paced competition from new entrants in the on-demand transport market, such as Uber, goCatch and Ingogo, with the potential to drive up prices and reduce service quality.
Indeed, some of the submitted provisions featured flagrant anti-competitive behaviour. For one, ihail planned to use only the Cabcharge payment system – which effectively contravenes a recent ACCC ruling on a previous attempt to curb taxi payment competition.
Another attack on competition would come from the ability to prevent ihail taxi drivers from using other on-demand transport apps, keeping potential start-up apps at bay.
Moreover, consumers would not be given the option to choose which specific taxi company they are booking from the ihail network — ultimately, a blatant erosion of both consumer rights and internal competition in the industry.
The ACCC interim decision is a win-win for competition and consumers.
Home > Commentary > Opinion > The Empire strikes back — and the force is with consumers
The Empire strikes back — and the force is with consumers
Adam Smith (1776)
It is time for the taxi companies to accept that competition has come to their long-protected industry.
Better to expend energy on improving services and affordability rather than striking back with anti-competitive behaviour. At last, may the force be with Australian consumers.
The ACCC has just issued a draft determination to deny another concerted anticompetitive movement from the taxi industry to set up the cartel-like booking app ihail.
In principle, the app could streamline the booking and payment procedures of different taxi networks, making it easier – and hopefully more reliable – for consumers to use. But the problem lies in the details of the proposal.
First, the initial members of the ihail joint venture — Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis and Cabcharge — would right from the start control up to 80% of the market. That is, a marketplace dominance not due to excellence and efficient services, but from outright collusion from supposedly competing networks.
Further, such artificial oligopoly could also be used to squash the fast-paced competition from new entrants in the on-demand transport market, such as Uber, goCatch and Ingogo, with the potential to drive up prices and reduce service quality.
Indeed, some of the submitted provisions featured flagrant anti-competitive behaviour. For one, ihail planned to use only the Cabcharge payment system – which effectively contravenes a recent ACCC ruling on a previous attempt to curb taxi payment competition.
Another attack on competition would come from the ability to prevent ihail taxi drivers from using other on-demand transport apps, keeping potential start-up apps at bay.
Moreover, consumers would not be given the option to choose which specific taxi company they are booking from the ihail network — ultimately, a blatant erosion of both consumer rights and internal competition in the industry.
The ACCC interim decision is a win-win for competition and consumers.
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