​ACCC moves to block Cabcharge taxi app

Ihail app would have a “significant impact” on competition says consumer watchdog

The Australian Competition and Consumer Commission (ACCC) is set to deny authorisation to Cabcharge’s ihail app as according to the watchdog, it would have a significant impact on competition in the taxi industry.

In a draft report released today, the ACCC argues that the app could impact taxi prices and quality of service.

Members of the ihail joint venture include Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis and Cabcharge (ASX: CAB).

As well as providing in-taxi payment terminals to most taxis in Australia, Cabcharge operates taxi networks in Sydney, Melbourne, Adelaide and Brisbane.

The ihail app is designed to operate in metropolitan and regional centres across Australia and some cities overseas. 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.

However, passengers would only be able to pay for fares booked with ihail through the app and Cabcharge would process all payments.

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 concerned that the proposed priority dispatch payment could reduce access to taxis during peak periods for financially disadvantaged people.

“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,” said ACCC chairman Rod Sims.

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

“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.”

Sims pointed out that there are already a number of apps which 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,” said Sims.

According to the ACCC, the ihail app would 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.”

The ACCC is seeking submissions from ihail and interested parties before making a final decision by December 2015.

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