Cabcharge Limtied (ASX:CAB) says the ACCC has moved to deny authorisation of a new taxi booking app on the grounds it would have a significant impact on competition.
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Taxi representatives are furious that the Australian Competition and Consumer Commission plans to block the release of ihail, an app that acts as a one-stop booking service for major taxi networks nationally.
“Depending throughout the flow of require along the ihail app amongst other taxi signals, it can possibly expand to comprise all taxi mmorpg’s in most any area”, said ACCC chair Rod Sims.
Sims said there were concerns about the impact of ihail on existing apps such as goCatch and ingogo.
As Cabcharge notes, not only is it “the largest operator of taxi brands in Australia including Silver Service and Taxis Combined in Sydney, Newcastle Taxis and 13CABS in Melbourne and Adelaide”, it also has a ‘diversified portfolio of payment technology, financial services, taxi payments and passenger transport’. “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”.
iHail’s chief operating officer Nick Kings said he was disappointed in the ACCC’s decision.
“The ACCC considers that the proposed arrangements are likely to 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”, Sims said.
The watchdog also found issues with ihail’s requirements that customers had to pay using the app, rather than the driver, with Cabcharge processing all payments.
“It is just completely staggering that the ACCC would take that role”.
While the app would have made booking taxis more convenient for passengers, it would have been “too big a cost to competition”, Mr. Sims said.
Taxi payments company Cabcharge Australia Ltd. and local taxi networks have teamed up with Minneapolis-based Taxi Services Inc.to launch an global smartphone app called iHail in Australia, the US and the United Kingdom.
All of that aside, however, Cabcharge is still the 800 pound Caborilla of the industry, the silverback with plenty of strength, thus when Cabcharge speaks, people listen.
“We’d see the next major competitor to Cabcharge networks, being Silver Top, joining in on the grouping – so that’s going to concentrate a lot of market power into that one offering”, Mr Moorfield said.
Uber, which has signed up around 15,000 Australian drivers, said it welcomed the regulator’s interim decision to “put consumers first and reject the taxi industry’s latest attempt to shut out competition”.
However, former ACCC chairman professor Allan Fels, who led a Victorian government review into the taxi industry, said Australian governments needed to take a more liberal approach to regulating the pre-booked taxi industry.
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A final decision on ihail will be made by the watchdog later this year.
