Two years and half a million dollars later, ACCC gives green light to taxi industry’s ‘Uber killer’

THE competition watchdog has given the green light to the taxi industry’s answer to Uber, after initially threatening to block the app.

THE taxi industry says it has lost more than a year of valuable time in the fight against the rapidly growing ride-sharing app Uber due to interference from the competition watchdog, which it has accused of “playing favourites”.

The Australian Competition and Consumer Commission this morning gave the green light to ihail Pty Ltd after last year threatening to block the app citing concerns it would lead to a reduction in competition.

ihail, a joint venture between Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis and Cabcharge, will now go live in June after implementing the changes required by the ACCC.

Those include giving passengers the option to pay in the cab rather than solely via the app through Cabcharge, and the ability to choose between taxi networks rather than simply booking the nearest available taxi.

ACCC Chairman Rod Sims said the app was “likely to reduce waiting times, particularly in peak period, which is a benefit to the public”.

He said the ownership structure would still allow participants to quickly establish a larger network of drivers than any other app, but the ACCC “considers that ihail will still face competition from other taxi booking apps and ridesharing apps which have established brands and customer bases”.

Rating screen.

Booking screen.

“There is also nothing in the arrangements preventing drivers using other booking apps,” Mr Sims said. “The ACCC has imposed conditions of authorisation requiring ihail to explicitly inform drivers that they remain free to use competing booking apps.

“These conditions also prohibit ihail and its shareholder networks from preventing drivers using other booking apps or disadvantaging drivers who do so in preference or in addition to the ihail app.”

ihail chief operating officer Nick Kings said the company had spent nearly half a million dollars on the legal process.

“Obviously this process has been exceptionally expensive and time-consuming for ihail and has delayed our entry to market,” he said. “It would be better if it had been slightly quicker.”

Mr Kings said the app would go live in June with 14,000 cars and 42,000 drivers.

Blair Davies, chief executive of the Australian Taxi Industry Association, said ihail could have been in market 12 months ago if the ACCC hadn’t “effectively denied consumers access to a good product”.

“The ihail concept has been around in gestation for probably a good two years,” he said.

“ihail will provide a centralised smartphone booking service for people who just want the nearest cab. The ACCC standing in the way of the industry taking advantage of these technologies was from our point of view quite ridiculous.”

Mr Davies said the ACCC “seems to misunderstand its role” and should be “getting out of the way of competition”.

“It closed down the ability of the Australian taxi industry to innovate. It seems to be oblivious to its impact on the market.”

ATIA chief executive Blair Davies. Picture: Liam Kidston

Mr Davies said the ACCC had “been out there trying to protect Uber in the marketplace”.

The taxi industry is hoping ihail, which will allow consumers to book taxis in any city without having to download a different app for each network, will provide a single platform to meaningfully compete with Uber.

The taxi passenger transport industry is worth around $4-$5 billion a year. Uber, which launched in Australia in 2012, is already estimated to have about 5 per cent market share.

Cabcharge, which has a 10 per cent stake in ihail, said the decision would enhance competition in the market “which in recent time seems to have all but been reserved for players outside the traditional taxi industry”.

“There can be a remarkable premium attached to being regarded as agile and innovative, which can make it frustrating when regulators block efforts by existing players to improve their service,” Cabcharge CEO Andrew Skelton said.

Mr Skelton said the requirement to include alternate payment methods was an “odd one”.

“There are so many examples where as a customer or organisation, you don’t get to choose which payment process you use — the provider of the service facilitates that as part of the interaction,” he said.

“So it’s unusual that we’ve been singled out.”

But Mr Skelton said he didn’t think the change would affect Cabcharge’s revenue generated through the app “in a material manner”.

“I think the convenience of the in-app payment will encourage the majority of passengers to at least consider using it,” he said.

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Originally published as Two years and half a million dollars later, ACCC gives green light to taxi industry’s ‘Uber killer’