Latest blow to taxi industry as ACCC blocks Uber-style booking app

THE taxi industry says it is “flabbergasted” at a decision by the competition watchdog blocking it from taking on the “illegal” Uber.

Uber taxi service app screenshots from Hobart and Melbourne.

THE taxi industry says it is “flabbergasted” after the competition watchdog blocked a booking app intended to take on the increasingly powerful Uber.

The Australian Competition and Consumer Commission today announced it was proposing to deny authorisation for ihail Pty Ltd, a joint-venture between Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis and Cabcharge.

The ACCC argued the app, which would initially operate in major metro and regional centres across Australia and some cities overseas, would reduce competition both in the taxi market and in payments.

ACCC Chairman Rod Sims said with around 80 per cent of the taxis in any given major metro city controlled by just two operators, allowing the companies to come together would be like allowing Woolworths and Coles to merge to fight off Aldi.

“I can understand why they would want to get together, but our concern is it’s too much of a reduction in competition,” he told news.com.au

Mr Sims said while the ACCC accepted the app would provide a more convenient way for consumers to book taxis, it would come at “significant public detriment”.

He said while the growth in existing apps such as GoCatch and Ingogo was through competition to attract drivers and customers, ihail would achieve a potentially dominant position from launch, not through competition but “because of the larger fleet of taxis its ownership structure delivers”.

The ACCC was also concerned passengers would only be able to pay through Cabcharge when using the app, locking out other payment providers.

Blair Davies, chief executive of the Australian Taxi Industry Association, said he was “flabbergasted” at the decision.

“Uber is coming in and operating illegally, operating in contravention of the laws that the ACCC is responsible for administering, and it has done nothing about that,” he said.

“When the taxi industry comes up with a solution to compete with Uber, which is a $US50 billion company, the ACCC seems to want to protect Uber from the taxi industry’s ability to compete with it.

“It is just completely staggering that the ACCC would take that role.”

Mr Davies said while ihail wouldn’t have been a “silver bullet”, it would fill a gap in the marketplace, namely that consumers don’t like having to download separate apps for each taxi company when they travel.

“It’s an important gap for us. For those consumers who were attracted to the Uber app because they can use it in different cities, there would have been an alternative.”

Cabcharge shares had slid more than two per cent on the news at midday on Monday.

In a statement, an Uber spokesman said: “We welcome the ACCC’s decision to put consumers first and reject the taxi industry’s latest attempt to shut out competition.

“With the arrival of competition in the point to point transport industry, choice and opportunity has been opened up to consumers like never before.

“Millions of Australians are choosing alternatives like ridesharing and enjoying the safety, reliability and affordability that it provides. We look forward to seeing regulations that reflect these choices across all states and territories in the very near future.”

The ACCC has invited ihail to respond to its concerns before it makes its final decision.

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— with AAP