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The Australian Competition and Consumer Commission (ACCC) has granted conditional authorisation to the ihail taxi booking app, reversing last year’s draft determination proposing to deny its authorisation.While the ACCC’s draft determination last October proposed to block ihail – the product of a joint venture including Cabcharge, Yellow Cabs, Silver Top Taxi Service, Black and White Cabs and Suburban Taxis – its final determination comes with some conditions attached.
“Following the ACCC’s draft decision proposing to deny authorisation to the arrangements, ihail made a number of significant modifications to its app,” the ACCC today stated.
“These include now giving passengers a choice to pay their fare in the taxi (rather than just via the app), and the ability to choose their preferred taxi network based on certain performance information during the booking process or the nearest available taxi (regardless of network).”
ACCC chairman Rod Sims commented that passengers will be provided with an additional platform to book taxis from a large pool of taxi networks and drivers via the app, with the ACCC accepting that “this is likely to reduce waiting times, particularly in peak periods, which is a benefit to the public”.
“The ACCC considers the ownership structure underpinning the ihail app is still likely to allow the participants to quickly establish a larger network of taxi drivers than any other app, and that this initial competitive advantage will not be gained from offering a better product to drivers and passengers but through ihail’s ownership structure alone,” Sims stated.
“However, the ACCC considers that ihail will still face competition from other taxi booking apps and ridesharing apps which have established brands and customer bases. There is also nothing in the arrangements preventing drivers using other booking apps.”
Sims stated that conditions imposed by the ACCC require ihail to explicitly inform drivers that they remain free to use competing booking apps, and 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 ihail.
“These factors should mitigate the extent of the reduction in competition and associated public detriment due to the competitive advantage ihail will have as a result of its ownership structure,” he commented.
The ACCC noted that it was initially concerned that, with Cabcharge the exclusive provider of payments processing services to ihail – and originally passengers would only have been able to pay for fares through the app – “emerging competition between Cabcharge and other providers of taxi payment processing services would have been dampened”.
The ACCC, however, stated that the changes made allowing payment in the taxi means that other payments processing providers are able to compete to provide services to ihail customers.
In response to the final determination, Andrew Skelton, Cabcharge managing director and chief executive officer, stated the company believes “authorisation will enhance competition in the local market, which in recent times 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,” Skelton commented.
“From ihail’s perspective, it now has a ticket to play across different taxi networks, just like the other competitors, who are typically regarded as innovative, have been doing for some time.
“To get there ihail has amended its business model to facilitate in-car payments as well as in-app payments, which is at odds with some of its competitors. However, we are pleased that ihail can get on with business and begin servicing passengers.”
