No fare: Cabcharge-backed taxi app ruled anti-competitive

The ACCC has struck down a new cab-hailing app from the taxi industry, designed to take on the likes of Uber and goCatch, saying it is anti-competitive.

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Australia's consumer watchdog plans to strike down a new taxi-hailing app geared at taking on the likes of Uber and goCatch, saying that it is anti-competitive.

The Australian Competition and Consumer Commission says it intends to deny authorising a new app, known as ihail, that has been put forward by a joint group of companies from the Australian and international taxi industry.

Similar to Uber, the app would operate in major metropolitan and regional centres (and some cities overseas) allowing consumers to order a taxi via a mobile app. Because the app is designed to pool together different taxi networks and companies, the user would get the closest available vehicle, regardless of which network that particular taxi belongs to.

Howver, the ACCC argues that the companies involved in providing taxis for the app make up a large proportion of the industry, meaning the proposed ihail app would dominate the market from day one, but not by offering genuine competition or superior service.

The ihail app also requires the user to pay through the Cabcharge payment system, which the ACCC says shuts out Cabcharge's competitors. In a statement today, Cabcharge said its in-app payment system is "nothing new" and "no different to this function being provided by a bank."

Users can also offer to pay a higher fare when booking through the app, offering the incentive for a cab driver to accept their booking over other fares, but the watchdog argues that this locks out "financially disadvantaged sections of the community."

The stakes are high for ihail as the taxi industry goes through a period of significant upheaval, spurred on by the growth of ridesharing and taxi-hailing service Uber.

Since launching in Australia, Uber claims to have 'disrupted' the traditional taxi industry, increasing competition whilst improving prices and service for consumers. However, the taxi industry claims that Uber operates an "illegal" service that puts passengers at risk. Regardless, the growing popularity of Uber and its network of private ridesharing 'partners' has undoubtedly put a dent in the profits of the established taxi industry.

But the latest attempt by the industry to take a slice of the Uber pie has been struck down by the ACCC, which has issued a draft determination to deny authorisation of the ihail app.

"The ACCC considers that the ihail app would have a significant impact on competition in the taxi industry, which could impact prices and quality of service," ACCC Chairman Rod Sims said.

While conceding that the app would be convenient for consumers, Sims warned that ihail could grow to include all taxi networks in a given area, ultimately resulting in less competition and a negative result for consumers. The ACCC also noted that ihail could negatively impact existing apps such as goCatch and ingogo, as well as those operated by individual taxi companies.

But Victorian Taxi Association CEO David Samuel accused the ACCC of hitting the wrong target in its crackdown on anti-competitive behaviour, taking a swipe at rival service Uber in the process.

"Regulators at all levels have failed to curb the activity of an international corporation operating illegal services around the country, and indeed, around the world," he said.

"The ACCC have again missed the point as to where the competition exists in this industry and are effectively preventing taxi companies from innovating and developing new technology to give customers what they want."

However, Uber fired back saying it welcomed the ACCC's decision "to put consumers first and reject the taxi industry's latest attempt to shut out competition."

The ACCC will now seek public submissions on its draft determination ahead of making a final decision by the end of the year.