The taxi industry’s answer to Uber has been blocked by the consumer watchdog because it would have too big an impact on competition.
The ACCC has proposed to deny authorisation of the iHail app, a taxi booking service that would allow users to flag the nearest cab regardless of which company it belonged to.
The app is a joint venture between Australian taxi networks, with members including Yellow Cabs, Silver Top, White Cabs and Cabcharge.
The app would have “significant public detriments”, ACCC chairman Rod Sims says.
“The iHail app would have a significant impact on competition in the taxi industry, which could impact prices and quality of service,” Sims says.
With the initial partners, the ACCC estimated that iHail would represent more than half of Australia’s taxi fleet and a much higher percentage in metropolitan areas where it would operate.
“This would guarantee that from its launch, the iHail app would have a larger fleet of taxis, in a broader range of locations, than any existing taxi booking apps,” Sims says.
“If it becomes the dominant booking app, it may also reduce competition by impacting the commercial viability of existing apps operated by individual taxi networks, as well as those operated by third parties such as GoCatch and ingogo.”
The ACCC admits that the app would provide a more convenient and easier way to book a taxi for users, but says the impact on competition is more important.
“The ACCC accepts this app would provide a more convenient way for consumers to book taxi services, but in the draft determination the ACCC takes the view that this comes at too big a cost to competition,” Sims says.
The consumer watchdog also took issue with iHail’s plans to allow users to pay more upfront to receive priority access to a taxi, saying this would reduce access to “financially disadvantaged sections of the community”.
The ACCC has issued a draft termination of the app, and a final decision will be made before the end of the year.
The app was designed as a way for the Australian taxi industry to fight back against the rise of Uber, and the ride-sharing startup thinks the ACCC has made the correct decision.
“We welcome the ACCC’s decision to put consumers first and reject the taxi industry’s latest attempt to shut out competition,” an Uber Australia spokesperson says.
“With the arrival of competition in the point-to-point transport industry, choice and opportunity has been opened up to consumers like never before.”
The iHail has been ready to go from as early as July this year, but plans to fast-track the launch were also blocked by the ACCC.
The consumer group is now seeking submissions from iHail and other parties before making its final decision in November or December.
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