CONSUMER WATCHDOG GETS ON BOARD TAXI'S ANSWER TO UBER

THE taxi industry is riding on success, after the Australian Competition and Consumer Commission finally granted authorisation for a new smartphone taxi booking app.

iHail, a joint venture arrangement between taxi networks and other industry participants including Cabcharge (ASX:CAB), was denied by the consumer watchdog in October last year after it was deemed it would reduce competition in the industry.

The ACCC was initially concerned that because Cabcharge is the exclusive provider of payments processing services to iHail, and originally iHail 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.

However, iHail has made a number of modifications, including 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.

ACCC Chairman Rod Sims says with the changes, the app will provide an additional platform for passengers to book taxis from a large pool of taxi networks and drivers.

"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," says Simms.

"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."

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.

"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," says Simms.

The initial members of the iHail joint venture include Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis and Cabcharge. 

Other taxi networks can sign up to the iHail app, without becoming members of the joint venture. 

Taxi drivers working for any participating taxi network will need to opt-in to receive iHail bookings over their existing dispatch systems.