The ACCC given the green light to smartphone taxi booking app, ihail, almost six months after blocking the app over concerns it would reduce competition.
The competition watchdog on Tuesday said it had authorised a joint venture arrangement between taxi networks and other industry participants, including Cabcharge – which owns a 10 per cent stake in the project – to operate the app.
Other members of the ihail joint venture include Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis, and Cabcharge.
The ACCC changed its mind after ihail made significant modifications to the app, which will take on the popular Uber service.
These include 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 nearest available taxi, regardless of network.
ACCC chairman, Rod Sims, said 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.
He said 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.
“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,” he said.
“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,” Sims said.
The ihail app will initially operate in major metropolitan and regional centres across Australia and some cities overseas.
Cabcharge’s CEO, Andrew Skelton, welcomed the decision and said taxi networks deserve equal opportunities to innovate in the market and it’s important that regulators continue to support that.
“Today’s decision will enhance competition in the local market,” said Skelton.
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