The competition watchdog has dealt a blow to the taxi industry's attempt to take on ride sharing service Uber with a new smartphone booking app, saying it could threaten smaller competitors Ingogo and Gocatch.
The Australian Competition and Consumer Commission says it plans to reject the proposed 'ihail' app as it would threaten proper competition in the market.
The app was developed by a joint venture between Cabcharge, Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, and Suburban Taxis.
Black and White Cabs is an operator in the Western Australian market, which has an existing mobile app, while Cabcharge operates payment services in WA.
Earlier this year, Business News spoke to Swan Taxis after the company released a new mobile app in an effort to win back market share from global giant Uber.
That was followed by the flagged entrance of taxi-hailing applications WA Cabs, Ingogo and GoCatch to the Perth market.
At the time, Swan Taxis chief executive See Peng Yeo said extra regulations on cab drivers made it difficult for them to compete with Uber, but acknowledged more could be done to improve results for consumers.
That included a new customer ratings system rolled out with the app, he said.
But the ACCC today said it had concerns about the Cabcharge-led consoritum's plans for a further ride-hailing service.
“The ACCC considers that the proposed arrangements are likely to produce significant public detriments," the watchdog said today.
"They will reduce competition between taxi networks in supplying services using the ihail app and, the arrangements may tip the market towards ihail becoming the dominant booking app.
"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.”
Commuters using the app would have access to the affiliated range of taxi networks, which combined represent more than half of all taxis in Australia and an even greater proportion in the capital cities where the app would be launched, the ACCC estimated.
"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," chairman Rod Sims said.
"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. Depending on the rate of take up of the ihail app amongst other taxi networks, it could potentially grow to include all taxi networks in any area.
"ihail will achieve a potentially dominant position from launch not through competition, but because of the larger fleet of taxis its ownership structure delivers."
The watchdog's draft decision comes as a blow to the taxi networks, which have been banking on the launch of the single platform app to compete with Uber.
At its annual profits release presentation in August, Cabcharge chief executive Andrew Skelton said that the company couldn't wait much longer to get the app up and running.
"We know that it's imperative we get payments in apps to the market in the current half," he said at the time.
Cabcharge shares had slid more than 2 per cent on the news in early trade.
The watchdog also found issues with ihail's requirements that customers had to pay using the app, rather than the driver, with Cabcharge processing all payments.
It was also concerned about a feature allowing customers to pay a surcharge to guarantee a taxi during peak times, a move the ACCC sid could reduce access for the financially disadvantaged.
The ACCC said it would seek further submissions from the app company before making a final decision in November or December.
Comment was being sought from Cabcharge.
By AAP and Matt Mckenzie
