ACCC not to revoke taxi authorisations

The Australian Competition and Consumer Commission today issued a decision not to revoke authorisations* granted to a number of taxi networks across New South Wales, Victoria and South Australia, ACCC Chairman, Mr Graeme Samuel, announced today. However, the ACCC continues to hold concern about the state of competition for the processing of card transactions in taxis.

The authorised conduct allows taxi networks to suspend taxi operators and drivers from radio booking services, or impose a penalty, if they do not accept certain forms of non-cash payments approved under the Cabcharge Account System.

In late 2003 the ACCC initiated a review of the authorisation granted to De Luxe Red & Yellow Cabs, now Combined Communications Network, in response to a number of complaints and later extended the review to other taxi authorisations with similar conduct.

Following wide consultation the ACCC has formed the view that with the considerable changes which have occurred in the taxi industry since the authorisations were granted, the public benefits once secured by authorisation have diminished to a large extent. In that regard cards and vouchers are likely to continue to be widely accepted with or without the authorised conduct in question. Normal market forces are likely to ensure that consumers are offered the opportunity to use their preferred method of payment when paying for a taxi fare.

The ACCC found that most of the public benefits claimed by the applicants could not be considered as benefits flowing from the authorisations, as these benefits are likely to continue to be realised without authorisation. However, the ACCC accepts that there is likely to be a small public benefit from the continued certainty that non-cash payments will be accepted in taxi-cabs.

The ACCC found that the authorised conduct generates negligible public detriments, noting that taxi operators and drivers for commercial reasons are likely to continue to accept non-cash payments.

While the ACCC has decided not to revoke the authorisations, the ACCC remains concerned over competition issues regarding the processing of card transactions identified by the review. These appear to be outside the scope of the authorisations and therefore revocation would be unlikely to address these issues. However, should further information come to light, the ACCC will look to see if these issues raise any concern under the Trade Practices Act 1974.

Copies of the determination are available from the ACCC website.

*The Trade Practices Act 1974 prohibits certain forms of anti-competitive agreements including agreements between competitors which limit their ability to deal with who they choose or on the terms they choose (including price). Authorisation provides immunity from court action under the Act arising from certain anti-competitive agreements. Authorisation can only be granted where the ACCC is satisfied that the public benefit arising from the conduct outweighs any competitive detriment.

The Trade Practices Act 1974 allows the ACCC to revoke authorisations in certain circumstances. In assessing revocation the ACCC must apply the statutory test as set out in the Trade Practices Act 1974.  In essence, the ACCC must not revoke the authorisations if the conduct results in such a benefit to the public that the conduct should be allowed to continue to take place.

Background

On 17 December 2003, the ACCC issued a Notice indicating that it was considering the revocation of the De Luxe Red & Yellow Cabs (now CCN) authorisation on the basis that a material change of circumstances had occurred since authorisation was granted.

On 7 May 2004, the ACCC issued Notices indicating that it was considering the revocation of 11 other taxi authorisations also on the basis that a material change of circumstances had occurred since authorisation was granted, except for the Notice issued to Suburban Taxi Service in South Australia, which was issued on the basis that revocation of authorisation had been applied for.

The authorisations the subject of the review were granted between 1986 and 1994 in perpetuity and are listed below.

• De Luxe Red & Yellow Cabs Co-operative Trading Society Ltd (now Combined Communications Network Ltd)
  A30112 - 25 February 1986 - New South Wales
• Legion Cabs (Trading) Co-operative Society Limited
  A90441 - 20 October 1986 - New South Wales
• RSL Ex-Servicemen's Cabs & Co-operative Members Ltd
  A90448 - 31 August 1987 - New South Wales
• St George Cabs Co-operative Ltd
  A90531 - 30 November 1992 - New South Wales
• Arrow Taxi Services Ltd
  A90449 - 28 November 1986 - Victoria
• Regal Combined Taxis Pty Ltd (now Taxis Combined Services (Victoria) Pty Ltd)) A90447 - 23 December 1986 - Victoria
• Geelong Radio Cabs Co-operative Ltd
  A90463 - 6 October 1987 - Victoria
• North Suburban Taxis Ltd (now 1A Bell Holdings Ltd)
  A90455 - 19 February 1987 - Victoria
• Silver Top Taxi Service Ltd
  A40047 - 6 February 1987 - Victoria
• Black Cabs and Eastern Group Taxis Co-operative Ltd (now Black Cabs Combined Ltd)
  A90498 - 1 May 1990 - Victoria
• West Suburban Taxis Ltd
  A40071 - 27 April 1994 - Victoria
• Suburban Taxi Service Pty Ltd (now Suburban Transport Services Pty Ltd)
  A90472 - 28 January 1988 - South Australia