ACCC allows Victorian country taxi co-op members to agree booked fares

9 October 2014

The Australian Competition and Consumer Commission has allowed taxi operators working in co-operatives in regional and country Victoria to agree on the maximum fares they will charge taxi-users for work booked within their cooperative network.

The Victorian Government recently implemented a number of taxi industry reforms, including allowing taxi operators in regional and country areas to set their own fares. For taxi operators working in a cooperative this meant that they could not offer consumers who booked work, for example through their phone service, a common fare structure without first obtaining authorisation from the ACCC.

“Granting authorisation allows taxi operators participating in a cooperative network in country or regional Victoria to offer its customers a simpler booking process and a better co-ordinated service. By enabling the cooperative networks to be more efficient in providing taxi services, the arrangements are likely to enable co-operatives to compete more effectively with other taxi networks and hire cars,” ACCC Commissioner Dr Jill Walker said.

The arrangements will also allow the cooperatives to avoid some costs and adopt a less complex process for managing their contracted work with institutional customers.

“The arrangements are however likely to result in some detriment to the public by lessening competition at the operator level. In deciding to grant authorisation the ACCC has taken into account the Victorian Government’s taxi industry reforms. These reforms are intended to promote competition in a number of ways and may constrain the detriments associated with the arrangements,” Dr Walker said.

There is some uncertainty about how competition in local markets will develop following these reforms. In granting authorisation until 31 December 2017, the ACCC has sought to enable the co-operatives to respond and adjust to new competitive pressures and allow time for competition to develop.

“Granting authorisation for three years allows the taxi industry time to adjust to the overall package of reforms and, if competition doesn’t develop as anticipated, to prepare for the possibility that the ACCC may not re-authorise this maximum fare arrangement,” Dr Walker said.

The authorisation granted by the ACCC relates only to booked fare agreements within cooperatives.  It does not permit fare agreements between cooperatives or between members of different co-operatives.

Co-operative networks are made up of independent taxi operators. About a quarter of Victoria’s regional and country networks are co-operatives, providing about one third of taxis in those zones.

Authorisation provides statutory protection from legal action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment constituted by a lessening of competition.

Further information about the application for authorisation, including a copy of the ACCC's authorisation decision and public submissions, is available on the public register.

Release number: 
MR 245/14
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