ACCC proposes to allow Victorian country taxi co-op members to agree fares until 2017

5 September 2014

The Australian Competition and Consumer Commission has proposed to allow Victorian regional and country taxi operators working in co-operatives to agree on the maximum fares they will charge within a network for three years.

As part of Victorian Government reforms to the taxi industry, operators in regional and country zones can now set their own fares, subject to them informing Victoria’s Taxi Services Commission and passengers of their maximum fares. The Victorian Taxi Association has asked the ACCC to exempt operators in regional and country cooperatives from provisions of the Competition and Consumer Act designed to prevent price fixing among competitors.

“Granting the operators authorisation would enable cooperative networks to continue to offer a single price and a simple booking process. This will enable them to compete better with single-owner networks and hire cars, when they might have been at a disadvantage if they were not able to offer a single maximum price and simple booking process,” ACCC Commissioner Dr Jill Walker said.

“Operators will also avoid some costs, as they will not have to implement new systems, and there will be transaction costs savings in managing contracted work with institutional customers,” Dr Walker said.

Dr Walker said the ACCC was conscious the arrangements would eliminate the prospect of competition on maximum prices within the networks.

“However, the Victorian Government has implemented reforms designed to encourage other sources of competition, particularly between networks, putting pressure on the co-ops to stay competitive on price and service. There is also the potential for individual operators to break away from networks and for price competition below the maximum fare.” Dr Walker said.

The ACCC will now seek submissions on its draft determination before making its final decision.

“If parties wish to apply for similar authorisation in three years, the ACCC will be able to assess the extent to which competition is in fact constraining cooperative networks and whether the arrangements are helping them compete,” Dr Walker said.

On 19 June 2014 the ACCC granted the taxi operators interim or temporary authorisation, as requested, to engage in the conduct and agree maximum fares while the ACCC considered the substantive merits of the application.

About a quarter of Victoria’s regional and country networks are cooperatives, accounting for about one third of cabs in those zones.

Authorisation provides statutory protection from court 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.

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

Release number: 
MR 224/13
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