By Khairie Hisyam
One taxi operator suggested that ridesharing services be made to charge higher fares to ensure the survival of the taxi industry. But there is one little problem with that even before we talk about how absurd the logic is: such action may be not be legal.
As the public transportation sector continues grappling with the presence of ridesharing services, one taxi operator has made an interesting suggestion: the Land Public Transport Commission and the government should set higher fares for Uber, MyTeksi and GrabCar to even the playing field for taxis.
Shamsubahrin Ismail
“If the fare is lower than that of the budget taxis’, it will ‘kill’ the taxi industry because passengers will choose their services,” said Shamsubahrin Ismail, founder and advisor of Big Blue Capital (M) Sdn Bhd was quoted as saying by Bernama. “A fare hike is apt (for Uber, MyTeksi and Grabcar services) as these operators practise ridesharing compared to the budget taxis which impose fare on one passenger at a time.”
But there is one bit of problem with that idea: it may be illegal to force these services to charge higher fees than they currently are. Simply put, it may be anti-competitive and in breach of the Competition Act 2010.
(And before you jump in burning rage to point out the obvious, sometimes these services are already more expensive than taxis. Ridesharing is also not an available option as it’s something Uber is only trying out in its home city.)
Probably the most commonly looked at provision under the Act is Section 4, which prohibits cartels – any arrangement between businesses which, among others, is deemed to distort competition in the market for any goods or services. Think, say, two fish sellers who agree to charge a certain price so that they don’t have to fight for customers by seeing who can afford to sell fish cheaper.
Now this may not be directly applicable here because what is being proposed is not a cartel arrangement. Shamsubahrin is in effect asking for the authorities to force alternative services to charge higher fees – he is not asking these services to come to his office and discuss price fixing, which would be a cartel arrangement.
However, the Act also covers the situation which may arise here. Section 11(1) stipulates: “The commission may, on its own initiative or upon the request of the minister, conduct a review into any market in order to determine whether any feature or combination of features of the market prevents, restricts or distorts competition in the market.”
The keywords there are “feature”, “restricts” and “distorts”. If Shamsubahrin’s idea is taken up and implemented, what would happen is that there would be a feature of the market which distorts competition in the public transportation market.
In this case, a requirement that ridesharing services charge a much higher price than they otherwise would charge would have the effect of distorting market competition by restricting the competitiveness of ridesharing services and artificially relieving some competitive pressure on the taxi segment.
So it looks like this particular idea is a no-go before it takes off. Then again even if it was a legal possibility, it would probably not have worked anyway, because the logic underlying the request is flawed.
To put it bluntly: even if alternative services are forced to charge way higher, will that guarantee more passengers for taxis? Not necessarily.
There is no denying that the advent of these alternative services have cut into the taxi drivers’ share of the market, which in turn threatens their livelihood. However, this shift in passenger preference is not, in likelihood, driven by cost but other factors.
Arguably, people are choosing ridesharing services over taxis because, to many, it is a more pleasant option in a number of aspects – better user experience, more dependable service and in some cases perhaps better convenience. In turn, the common complaints against taxis are widely known – some are rude, forgo the meter and charge excessively whenever they can, among other things.
This type of unethical taxi drivers may be a small minority but the effect is the same: most people just don’t like our taxis that much. Making people pay more for the alternative to taxis is unlikely to change their mind about taxis themselves – if anything, it may deepen the resentment because the higher fares were suggested by taxis for the sole purpose of allowing taxis to survive.
Therefore, the suggestion seeks to address a symptom while completely missing the cause of the sickness. If the taxis want their passengers to come back, there is no way around it: reform their service levels and make people happy to use taxis again.
Because at the end of the day, who is to say we need to have a taxi industry per se in order for human society to function? For all we know the ridesharing services are their permanent replacements of tomorrow – so if the taxi industry wants to survive, they have to put in some effort on their own, too.
GRRRRR!!!
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