Watchdog slams brakes on taxi app joint venture

A smartphone app to book and pay for taxi rides in Australia and overseas has hit a hurdle after the Australian Competition and Consumer Commission indicated it plans to deny it authorisation.

The 'ihail' app is a proposed joint venture between payments provider Cabcharge and taxi operators Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, and Suburban Taxis.

Cabcharge, which also operates taxi networks in Sydney, Melbourne, Adelaide and Brisbane, would handle all ihail payments for rides booked through the app. Passengers would not be able to pay their ihail-booked fares in the cab.

But the app looks set for a rocky path after the ACCC revealed in a draft determination it was concerned the technology would have "a significant impact on competition in the taxi industry".

More than half of all taxis in Australia would be covered by ihail at the launch, along with an even larger share in metropolitan areas, the ACCC said.

This would give ihail a larger fleet of taxis in a broader range of locations than existing cab booking apps, the watchdog said, noting that ihail could potentially grow to include all taxi networks in any area.

Although the taxi companies involved in ihail would retain their existing booking apps, the ACCC argued the new app would become dominant and could also reduce competition by impacting the commercial viability of third-party booking services such as goCatch and ingogo.

The ACCC said it accepted there was a benefit to consumers through greater convenience, but argued this was outweighed by the risks of reduced competition in the industry.

A final decision on ihail will be made by the watchdog later this year. It is currently seeking submissions from ihail and interested parties on the draft determination.