I don't think this self-explanatory review needs any commentary from myself.
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COMPETITION LAW INSIGHT
April 2004
LENGTH: 1022 words
TOPIC: COMPETITION
TITLE: Competition And Public Services -- Taxi Services In France, Italy And The UK
TEXT:
Three European competition authorities have recently published studies on taxi services. The French Conseil de la concurrence issued an opinion on 29 January 2004. The Italian Autorità Garante della Concorrenza e del Mercato published a report on 9 March. The UK's Office of Fair Trading published its report on 11 November 2003. The government endorsed the recommendations on 17 March, although it takes a more gradual and consultative approach than that suggested by the OFT.
All three authorities call for relaxation of any regulation that imposes numerical limits on taxi licences, since this creates an artificial scarcity in the market.
France
In an opinion issued in March 1987, taxi services were defined as "collective interest services using the public highway." Although subject to competition rules, they are regulated and organised by the municipality. The key regulation is the parking permit given to taxis so that they can operate in the area.
The Conseil found that the municipality does not coincide with the economic area served by the taxis licensed there, nor is there any coordination with neighbouring municipalities. This tends to defeat the object of a taxi service, which will frequently be called upon to go into nearby territory. Three basic service features need to be secured:
* adaptation of the volume of taxi services to meet demand across economically relevant geographical zones
* unified rules on hiring so that taxis do not circulate empty
* even distribution of taxis throughout the day so that no particular period of demand is disadvantaged
The following regulatory instruments are recommended:
* identification of economic zones in which taxis supply a unified service, with cooperation between municipalities to align them
* revision of quota systems, then regular review, using prices in the secondary market as an indicator of supply and demand
* coherent rules on hiring, traffic and parking in zones within which permits are coordinated
* flexible fare structures that can be adapted to local needs continuing studies of demand and qualitative surveys
For this last recommendation, the Conseil urges completion of the DGCCRF's study of taxi use statistics, which was started in 2000 but has now apparently stalled. Empirical data is important even if the conceptual problems are solved.
Whatever rule caused the driver of a cab I hired a few years ago for a shortish trip in central Paris to scold me incessantly for the entire journey for not wanting to go to the airport should be abandoned forthwith. The only thing to be said in his favour was his willingness to take me to my destination. In Brussels, a taxi hired outside the Borschette Centre refused to take me to the Rue Royale because it was not the airport, so the driver evicted me at the Rond-Point Schumann.
The AGCM found that generally the density of taxis in cities and big towns is inadequate. The municipal authorities set the number of vehicles that may be licensed, but the process is distorted by pressure from incumbent drivers.
Licences were originally issued free of charge by the municipality, but now most working taxi drivers have bought their licence from retiring drivers. The price of a licence has risen steeply, indicating that there is a shortage, but also giving the existing drivers a powerful incentive to keep numbers low.
The AGCM wishes to recognise this reality in its recommendations, and to provide some form of "compensation" for the drivers. The crucial element in any scheme is the overall increase in numbers, but the process should be gradual.
One solution would be to auction new licences and use the proceeds to compensate existing drivers. Another would be to issue a second licence to drivers free of charge. They could then sell or assign it, or use it and recoup their losses by doing more business.
Legislation would be needed if the second solution were adopted, since the law currently limits taxi licences to one per head. Licensing would remain but quotas would go.
Subsidiary measures to ease the path to liberalisation could include part-time licences, a secondary licence charging different fares and not plying for hire on the street, and introduction of new concepts, such as taxi buses and collective taxis.
AS277 - Distorsioni della concorrenza nel mercato del servizio taxi. Bollettino 9/2004
Opinion 04-A-04 of 29 January 2004, on a request by the Fédération nationale des taxis indépendants concerning the regulations governing taxi activity
www.conseil-concurrence.fr/user/avis.php?avis=04-A-04
www.agcm.it/agcm_ita/BOLL/BOLLETT.NSF/0 ... 1c1256a6f0 04d522a/51d4a987d2840c45c1256e580033bb2e?OpenDocument
United Kingdom
UK taxis are regulated at the local level. Fewer than half the authorities place a maximum on the number of licences issued, but most control fares. All impose quality and safety standards on drivers and vehicles. A vigorous secondary market in minicabs that have to be pre-booked exists almost everywhere. These are only subject to quality and safety regulation.
The OFT recommended that all quantity limits be removed, that the quality and safety rules be examined to make sure that they are effective, and that all controlled fares should be competitive below a set maximum, including London where there is currently a mandatory tariff.
Trading in taxi licences also occurs in the UK market, especially in the urban areas that tend to place a quota on numbers. Reported prices range from £ 12,000-£ 50,000 ( 18,000-75,000). The OFT makes no suggestion to help those who have paid these prices adjust to a more populous market.
The DTI's reaction was to propose asking local authorities to justify their current regulation of taxi services. They will be able to keep quantity controls but will have to show that they do not harm consumer interests. The OFT found that taxis are most important for the poor because they do not own cars.
The regulation of licensed taxi and PHV services in the UK, OFT 676
www.oft.gov.uk/NR/rdonlyres/C309CE26-2D ... OFT676.pdf
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