Competition guidance for the taxi sector

Consequences that have a harmful impact on competition may arise particularly from a dispatch service’s decision to restrict taxis’ ability to accept rides from other dispatch services. This restriction is especially problematic if the dispatch service imposing the ban holds a dominant market position. The dispatch service can enforce the restriction, for example, through a direct prohibition in its dispatch agreement and/or by imposing requirements on taxi drivers that effectively prevent the acceptance of rides from competing dispatch services. In practice, such a restriction is likely to undermine the operational conditions of taxi entrepreneurs or other providers of dispatch services within the service area. This, in turn, may reduce price and quality competition in the area, thereby harming consumers.

According to the authority’s information, agreements on driving shifts among competing taxi entrepreneurs continue to raise questions among industry players. The following elaborates on the assessment of driving shifts.

Agreements on driving shifts among competing taxi entrepreneurs may constitute anti-competitive cooperation under competition law. Shift arrangements made within a dispatch service owned by taxi entrepreneurs are akin to direct agreements on driving shifts among competing taxi entrepreneurs. Generally, the necessity of driving shifts is justified by ensuring availability but driving shifts can also lead to a restriction of supply either regionally or at certain times of the day. The authority has received inquiries where a taxi entrepreneur wishes to drive more, but this is not possible due to the driving shifts. A restriction of supply can lead to poorer availability of taxis, thereby causing harm to end customers.

As noted above, the authority’s focus in selecting cases for detailed investigation is on practices that have the most significant impacts on the market. Internal driving shift arrangements within a dispatch service owned by taxi entrepreneurs only exceptionally fall into this category.

However, it is important to note that agreements on driving shifts may only be permissible if the companies can demonstrate that they benefit consumers and are necessary. This may be the case, for example, if there would not be enough vehicles in operation without this cooperation and if each driver has the opportunity to receive rides even when not on duty. In many locations, it is unlikely that so-called 24/7 driving shifts covering all days of the week and times of day are necessary to produce efficiency benefits that also benefit consumers.

Companies involved in driving shifts cooperation must ensure that no restrictions other than those absolutely necessary to achieve consumer-benefiting efficiencies are imposed. Driving shifts must first and foremost be designed to cover only the times necessary to achieve the benefits. The application of driving shifts must cease if their necessity is removed, for example, due to the entry of a new competitor into the market or improved availability of taxis. Additionally, drivers included in the shift system must have the right to drive and the opportunity to receive rides outside of their scheduled shifts.

The authority recommends preparing a written assessment of the necessity and impacts of the driving shifts arrangement before its potential implementation and keeping the assessment up to date. This way, the company can also aim to demonstrate that the purpose of the driving shifts arrangement was not to restrict competition if the practice later comes under the authority’s evaluation.