CMA warns of competition implications of TfL’s proposals for regulation of vehicles for private hire

The Competition and Markets Authority (CMA) has published a response to a consultation by Transport for London (TfL) on proposed amendments to its regulation of private hire vehicles.  The CMA considers that the proposals will harm competition between private hire vehicles such as Uber and licensed taxis and that the proposed regulatory regime is disproportionate.  The CMA also considers that the proposals will distort a level playing field, in some instances by introducing rules that do not apply to London taxi drivers.

The main elements of the proposals are advanced fixed fares, minimum five-minute waiting time requirements for passengers, obligatory pre-booking facilities and restrictions on drivers working for multiple operators at any given time.  Operators would also be banned from displaying the location of vehicles on smartphone applications.

The CMA accepts that some form of regulation is needed but it is concerned that the proposals go beyond what is necessary and could operate to the detriment of users of taxi and private hire services in London.  It is also keen to avoid regulatory divergence between the regulatory regimes applying to taxis and private hire vehicles and which would potentially curb market developments that benefit passengers.

The CMA has published guidance for policymakers on how to take account of competition (Competition impact assessment: guidelines for policymakers).  It suggests that TfL might find this guidance useful when considering the impact of its regulatory regime on competition.

It should be emphasised that this is not a case of one regulator overriding the views of another.  The CMA is highlighting that TfL must consider the impact of its measures on competition, a duty that applies to all central and local government departments. 

This is not just an issue for London.  As new business models emerge, regulators in the UK and elsewhere are grappling with how to adapt their regulation to the demands of a changing market.  To take one example, Uber operates in over 50 countries around the world and has often encountered a legal and regulatory battleground.  On the one hand, Uber wants to operate wherever there is a demand for its services.  On the other hand, taxi drivers argue for preservation of the licensing regime that reserves territory to themselves.  The issue, then, is not whether regulation is needed.  It is a case of asking about the scope of regulation, i.e. to what, to whom and to what extent regulation applies?  And all against dramatic changes to technology allowing for service delivery in ways not contemplated before now.

CMA response to TfL's private hire regulations proposals, 2 December 2015