Are there any Uber drivers here

Uber becomes taxi: hardly any competition, bad for customers

The Federal Competition Authority (BWB) publishes analyzes and assessments at regular intervals, be it on prospective mergers, on the possible dominant position of individual companies or on suspected price agreements. In addition, there are wide-ranging studies of the competitive situation in individual industries. It is not uncommon for sensitive legal issues to be dealt with, so the tone is sober - and dry.

It is all the more astonishing to read an analysis published on Thursday by the authority on the competitive situation in the taxi and rental car market in Austria. The BWB does not save with scathing criticism of the new regulation of the market, sees competition at risk if not even disturbed, speaks of the end of innovation in this segment and warns of fatal disadvantages for customers.

In addition, the BWB openly criticizes that the taxi industry isolates itself and provides little insight. Immediately upon receipt of the report it says: "The BWB has carried out a number of industry surveys in the past. In none of the cases, individual stakeholders were as uncooperative as in this investigation. For example, a taxi radio center refused to cooperate."

What is it all about? After a long struggle, the legal merger of the taxi and rental car industries in Austria was finalized last year with the votes of the ÖVP, SPÖ and FPÖ. In future there will only be one trade with common rules of the game. The new regulations will finally take effect from 2021.

Reorganization is in progress

The law organizes the market according to the wishes of the taxi industry. Uber and other platforms have previously used rental car companies and their drivers to offer their services - the fixed taxi tariff did not apply to them. This system will be abolished - wherever it exists, the tariff will apply to everyone in the future. Regulations for obtaining approval as a driver have also been changed, rental car drivers who previously only needed a driver's license will in future have to take a taxi test, prove local knowledge and also have at least a rudimentary command of German. All vehicles must be marked as taxis and need a taxi meter.

On the occasion of the merger of the industries, the competition authority looked at the effects of these reforms.

The Bundeswettbewerbshörde criticizes that there is no longer any room in passenger transport "for the future exercise of innovative business models, which have found their way into almost all areas of life due to the digitization of our society". In principle, this could "have a negative impact on the diversity and fairness of competition and consumers' freedom of choice".

Competitors will disappear - as will jobs

By merging the two businesses and adopting the regulations for taxis, online platforms such as Uber and Bolt would de facto be pushed out of the market. For customers, this will lead to a reduction in the range on offer. "This fossilization can lead to the elimination of quality and price competition and is not innovation-friendly," said the BWB. The intention of the legislature to preserve the advantages of both models - from Uber, Bolt and other rental car companies as well as the taxi industry - will not be fulfilled.

But it gets worse. The drivers who are already active in the rental car must prove their new authorization by the end of the year. For taxis, on the other hand, there are transitional provisions; they can drive for several years with old certificates. But the exam capacities for taking the taxi exam are not sufficient. This alone makes it "virtually impossible for rental car drivers to meet the requirements for the new business in good time".

Due to this lack of capacity and the threat of many online brokers leaving the market, "numerous jobs could suddenly be lost".

Longer waiting time, less quality?

The competition authority therefore warns of a decline in the quality of the offer, for example because waiting times for customers could become longer - and also because the quality assurance standards established by providers such as Uber, such as the evaluation of the driver and the journey that is visible to all, will probably disappear.

The price is also becoming increasingly difficult to understand for customers. The apps from Uber and Co. show what a trip costs before booking a trip. The taxi radio center 40100 now offers similar services, but these are used less often, and with classic taxis there is no certainty about the price before the trip.

For the study, the BWB asked more than 1200 people online about their use of taxis and rental cars and analyzed the new regulations. In addition, 170 requests for information were sent to taxi and rental car companies and travel agents. This includes the taxi radio centers 40100 and 31300 as well as the app-based switching services Bolt, Holmi and Uber. (András Szigetvari, 24.9.2020)