CMA warns council on "anti-competitive" taxi policy

The Competition and Markets Authority (CMA) has warned Sheffield City Council that parts of its new private hire operator and vehicle policy may be anti-competitive.

In a letter to the council, CMA acting chief executive Andrea Coscelli said the regulator had approved a merger in October 2015 of the city’s private hire firms Sheffield City Taxis and Mercury Taxis partly on the grounds that the merged business would face competition from mid-size private hire operators, taxis, and new businesses such as Uber and Gett.

“The CMA would be concerned if, as a result of changes to regulation, the ability of new or existing firms to compete with the merged business was reduced, harming the interests of taxi and private vehicle hire (PHV) passengers in Sheffield.” Ms Coscelli said.

She said the CMA recognised that regulation of taxis and PHVs could help protect passengers but they also benefited from “the spurs to efficiency, quality and innovation that competition can bring”.

Sheffield “should take care to avoid creating or increasing differences in the way regulation affects taxis and PHVs…as both are liable to undermine competition,” the letter said. “Above all, regulation should not favour certain groups or business models over others.”

The CMA objected in particular to requirements for operators to have a permanently staffed helpline based in Sheffield and be able to take a booking up to seven days in advance.

“Mandating add-on functions (such as pre-booking) can place undue burdens on some providers, leading to increased costs for PHV firms,” it said. A clause that appeared to prevent vehicles being used by more than one operator could mean that owner-drivers could only work for one operator, as might a requirement to display the name of the operator on the side of the vehicle. Restrictions on advertising on PHVs “differ substantially from those applicable to taxis [and] they risk distorting the competition that exists between the two categories”, it noted.

Ms Coscelli also warned that the CMA is “unconvinced that knowledge tests for taxi and private hire drivers are appropriate – particularly given that satellite navigation is widely used by PHV drivers.

“While such tools are not perfect, it is not clear that the skills checked by knowledge tests constitute a necessary or effective backup.”

She said these tests might have been useful prior to the invention of satnvas but now raised barriers to entry.

Bryan Lodge, cabinet member for environment, said: “The Licensing Committee approved a new private hire operator and vehicle policy with some minor amendments. We listened to the concerns raised against some of the proposed conditions and made changes to the policy to address this.

“As a local authority we will always do everything we can to ensure that applicants are fit and proper and that our policies, procedures, and licence conditions are fit for purpose and enable us to promote public safety, prevent child sexual exploitation and protect the children and the vulnerable.”