Taxi, Ride-Sourcing and Ride-Sharing Services – Background Note by the Secretariat

Abstract

Traditional taxi services – together with other providers – constitute a crucial part of the urban transportation environment. Over the last 10 years the emergence of ride-sourcing and ride-sharing platforms put under competitive pressure the activity of traditional taxis. While these new services provide clear benefits to consumers, they largely operate outside of any regulatory framework, raising new questions for regulators and competition law enforcers. This note looks at the rules that apply to traditional taxis which might need reviewing in light of digitalisation. Technological developments have affected several aspects of the pre-booked and street-hailing segment, perhaps removing the need for some common regulations. Regulators have the opportunity to review existing rules, softening (or abolishing) those whose original justifications are not valid anymore. However, technological development may not solve some of the market failures affecting the sector. Thus, while some changes to the regulation of traditional taxis would help to establish a level playing field and increase competition in the market, some rules might need to be applied to new providers as well. Competition between traditional taxis and new services has also been at the top of National Competition Authorities’ (NCA) agenda. These have exerted a significant effort to enrich the discussion thorough their advocacy activity. A common point of view emerges from their work, as all the NCAs highlight the priority of recognising – and not banning – the new providers in order to increase competition in the market. The paper also analyses the role of new providers from a competition law enforcement perspective. Although competition law cases regarding ride-sourcing and ride-sharing services are very limited in number, growing volume of such services, their two-sided nature and issues related to big data pose potential challenges to competition authorities. This note discusses some of the issues NCAs might face in the future.