FCCA: Taxi entrepreneurs in the Hyvinkää area have engaged in illegal cartel activities

Taxi entrepreneurs operating in the Hyvinkää area had agreed that taxi drivers would not drive up to taxi stands to wait for fares outside their driving shifts.  The Finnish Competition and Consumer Authority (FCCA) has ordered the entrepreneurs to cease this conduct as it is in violation of the Competition Act. Taxi entrepreneurs are competitors to each other, and they are required to make independent decisions on matters such as when to offer services.

In early 2017, taxi entrepreneurs in the Hyvinkää area had made a “gentlemen’s agreement” where taxis operating outside their driving shifts would not check in to the taxi stands in the Hyvinkää area and would not accept orders and customers directed to the stands. In its decision on 6 May 2021, the FCCA found that the conduct constitutes a cartel banned by the Competition Act, and has prohibited the continuation of the conduct. The order to cease the implementation of the agreement is enforced with a conditional fine varying from 1700 to 17,200 euros depending on the turnover of the taxi company. A conditional fine will be imposed on the parties in the event of non-compliance with the FCCA prohibition.

During the investigations, some taxi entrepreneurs in the area have indicated that the conduct found to be illegal by the FCCA has already been abandoned. However, the FCCA has not been provided with sufficient evidence of this claim, which is why the FCCA deemed it necessary to issue an order to terminate the conduct enforced with a conditional fine. Even though the activities of the taxi entrepreneurs, by their nature, fall under the most severe restrictions on competition, the FCCA did not propose to the Market Court that it impose a penalty payment on the cartel activities due to the local nature of the conduct, the low volume of business among the parties and other special features of the case. Instead, the FCCA considered the prohibition decision to be an appropriate means of ensuring that the parties would cease the restriction of competition.

The prohibition decision is part of FCCA’s work in the taxi market

The taxi market was opened to competition in summer 2018. Companies offering products and services in the competitive market decide independently on matters such as when they offer products and services. An agreement between competing companies on when each company offers products and services constitutes illegal cartel activity in principle. Cartels are detrimental to customers due to the fact that they reduce the amount of supply compared to a competitive market.

– Based on the FCCA’s assessment, the cooperation between the taxi entrepreneurs in the Hyvinkää area is clearly a cartel. However, the activity has been very local and, taking into account the scale of the parties’ business operations and the nature of the conduct, it has had a fairly small impact on the entire taxi market. For its part, this decision exemplifies how the FCCA assesses the activities of companies in the taxi market now that it has been opened up to competition. It is important for taxi entrepreneurs to remember that they are in principle competing with each other and must carefully assess the compliance of different forms of cooperation with the Competition Act, explains Director Valtteri Virtanen.

The FCCA has had several pending cases of suspected restriction on competition in the taxi sector since summer 2018. In addition to the investigation on taxi entrepreneurs in the Hyvinkää area, the FCCA has also investigated, among other things, potential anti-competitive activities by companies dispatching taxi rides reimbursed by Kela. The FCCA has also assessed the impacts of the taxi reform and the need for regulatory changes and expanded on the priorities of competition enforcement on the taxi markets.

Further information on the subject:

Additional information:

Director Valtteri Virtanen, tel. +358 29 505 3621
Head of Research Hannu Raatikainen, tel. +358 29 505 3357