The Finnish Competition and Consumer Authority (FCCA) has investigated into possible anti-competitive activities by companies dispatching taxi rides reimbursed by Kela, the Finnish Social Insurance Institution. Some of the 13 companies involved have changed their operating practices which the FCCA had assessed as being problematic, and, on 2 June 2020, the agency closed its investigation into the operations of these companies. The FCCA will continue its investigations into the conducts of the remaining six taxi dispatch centres. The agency has also updated its guidance set for the taxi service sector.
The taxi reform enacted in 2018 liberalised the sector that had previously been heavily regulated and created prerequisites for market-based competition This attracted new entrepreneurs to enter the market in line with the objectives laid down for the reform. However, following the opening of the taxi service market, a number of problematic practices emerged, resulting in a lack of optimal market performance for consumers.
After the taxi reform entered into force, the FCCA was contacted on a great number of occasions by taxi entrepreneurs who had had difficulty with obtaining Kela-reimbursed rides by Kela from taxi call centres. After conducting an extensive survey directed at entrepreneurs, which confirmed the problems that had come forth when in the entrepreneurs had contacted the FCCA , the agency launched an investigation into the activities of the taxi dispatch centres In spring 2019.
“Based on the investigations carried out by the agency, it appears that the operations of several regional taxi dispatch centres have prevented or hampered the business of taxi entrepreneurs. This has reduced competition in the taxi market, which has also reduced consumer choice”, says Valtteri Virtanen, Director at the FCCA.
During the investigations conducted by the FCCA, a large number of companies have revised their problematic operating practices. The agency has closed its investigation into seven taxi dispatch centres: Kokkolan Taksiliikenne Oy, Kuru-Taksi Oy, Pohjanmaan Taksi Oy, PRO-Keskus Oy, Taksi Päijänne Oy, Tampereen Aluetaksi Oy and Vaasan Ulataksi Oy. Six companies are still suspected of having in place practices that restrict competition.
Suspicions of discriminatory terms and practices
The FCCA has focused on problems that it had observed with Kela-reimbursed taxi rides. Kela rides are a significant source of income for many taxi entrepreneurs and account for up to 20 per cent of the total turnover of the sector on the national level. However, several of the problems observed also affect the dispatch of ordinary taxi rides.
Dispatch centres are often owned by taxi entrepreneurs, and the FCCA has primarily investigated into the operation of dispatch centres, considering it as a form of illegal cooperation between com-panies that compete with each other. Dispatch centres often have a very strong position in their traditional operating areas, and taxi entrepreneurs are often dependent on access to local dispatch centres
In its investigation, the FCCA has paid particular attention to the following problematic operating practices, which may have reduced competition between taxi entrepreneurs and slowed down the taxi market opening process.
- Various restrictions and quotas have been used to prevent drivers from entering the service provided by dispatch centres. The restrictions may have, for example, been used to ensure that the profitability of taxi entrepreneurs, who are shareholders in a dispatch centre and competitors to each other on the taxi market, will remain intact even if competition in the taxi sector increases.
- Taxi rides have not been distributed equally. Various procedures have been followed in the dispatch of rides, the aim of which, in practice, has been to give taxis in a particular mu-nicipality or in a group of taxis the privilege for all rides or only for some of them.
- Drivers have been prohibited from accepting rides from other dispatch centres. In practice, such a prohibition may have weakened the operating conditions of taxi entrepreneurs or other dispatch companies.
- Taxi entrepreneurs have agreed on driving shifts that are too extensive. The driving shift and stand agreements between taxi entrepreneurs may unnecessarily restrict competition and business opportunities available to taxi entrepreneurs. Dispatch centres may need to ensure the availability of taxis at quiet hours in certain areas, but the on-call stands covering entire operating areas and round-the-clock driving shifts are often unnecessarily large in scope. The FCCA has issued more detailed instructions on agreeing on driving shifts and on-call stands for the taxi sector.
In its investigation, the FCCA has taken into account that the taxi sector is still in a transition phase due to the new Act on Transport Services, which entered into force in 2018. The FCCA will continue to monitor developments in the taxi market and will intervene to the competition restrictions that it observes. In connection with the issuing its decisions, the agency has updated its guidance for the taxi sector, which provide companies with more information on the kinds of procedures that the agency may consider problematic.
The FCCA may open new investigations with respect to the conduct of any of the companies in case the authority obtains new information on the basis of which it will have reason to suspect that the conduct of the companies in question significantly restricts competition.
Director Valtteri Virtanen, tel. +358 29 505 3621
Head of Research Max Jansson, tel. +358 29 505 3688
Senior Specialist Eero Hämäläinen, tel.. +358 29 505 3033