Portuguese Competition Authority published final Report identifying the main constraints to competition in the public passenger transport services by car hire

​Press Release
 
Portuguese Competition Authority published final Report identifying the main constraints to competition in the public passenger transport services by car hire
 
The Portuguese Competition Authority published the final version of a Report identifying the main constraints to competition in the public passenger transport services by car hire, including a set of recommendations aimed at promoting competition in the sector.
 
The report concludes that the sector is subject to intense regulatory intervention, namely in what concerns taxi services. This tight regulatory context limits the capacity of traditional taxi service providers to strategically react to the rise of new business models and simultaneously weakens the ability and incentive of new providers to enter and innovate in the market.
 
Amongst the constraints to competition identified in the report are the quantitative restrictions to entry and prices fixed by convention, which eliminate price as a dimension of competition and reduce service providers’ incentives to compete. 
 
The Portuguese Competition Authority further highlights that regulation on quality parameters should ensure safety and protection for users, though minimising the associated restrictions to competition. The standardisation of supply as a result of excessive regulatory requirements on the characteristics of vehicles soften competition in price and quality, and reduce the scope for innovation.
 
The Portuguese Competition Authority has also identified some regulatory provisions which unnecessarily discriminate between different types of service providers, thereby inducing undue restrictions to competition in the market. This is the case, in particular, for the procedural requirements regarding service contracting as well as the rules for vehicle inspections and driver licensing.
 
The emergence of new ways to hire passenger transport services, namely through electronic platforms, makes a review of the current regulatory framework even more compelling, so as to ensure equal opportunities to the different service providers, while duly accounting for the specificities of each type of service.
 
As such, the Portuguese Competition Authority defends a regulatory review that seeks not to favour a given type of service provider over the others, but rather one that promotes a level playing field capable of yielding the benefits of competitive interaction.  
 
The Portuguese Competition Authority also highlights the need to undertake a regulatory review that does not entail replicating the existing regulation to new entrants but rather to make the set of rules currently applicable to taxi services in Portugal more flexible.
 
The report of the Portuguese Competition Authority also highlights a set of principles that should be observed in the regulatory review, as well as a number of specific recommendations that aim at overcoming the identified competitive constraints, so as to contribute to more vigorous competition in the provision of public passenger transport services by car hire, thereby promoting a broader supply range and higher quality of service.
 
 
The Portuguese Competition Authority recommends the following to the Government:
 
1. Eliminating quantitative restrictions in the provision of taxi services and the corresponding territorial restraints, and consider alternative, more efficient and less restrictive regulatory tools to achieve the public policy goals that the legislator choses to pursue.
2. Evolve towards price deregulation. However, in particular for hailing and taxi stands, market failures may justify, in the short run, some form of regulatory intervention that should nonetheless be confined to the minimum required (e.g., price cap) to address the identified problems.
3. Limiting quality requirements to the level necessary to address market failures and pursue the public policy goals found relevant by the legislator, in observance with the principles of efficient regulation, and ensuring adequate and effective compliance monitoring.
 
The release of the final report was preceded by a public consultation procedure to a draft version, issued on July 20, 2016. The public consultation allowed for the gathering the views of different stakeholders in the sector, namely the sector regulator, consumer associations, representatives of taxi drivers, among others.
 
December, 28, 2016