This also provides a justification for greater regulation of service standards of taxis compared to PHVs. There is therefore a need for fare regulation of taxis. Passengers are in a relatively weak position to compare offers and negotiate prices in the hail and rank (taxi) trade. The OFT’s 2003 market study found, among other things, that: We also considered the 2014 Law Commission report on Taxi and Private Hire services. The CMA’s understanding of the hackney carriage and PHV markets is informed by the OFT’s 2003 market study and the subsequent impact evaluation in 2007, the examination of a merger between private hire operators in Sheffield and our recent evidence review and analysis of licensing conditions. This guide illustrates how some licensing conditions can affect consumers’ interests, in order to help ensure conditions are targeted and proportionate. The CMA’s view is that competition should only be restricted by regulatory rules to the extent that is necessary to protect consumers. Government may impose additional regulations in a market where, for example, there are concerns around consumer safety. Competition can exert downward pressure on prices and upward pressure on quality, because greater competition means that firms must fight harder to attract and retain customers.Įffective and fair competition is underpinned by competition and consumer protection laws which govern how businesses can compete.
The CMA’s short report on the impact that licensing conditions can have on consumer welfare is available on request ( Competition and regulationĬompetition is a process of rivalry between firms that benefits consumers.
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The CMA recognises that licensing authorities face competing pressures and tough decisions over how to strike the right balance. The CMA has found that some licensing conditions are likely to restrict or distort competition in ways that may result in higher prices and/or worse service for consumers. This guide is designed to help local authorities understand the impact some licensing conditions can have on consumers and hence help to reach the right balance between ensuring passenger safety and avoiding consumers having to face higher prices or lower service quality.
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Regulations on vehicle safety and driver suitability are clearly necessary to ensure safety. The CMA recognises that taxi and PHV licensing conditions play a crucial role in ensuring the safety of passengers. The purpose of this guidance noteĪs part of our work on local authorities’ impact on competition, the CMA has undertaken a review of taxi and private hire vehicle ( PHV) licensing conditions. The CMA has an advocacy function, which involves giving information or advice to public authorities on the impact on competition of public policy.Īs part of this work, HM Treasury has asked the CMA to consider how local authorities can support competition, and to challenge them when they do not. The CMA has a statutory duty to seek to promote competition for the benefit of consumers. The CMA brought together the competition and consumer protection functions of the Office of Fair Trading and the Competition Commission.
On 1 April 2014, the Competition and Markets Authority ( CMA) became the UK’s lead competition and consumer body. About the Competition and Markets Authority