AGCM

PRESS RELEASE

TAXIS: ANTITRUST AUTHORITY TO CITY OF ROME - RAISING FEES DUE TO LARGER NUMBER OF LICENSES IS ANTI-COMPETITIVE

This would propagate situation rents - mechanism nullifies more positive aspects of the reform.

'No' to mechanisms linking taxi rate hikes to higher numbers of licenses. The Antitrust Authority submitted its assessment yesterday in a report to the City of Rome. The adequacy of rates had been evaluated in terms of the supply-demand ratio when more licenses are issued.  The criterion used by the designated technical Committee, however, seems to have interpreted this dynamic in a competiton-restricting manner: the mechanism would in fact legitimize rate increases in response to the recently-witnessed rise in the total number of licenses. For the Antitrust Authority, the criterion established by the Committee should have been interpreted, in sharp contrast, as suggesting the need to reduce maximum rates in response to the increase in supply, in accordance with standard market logic. Instead, the system that was adopted serves only to propagate situation rents, in contradiction to the principles frequently invoked by the Antitrust Authority to enhance service organization and more virtuous price dynamics in the interest of consumers.

According to the Antitrust Authority, this mechanism nullifies more positive aspects of rate reforms, such as the explicit definition of rates as "maximum rates," which leaves drivers free to apply lower rates without requiring permission from the City. Another positive aspect is greater transparency of rates, with drivers being obligated to issue automatic receipts that include the license number, day and time of the ride, distance in kilometers and duration in minutes, rates actually applied and detailed contact information for the registration of complaints.

Rome - January 27, 2011