Price controls on e-hailing services vital to protect consumers

E-hailing is a great example of how technological innovation can disrupt an existing market which in this case, threatens to wipe out taxi services but at the same time revolutionises the way consumers commute.

Around the world, taxi operators are demanding regulatory protection against e-hailing services as their livelihood is affected, but on the other hand consumers are pleased, and this situation is no different in Malaysia.

In Malaysia, policymakers are continuing to explore regulatory solutions capable of appeasing all stakeholders with a minimum negative impact on consumers, but unfortunately for consumers, the damage has already been done. The market is now dominated by single players, creating an almost absolute monopoly.

The Uber- Grab merger was a disaster for consumers as it effectively distorted the market, eliminating competition, creating an almost absolute monopoly and sadly our competition regulatory authority could do nothing about it as provisions regulating mergers and acquisitions are not part of the Competition Act.

Making things worse is the fact that policymakers continue to ignore the fact that the market is almost an absolute monopoly. What we are informed is that there are 17 active e-hailing service providers in the market but most are almost unheard of.

Following the Uber-Grab merger, we saw a dramatic rise in the number of complaints lodged against Grab services, namely, price hikes and unsatisfactory service. Complaints such as fares paid at the destination are higher than what was offered when booking a ride continue to come in.

Apparently, Grab uses some algorithm to calculate the imbalances of supply, demand and traffic conditions to set a final price which is unfair to consumers. How is this different from the taxi operator who consumers have always accused of being unfair when charging? Awful customer service is another trait of a dominant player. A piecemeal response is a norm on complaints highlighted.

In order to protect consumers, the Malaysia Consumers Movement (MCM) urges the government to immediately introduce price controls on e-hailing services. A floor and ceiling price must be implemented. This will not only protect the consumer from anti-competitive behaviour but also help ensure orderly development of the industry, including benefitting e-hailing drivers and taxi operators.

Consumer protection deserves utmost priority in this age of digitalisation. Monopolies allow for abuse of market position, with grave implications on consumers. E-hailing is the way of the future, however, a regulated and fair marketplace gives all segments an equal growth opportunity.

It is undeniable that e-hailing has provided great comfort and convenience for consumers, but it is also the government’s responsibility to ensure that this comfort and convenience is sustainable over the longer term.

Darshan Singh Dhillon is the president of Malaysia Consumers Movement (MCM). -FMT