I’ve mentioned that, when Comfort raises its prices, the other cab companies will follow. Well don’t congratulate me, because a myopic chimpanzee could have seen it coming. Now, the National Taxi Association (NTA) has issued calls for precisely that: fare hikes across the board. And SMRT has been one of the first to respond. The question is, what will the Competition Commission of Singapore (CCS) do about it?
What is Price Fixing?
Price fixing is when co-operating companies (sometimes called a cartel), attempt to standardize the price of a particular product or service. It runs contrary to the concept of a free market economy, which is a concept pretty sacred to Singapore.
Most of the time, price fixing is rare; business entities are as co-operative as rabid house cats. Whenever a group of companies tries to fix a price, one usually undercuts the others to steal business. This is actively encouraged, to keep businesses competitive.
How Does Price Fixing Affect You?
There are eight taxi companies in Singapore, of which Comfort is the biggest. But which of them most deserves to succeed?
As a consumer you’re supposed to vote with your money. You’ve heard of “one man, one vote”? In business it’s “one dollar, one vote”. So if you like Comfort, you pay Comfort. If you like Transcab, you pay Transcab. The rest can keep their filthy paws off your wallet.
In order to entice you, cab companies will have to improve their service. They’ll need to increase their availability, get rid of the taxis that smell like Ikan Bilis, and pick drivers who don’t seem to suffer from perpetual PMS. More importantly, they’ll have to justify asking you to pay more.
It’s hard work.
But companies like SMRT and Comfort, under the National Taxi Association (NTA), have found an easier way out: by raising their prices collectively, taxi companies can rake in higher fares without improving service. There’s no need to justify fare hikes to you, because everyone else is charging the same. Short of not taking a cab, you’ve lost your consumer voting power.
The NTA’s Role
The National Taxi Association (NTA) issued a statement urging all taxi companies to follow Comfort. In other words, it encouraged fare hikes across the board. That smacks of price-fixing, and sent the CCS crashing down on them faster than a greased meteor.
For comparative purposes, consider the 10 modelling agencies the CCS fined. When the modelling agencies attempting to fix a standard rate, they got slapped with a $360,000+ penalty. Now if the NTA gets off scott-free, it might send the wrong message: that it’s okay for taxi companies to fix prices, but not anyone else.
Other organisations, like the Consumer Association of Singapore (CASE), also called foul. Their executive director, Seah Seng Choon, said:
“Such a call will work against the interest of consumers, as choice will be limited since there is only one fare structure…each company has its own cost structure so fares need not be the same. We hope to see free competition prevail in the marketplace.”
But the NTA claims…
That it’s not price fixing. They’re merely expressing an opinion: that all taxi companies should follow Comfort. It’s the choice of individual companies whether or not they choose to listen. And if SMRT decided to follow their advice, it’s SMRT’s choice (and hence, fault).
The NTA also likes to claim it’s speaking on behalf of taxi drivers, who (according to them), need the fare hikes. Noble, but a little odd…since quite a few taxi drivers aren’t even members of the NTA. It’s like me marching into the UN and claiming to represent Canada’s interests, because I “spoke to a bunch of Canadians once”.
At worst, the NTA was deliberately trying to encourage price-fixing. But I don’t think so. My opinion?
The NTA made a poor, misguided attempt to get on the taxi companies’ good side. They ignored the public anger at taxi companies, and turned themselves into scapegoats. Like a deer strapping on a neon signboard and visiting the nearest hunting lodge.
But I think the issue with the NTA is a diversion. It’s not a question of whether the NTA attempted to price fix or not. The real issue is that SMRT, a major transport provider, is following on the heels of Comfort. The taxi companies are price fixing, and prosecuting the NTA does nothing to stop them.
Right now, going after the NTA is like worrying about a flu while the doctor’s discussing a brain tumour.
Do you think the taxi companies are price-fixing? Comment and let us know!
Keep updated with all the news!
Get the latest personal finance tips and tricks delivered to your inbox!
We promise never to spam you!