New taxi surcharge is price-fixing

So the news today is that lots of people are unhappy with the S$3 surcharge being imposed by taxi companies on rides starting from the Marina Bay Sands “resort” (primarily casino). The justification was that there was a “mismatch” between demand and supply at that location: more people were wanting taxis from there than there were taxis going there – which is kind of hard to believe because surely for every person who wants to leave in a taxi, there would probably be one who would want to get there by taxi. Don’t tell me people tend to go there by bus (there are no convenient train routes there) and leave by taxi?

What I found strange was that the Straits Times’ story on the issue ( 7 May 2010, Commuters, experts slam cab levy at IR) covered many angles but failed to mention that six taxi companies acting in concert to impose exactly the same surcharge starting exactly the same day constitutes a price cartel and price-fixing. Which is against the law.

Section 34 of the Competition Act expressly says:

34. —(1) Subject to section 35, agreements between undertakings, decisions by associations of undertakings or concerted practices which have as their object or effect the prevention, restriction or distortion of competition within Singapore are prohibited unless they are exempt in accordance with the provisions of this Part.

(2) For the purposes of subsection (1), agreements, decisions or concerted practices may, in particular, have the object or effect of preventing, restricting or distorting competition within Singapore if they —

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

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Why is the Competition Commission whose job is to monitor and enforce the Act not issuing a cease-and-desist notice immediately?

Oh wait, the same taxi companies imposed a similar surcharge last January in relation to Resort World’s casino on Sentosa. And our competition regulators were asleep then. As they seem to be now.

5 Responses to “New taxi surcharge is price-fixing”


  1. 1 Heng-Cheong Leong 7 May 2010 at 16:01

    I’m not saying whether there is or there isn’t anti-competitive price-fixing happening here.

    However, it is not surprising to me that there are no significant differences in taxi fares, simply because ComfortDelgro is so dominant in the industry. Smaller players cannot afford to charge significantly higher fares as they will lose passengers.

    On the other hand, a lower fare doesn’t translate to more customers, since one can only drive that fast, and, at least during most of the day, demand is higher than supply. If taxi companies charges lower fare, they will lose taxi drivers, which is their direct customers.

    Result: everyone else follows what ComfortDelgro’s fares.

    (According to a report in Lianhe Zaobao dated 6th May 2010 (http://www.zaobao.com/sp/sp100506_002.shtml), only 3 companies started the surcharge on the same day, while 1 company’s application (notification?) was still in the processing queue. The same report also stated that different companies started the Sentosa surcharge at different dates earlier this year, with ComfortDelgo starting the surcharge last.)

  2. 2 yawningbread 7 May 2010 at 22:16

    Allowing a dominant player to continue is also anti-competitive. I’ve argued before that a true competition watchdog would insist that Comfort-Delgro-Citycab-and-whatnot should be broken up into two competing companies.

  3. 3 Lim Jian Yuan 13 May 2010 at 20:59

    I think it is inevitable that a dominant player exists in industries that operate in singapore due to the size of consumer pool. This results in a mismatch of supply and demand but strictly in the case of too much choice for consumers. Thus I think the existence of singapore’s pseudo anti-trust agency is to regulate the markets which would mean more like regulating the larger incumbents.

    However the general public is still trying hard to adapt to the notion that consumer surplus are taken advantaged by suppliers when they do not act against monopolistic behavior. It also comes to a preposition that since the monopolistic firms are big employers which means that a lot of common folks will be affected if these employers take serious hits to the ledgers. So it is to satisfy a larger need to keep the economy afloat with healthy employment figures than to correct a imperfect market.

    However I find it hard to understand that a new attraction will warrant a new surcharge when they are only opened recently. How would the taxi companies get the data necessary that would suggest the mismatch in demand and supply within such a short period of time?

    My concern will not be the amount of the surcharge is but the integrity and rationale behind their pricing policy. It does not pay to take advantage of others.

  4. 4 yawningbread 14 May 2010 at 00:56

    I’m not sure I understand what you’re trying to say in the first two paragraphs. Is your main point that our competition watchdog misunderstands its own role and thinks that its job is to regulate the dominant player rather than ensure that there is no dominant player, at least not one so large that it distorts the market?

    By the way, I don’t agree with your first sentence. It is not inevitable.

  5. 5 Comage 15 May 2010 at 11:14

    Well, I suppose they’re just taking advantage of the hype since the MBS opened recently, and everyone wants to go there and take a look at the “new” things there.

    Got change to earn, why not? Up up and away the surcharges go! CASE will not do anything as we all know it is a “toothless tiger”.

    And as for Singaporeans, the only way out of this mess is to boycott taxis altogether. But we all know somehow for every determined Singaporean who wants to boycott taking taxis, there will be 2-3 more Singaporeans who are glad that this 1 “idiot” has given up his place in the taxi queue (Haha! All the better for me!)


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