JOINT COMMITTEE ON TRANSPORT díospóireacht -
Wednesday, 21 May 2008

Taxi Regulation: Discussion with Competition Authority.

Vice Chairman

The first item on the agenda is a discussion with the Competition Authority. I apologise for the absence of the Chairman. I draw witnesses' attention to the fact that while members of the committee have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name, or in such a way as to make him or her identifiable.

I welcome the chairman of the Competition Authority, Mr. William Prasifka, and his colleagues, Mr. Declan Purcell, Mr. Ciarán Aylward and Ms Paloma Repulla Conde. I propose that we hear a short presentation from Mr. Prasifka and then hold a short question and answer session.

Mr. William Prasifka

I am delighted to be here to assist the committee in its work. This is my first appearance before this committee in my current role but I appeared before the committee in my previous position. Each time I was here I was struck by the professionalism, goodwill and courtesy of the committee and I look forward to my presentation here today. I take it that the members have seen my statement. I will not read it verbatim but will point out a few highlights.

The Competition Authority has a particular remit given under legislation grounded in the work of the European Commission. The work of the European Commission is based on best international practice and it is grounded in promoting consumer welfare. We have examined many markets and continue to do so. During my short tenure we have achieved 18 criminal convictions for hard-core violations of competition offences, which are characterised as price fixing, market allocation schemes and the like. We look at a variety of markets, from car distribution to professions and specific markets such as hot-dip galvanising markets. In looking at these markets we always come back to the same point, namely, what is the impact on consumers and is the market working well to benefit consumers. It is in that guise that I am delighted to be here today.

The Competition Authority has long been involved in the taxi market. We have given many submissions advising Government and making public comment. We made submissions in 2002 stating our view on how the market should operate efficiently and for the benefit of consumers. The question on which we are addressed today is to give a view on the effect of giving the taxi regulator the power to put a cap on the number of taxi licences. Looking at it from a broad perspective, we note that the economy had a protectionist culture. There were many sectors of the economy which had been protected, from pharmacists to airlines. Many of the professions used quotas on entry. These have been withering away, one by one. In each instance they worked to the detriment of consumers.

Limiting the number of operators in a sector is generally considered to be one of the most harmful regulatory restrictions on competition. The Competition Authority would be extremely concerned about any attempt to limit the number of taxis that may operate in the market. We would be concerned for a number of discrete reasons. The first is that the effect would be that those taxi drivers who had already entered the market would effectively be given a property right to provide a public service. They would have a right to exclude others from doing so. This is bad policy and would create a harmful precedent for other markets.

The second reason is that the undeniable losers of such a policy would be consumers, who would find waiting times would increase, and also future taxi drivers who would be effectively blockaded from entry into the market.

The third reason is important to keep in mind. If a taxi regulator or anyone else were given the power to limit the number of taxis, it is impossible to imagine a coherent systematic way that this could be gone about. What would we expect the person to do? Would he or she state that waiting times, for example, are now 30 minutes or 45 minutes on average and that this is too short or too long, or would he or she ask is this acceptable? The task would involve a trade-off between the interests of those who hold licences and consumers. How would that trade-off be exercised? What cost to consumers would be deemed acceptable? Whatever the answer is, I know there is no internationally established methodology. There is no established way of going about this task.

Once a cap is put in place, it is extremely difficult to remove it. We can only look at our own case, where a cap was put in place in 1978. The cap had no statutory basis and caused considerable damage to consumers. It was ultimately removed by the courts, rather than by political action. It is not a very satisfactory history. The way forward is that proposed by the Competition Authority that we recommended back in 2002, when these issues first arose following the court decision and following the way deregulation came about. It is important to have a market in which quality as well as fares are regulated. In this context, we were quite impressed by the work of the taxi regulator in areas such as new vehicle standards, a licensing system for dispatch operators, and a very impressive skills development programme that will cover areas that have never been covered before. This is a worthwhile agenda and it is the best way to promote quality and efficiency and to have a taxi market that serves the interests of consumers.

I thank the committee members for inviting me here, and I look forward to answering their questions.

Vice Chairman

Thank you very much.

Deputy Timmy Dooley

My question is not directly related to the subject, but is about the lack of competition for taxis at Shannon Airport. I provided Mr. Prasifka's office with information, but I have not yet received a reply. A system operates at the airport whereby only a certain number of licences for hackney cars are allowed to operate. Taxis are excluded from this system and they do not have the capacity to pick up at the airport. That is certainly an issue for the Competition Authority and I would be grateful if Mr. Prasifka could comment on it. I know he may not be briefed on it, but maybe he could come back to me in due course.

Mr. William Prasifka

My colleague is involved in that and he will briefly answer the Deputy's question.

Mr. Declan Purcell

The Competition Authority and the taxi regulator have separately taken this issue up with the authorities in Shannon Airport. The taxi regulator had several meetings with the airport authorities. We did not go there ourselves as we chose to stand back and see what happened, but we understand that the issue of opening up that market is on the way to resolution. It cannot be done overnight, but my understanding is that it is being done.

Deputy Timmy Dooley

My understanding is that they have decided to increase the number. That goes back to the kernel of what we have been talking about, which is that it is not right to have a limit. However, it is accepted that a limit exists for the provision of these licences in Shannon. It flies in the face of what the witnesses are saying here and it works against the taxi drivers in Clare who would like the opportunity to access that growing business. Unfortunately, they are not in a position to do that. I ask the witnesses to give serious consideration to talking again with the regulator and with the airport authorities to remove the restriction.

Mr. Declan Purcell

The existing airport by-laws were directed at hackneys only. The issue we brought to the authorities, as did the taxi regulator, was that this should be opened up to taxis as well as hackneys. That is in the course of being achieved. However, as the Deputy rightly suggested, the sky may not be the limit when dealing with the number of licences. One difficulty that needs to be addressed in this area is that we are talking about plying for business on private property. This is what was said to us. The same difficulty arose in the past in Dublin Airport and may also arise in Cork Airport for all we know. There is some difficulty in persuading the airport authorities that there should be no limit, since it is within their jurisdiction to award these permits. However, that does not mean we will not take up the issue again. I assure the Deputy that we will.

Deputy Timmy Dooley

I would appreciate that. Regardless of where the restriction is coming from, the airports are State owned at the end of the day. I am not suggesting it is Mr. Purcell's contention, but I do not buy the private property argument. It is State property. If we are being consistent, then one airport should not decide for its own reasons to be restrictive if the Competition Authority's guidelines are different. Having access to the airport would benefit the taxi drivers in the Clare area, but clearly they are not accessing that business despite the large increase in the number of people involved in the business.

Mr. Declan Purcell

The Competition Authority entirely shares the Deputy's view in principle.

Senator Paschal Donohoe

I thank the chairman of the authority for his presentation and I thank all the witnesses for coming here today. In his presentation, Mr. Prasifka stated that the authority looked to deliver in the interests of the consumer. When looking at the taxi industry, a crucial aspect is whether the consumer is satisfied. An important element of that is the issue of waiting times. A footnote in the presentation contains information that compares the waiting times for 2005 with 1997. Are the witnesses doing any work on measuring waiting times for Dublin and elsewhere? Are they aware of other work on measuring waiting times?

My second question is about the impact of competition on the business. My perception as a consumer is that there are many taxis around and it is much easier to get a taxi than it was in the past. However, there is a big difference in supply at night, especially on weekends, when the need for them is greatest. Do the witnesses have any observations on whether the current system of complete deregulation is the right model for ensuring that the supply is greatest when the need is greatest? As a consumer, I am not sure that is happening at the moment.

My final question is specifically related to Dublin Airport and is quite different to that mentioned by Deputy Dooley. I understand why the focus of the Competition Authority is on the consumer. Whenever I am in Dublin Airport, there is a great oversupply of taxis, especially during the day. Recently we saw the queue of taxis to get onto the taxi rank stretched onto the motorway leading to the airport. While that might be in the interests of the consumers, in the medium term I am not sure it will be. There will be taxi companies and individuals who will decide it is not economically viable for them to be working in that environment. Does the Competition Authority consider the oversupply at Dublin Airport is the right model for operating this industry with a view to delivering what is in the interests of the consumers today, next month and next year?

Mr. William Prasifka

I thank the Senator for his questions. I will make an overall observation first. The Competition Authority does not have any role in monitoring the taxi industry. We have examined historical sources in our presentation in order to outline the background to our points but we do not monitor developments or carry out surveys.

Regarding the Senator's first question, we do not know what waiting times are. That is a matter for the taxi regulator which has a better handle on the matter. The regulator is undertaking an economic analysis, matching supply with demand. Those questions would be better directed to the regulator.

Regarding the impact on competition and the potential mismatch between supply and demand, the taxi market has interesting characteristics. There is a high variation in demand by time. What is the best model to deal with this? Clearly, one needs a model that allows significant flexibility in delivery of supply. That is absolutely key and anything that gets in the way of that flexibility would be a problem. Demand fluctuates significantly during the day. We are not in a position to prescribe the best model but seek one with the greatest flexibility of supply.

The Senator referred to the oversupply at Dublin Airport, which is an interesting case. I arrived on Friday afternoon and had the opposite experience. I queued for half an hour for a taxi. Some of my colleagues who arrived on Sunday night had to queue for an hour. There may be oversupply at certain times but there is undersupply at others. This indicates that we need a system that allows the maximum flexibility. During times of oversupply, that sends an important signal to drivers, namely, that they should pick a different time. It is important that the market sends signals. These will change over time depending on how people's behaviour changes, events and circumstances. The Competition Authority seeks flexibility of supply as the best way to ensure supply can adjust to meet demand, which we know varies greatly over time.

Deputy Thomas P. Broughan

I apologise for being late. The Dublin Transport Authority Bill is being debated in the Dáil. I welcome Mr. Prasifka and the Competition Authority.

Does the Competition Authority have any remit generally for competition issues that are already governed by a regulator? For example, ComReg is briefing members today. We have the CER, price rises in different industries and the Commission on Taxi Regulation which looks like it will become part of the Dublin Transportation Authority. Does the Competition Authority have a role as a regulator of regulators? The Fine Gael spokesperson on enterprise, trade and employment made an interesting proposal of a super regulator for competition and prices across markets before the general election last year. Does the Competition Authority see itself as having this role or have sympathy with this role?

I refer to the impact of deregulation, particularly on pricing. I thank the Competition Authority for sending us its presentation before the meeting, which makes the case against imposing a cap. Is it bad when there is no price competition or where the inputs to the industry change dramatically such as a doubling of the price of petrol and diesel within ten months or a year? There can be no competition for the efficient taxi driver or company. Is that something the Competition Authority regrets?

Does the Competition Authority have concerns about the unique nature of the industry? For example, any of us can do our professional job in the Houses of the Oireachtas and, if we hold a public service vehicle licence, we can grab the car this evening, throw the sign on top and start looking for fares. Is that not astonishing? The Competition Authority states it has no remit over standards but is that not the core of the matter?

I read an interesting Competition Authority report on dentists in the past year. There are grave concerns about this issue. There are other dental markets in Northern Ireland and Hungary where the exact same work seems to be much cheaper. One cannot imagine dentists working as taxi drivers later this evening. If there is a professional group, what does it imply about those working part-time competing with professionals who work very hard? I have received many e-mails from people who work 14 hours per day. They may have been almost in tears as they wrote to me, complaining about conditions in the industry and stating it is not possible to make a decent living.

Deputy Shane McEntee

I also welcome the Competition Authority. The taxi industry is a very important one for our young people. Having a family business and knowing many taxi drivers who have moved from Dublin to County Meath, the industry is under threat. From Monday to Thursday night taxis are not going out because it is not viable. Come Sunday night there are no taxis to be found and people are left stranded. Perhaps this is not within the remit of the Competition Authority but something must be done. From talking to taxi drivers, I know they are not able to meet their mortgage repayments, with diesel priced at €1.32 per gallon. They are going to the wall. If one has been in a business for a lifetime, it is difficult to move into something else.

Recommendations must be made to ensure the service which young people use more than others due to drink driving laws and the ability to go anywhere at night in a taxi is available. Many young people are being left stranded or walking. It is easy to suggest opening up the market but the consequences of this must be examined.

Mr. William Prasifka

I will deal with the questions in the order they were asked. Deputy Broughan asked if we saw ourselves as the regulator of regulators. The simple answer is that we do not. There is a series of sectoral regulators: ComReg, the CER, the aviation regulator and others. They have a particular job to do but it is important to note that there are no sectoral exemptions from the Competition Acts or competition policy. We have our role and the regulators have theirs. We are not the regulator of regulators.

Deputy Thomas P. Broughan

What if the Competition Authority saw an area in which the regulators were not doing their jobs?

Mr. William Prasifka

No, the issue for us is not whether the regulator is doing its job but whether we believe there is a violation of the Competition Acts. Where there is such a violation, be it in the telecommunications industry, the energy or aviation markets or the taxi industry, we must act and use our powers. Obviously, there is an overlap of jurisdiction in respect of sectoral regulators in that they have separate tools and statutory instruments and can put in place price controls. All we can do is initiate proceedings and go to court. It may be that we are trying to achieve the same ends. It is important that we co-operate with them, that we do not waste State resources and that we are not at odds with them. We have co-operation agreements with many of the sectoral regulators. For example, not only do we have such an agreement with ComReg but we also have a good working relationship with it. We exchange information and consult it. Where cases arise, we consult on which organisation is best suited to deal with them. However, there is no exemption from the competition rules. Also, we are not the regulator of the regulators.

Proposals have been made in regard to the amalgamation of all the regulators, the Competition Authority, the National Consumer Agency and so on. I do not have any tremendous issues of principle in regard to whether the amalgamation of these agencies into one would be good or bad. There are important issues involved in terms of the coherence of the entire regulatory system. ComReg was set up for a particular purpose. The regulator for the aviation industry regulates prices in a different way, as does the CER. We have an entirely different statutory remit. For me, it is not a question of amalgamating all the regulators but rather of ensuring there is a coherent approach in all markets, which is slightly different. We are required to react to violations of the Competition Acts, even if there is a sectoral regulator involved.

Matters such as the impact of deregulation, price competition and what happens in terms of the increase in costs — in particular, the increase in unavoidable costs — are ones for the regulator. This is an industry in which there is a price cap. It is an area wherein it is appropriate to have price control. The reason for this is that consumers are in a vulnerable position. When people get into a taxi, they do not necessarily know the driver or may never have seen him or her before and, more importantly, may never see him or her again. In those circumstances, price control is appropriate. Also, it is appropriate that prices are controlled by an independent regulator which should in setting maximum prices take into account unavoidable costs that increase. In terms of the exact mechanism to be used, this is an issue best addressed by the regulator.

A good point was raised about the uniqueness of the industry and ease of entry into it and the impact this would have on professional standards. Given the ease of entry into the industry, it is correct to say standards may be driven lower and lower. When this problem first came to light, the Competition Authority pointed out that with deregulation, it was important to put in place quality controls. As I said in my opening statement, the quality controls which the taxi regulator is seeking to introduce in the next 18 months to two years are impressive. They will go a substantial way towards raising the standards of the industry, making it more professional, and to relieving the pressure which would inevitably arise in driving down standards. This is the way forward.

The dental profession is facing the opposite problem. As the profession has developed in the market, the pressure has been not so much on standards but on prices owing to a number of restrictions in respect of competition. People are voting with their feet and travelling to Northern Ireland and Hungary for dental treatment. We now find that dentists from eastern European countries are coming here. Our dental report indicated that in the last year for which we had figures, namely, 2006, the majority of new entrants into the dental profession in Ireland had been trained outside the country. This was due to restrictions on entry which were driving up prices. These problems are mirror images of each other.

The way forward to protect the professionals in the business and safeguard consumer interests is to raise standards in the industry. I am pleased to note that the regulator has a programme in place to do this.

Deputy Shane McEntee

Does Mr. Prasifka accept that the taxi industry has fallen asunder in the past six months? One cannot get a taxi on a Sunday night or a Monday, Tuesday, Wednesday or Thursday. The more one opens up the market the worse the position will become. The service is falling asunder.

Mr. William Prasifka

I am hearing a number of things. I read the submissions supplied to the committee by the taxi regulator. A number of people involved in the industry were suggesting there was an oversupply of taxis which were crowding taxi ranks and driving around the city aimlessly. The Deputy is now saying there is no service, that there is a lack of supply.

Deputy Shane McEntee

There is no service because taxis are not out on the road. I encounter problems with the service every weekend. Drivers will not go out because it is not worth their while financially to do so. As a result, young people are left stranded and more vulnerable. The service is falling asunder. I know four taxi drivers who are unable to meet their mortgage repayments because it does not pay them to drive the streets of Dublin. We must do something about this.

Mr. William Prasifka

I do not understand the point the Deputy is making. If he is suggesting there is an undersupply of taxis, I do not know how restricting——

Deputy Shane McEntee

There is an oversupply of taxis.

Vice Chairman

The point the Deputy is making, a point also made to us by stakeholders in the industry, is that there are so many taxis on the road at particular times it is often not worth a person's while trying to get a fare. This is a problem not alone in Dublin but also in Galway where numerous taxis are parking improperly on footpaths and so on. As the Deputy stated, on other occasions one cannot get a taxi. This is obvious not alone to those involved in the taxi industry but also to the public.

Deputy Shane McEntee

The situation is similar to that which obtained in the food industry when the big supermarkets opened up and all the small shops around the country closed. As a result, the big supermarkets can now charge what they like for their products. We received an indication of this in the Dáil today in respect of the cost of goods here in comparison with Great Britain. There is often a difference of up to 20%. I know this issue does not come within the remit of the Competition Authority.

Deputy Thomas P. Broughan

The consumer rip-off in respect of the sterling exchange rate, as discussed in the Dáil, is a matter for the Competition Authority.

Vice Chairman

That is another issue.

Mr. William Prasifka

It is one for the Competition Authority. We recently published a report on the grocery industry. I would be delighted to meet the committee another day to discuss the matter.

There is a variation in demand in the taxi market. If there is a mismatch between supply and demand as indicated, I do not see the solution as being the imposition of quantitative limits, as this would further exacerbate the mismatch. There will be times when there is overcrowding and when insufficient taxis are available. However, the market should have in place a system to send signals in terms of what is appropriate. There is a need for flexibility. If there are times when people cannot get a taxi, I do not understand how limiting the number of taxis, putting a premium on the plate — simply a right to exclude others — will solve the problem.

Deputy Shane McEntee

I do not say it solves the problem but there must be a happy medium somewhere. What we are doing is not working. That is my point and it is our job to make sure the system works.

Vice Chairman

The committee will hear the last contributions from the four remaining committee members.

Deputy Michael McGrath

I welcome the delegation from the Competition Authority. I am interested to learn more about the experience in other countries. Mr. Prasifka referred to a number of these in his submission where he says that Sweden, the Netherlands and New Zealand have removed limits on taxi numbers and that France and Italy are currently considering removing their limits. Could Mr. Prasifka give the committee a feel for the international trends? How do other countries manage the market so that there is not an explosion in the number of taxis on the streets? How are standards maintained along with provision for an appropriate, or optimum, number of taxis operating in the market?

Following on that point, does the EU have any position on the issue of competition law with regard to taxis? If other countries in the European Union have a limit or cap on the number of taxis, is that permitted under EU law? Would it be within our competence if the legislation were to be changed here to introduce such a cap?

I agree that the primary issue is standards and quality, and the maintenance of these. The regulator is the primary force whereby we can ensure that standards are maintained. What would happen if the regulator sought to increase the fee for a taxi plate, not as a disincentive but to encourage those who are serious about the business to get involved? I do not refer to those who buy a plate and provide a service two days a week. If the price was increased significantly would that become a competition issue, given that so many people have come into the market on the basis of the €5,000 plate fee? If the regulator doubled that fee would a competition issue arise?

Senator Martin Brady

I welcome the delegation. The Competition Authority deals with the competitive element of this business. There must be a situation whereby competition is operated on a fair basis. People cannot be deprived of making a fair living. Deputy McEntee referred to this matter in respect of his own area around Navan.

Nonetheless, Mr. Prasifka made certain observations in the statement. Regarding "opt-outs" it referred to a national airline, a telecoms company and a single broadcaster. That may have been the case with those but such businesses are not found in their hundreds.

In the case of broadcasting, there are very strict regulations and procedures concerning how a broadcasting company can acquire a licence. I offer that as an example because a broadcasting Bill is going through the Houses at the moment. I believe it is within the remit of the Competition Authority that a customer must get value for money. That is not happening in the taxi business, not because people are overcharged but because those who are driving the taxis and obtaining licences to do so, do not have sufficient knowledge of the city. At a meeting I attended yesterday I heard a report of a person who got into a taxi at the Gresham Hotel to go to Ballsbridge and was asked by the driver how to get there. The regulator is responsible for this situation. It is all very well to say that the regulator will examine the dress code, will insist on nice clean cars and this, that and the other. That is of little use if experienced people are not available, those who can bring passengers from A to B. The manner in which licences are obtained must be examined.

Mr. Prasifka also said that if there were more taxis this would benefit the consumer. That is not necessarily the case. I use taxis quite a lot. I live on the north side of Dublin and I never had to wait half an hour for a taxi. I could call one to the house and it would arrive in ten or 15 minutes. I certainly never waited an hour — except perhaps some years ago — so I refute that point except for isolated cases.

There are not sufficient numbers of ranks where taxis can park. Shopkeepers and businesspeople complain that taxi drivers park illegally although this is through no fault of their own. We have not provided the means for the people who own taxis. We have not given them any assistance in helping them to operate in the professional way required.

I have been told that the regulator is preparing an economic report. This should establish whether there is sufficient business for additional taxis and whether a fair living can be made from having such. I do not know how long that will take, perhaps 18 months. What will happen in the meantime? Mr. Prasifka said that the last time a cap was put on taxi numbers it was very hard to remove it. That is not the case. A temporary cap could be put in place until the economic report becomes available. We would then have an opportunity to study the situation and see whether it is fair to operators and customers alike.

I will not go through all of Mr. Prasifka's observations. He said in one of his replies that the Competition Authority had examined historical sources but that it does not monitor developments. We could all say that and it would not cut any ice because it does not get to the core of the problem. There is a role here for the Competition Authority. People who operate a business are monitored to ensure that they give a proper service and value for money to the customer. That is not happening with taxis and that is my main point.

Mr. Prasifka mentioned pharmacies and the situation whereby at one time they had to be a certain distance apart while now they can be a few yards from each other. In reality that does not happen. Comparing a taxi business with airlines and pharmacies and radio stations is not comparing like with like. It is an unfair analogy because it is a completely different ball game. Nobody will build three or four pharmacies within a few yards of each other because it would not be economically viable. I wish to hear Mr. Prasifka's views on that.

Deputy Michael Kennedy

Go raibh maith agat. I welcome the delegation.

I think all members share Deputy McEntee's view on professional standards. We can consider the 1995 banger versus the 2008 Mercedes. Is it free competition when the part-timer who has a full-time job, or another job, can buy a banger, pay €5000 for the licence and go out and do the weekend work when there is plenty of it? Compare that to the professional operator who works seven days a week, with proper standards, a good quality car, has knowledge of the routes and so on. Can we not fit that situation into the realm of competition?

I share Senator Brady's view on the matter of times of operations. In the Dublin area, generally speaking, it is possible to get a taxi in a reasonable time. Whether it is the 1990 banger or a more modern car is another issue but by and large a person will get a taxi. Concerning hours of operation outside the immediate city area, however, is it free competition when a part-time operator works only during weekends or known busy periods? Then that operator ignores the business on Monday, Tuesday or Wednesday in Meath, Louth or Wicklow, or wherever it may be, including the outer regions of Dublin county. Is that free competition? Is there something the Competition Authority can do to address that issue and perhaps force proper regulation?

Mr. William Prasifka

A number of international markets have been deregulated. This may be an area on which it may be more helpful to give the committee a more comprehensive reply in writing. Sweden is one market that has been identified as having been successfully deregulated. It has been strongly deregulated since 1990. There were teething problems at the start, just as there have been here, but it seems to have been successful in entering a more stable period in which demand and supply have been matched reasonably well. Taxi density is significantly higher than in most other European countries and deregulation appears to have resulted not only in greater availability in the long term but also in taxi service operators who perform better economically. Policymakers, consumer organisations and trade organisations all seem to agree that the current system is preferable to the previous one. We know that work at the international level, at OECD level, has indicated strongly that deregulation is beneficial. We also know that other countries, particularly France, are looking at deregulating their taxi industries.

The Deputy asked whether the European Union had jurisdiction here. I do not know off the top of my head whether any actions have been taken but do not believe they have. One issue that arises with the European Union is that it will only look at competition issues that have a cross-border or transnational dimension. The taxi market is one that is more in the national non-traded sector. Having said that, the European Union has often ruled that it has some jurisdiction in other markets that operate wholly within a sector, but that is really a matter for it to decide.

Another question was asked about the competitive effects of increasing the price of the plate and whether that offered a way forward, especially in maintaining standards. Clearly, the way to go in maintaining and improving standards and professionalism is for the regulator to put in place standards in terms of quality control and mandatory training, very much along the lines of what she plans to do. Such qualifications and standards are perfectly appropriate and will ensure a better service is provided for consumers. The entry standards should be based on and directly related to providing an increased quality of service for consumers. Simply increasing the price of the plate arbitrarily would be a poor proxy for attempting to increase quality standards. It may mean that someone who was simply willing to pay the increased price would be in the market rather than someone who was ready, willing and able to meet the quality standards required. That is very much the way we would prefer to see things going.

Senator Brady's questions were on fair competition and whether we thought customers were getting value for money. He cited the example of people getting into taxis and drivers not knowing where they were going. I take that point as a given. If one gets into a taxi and someone does not know where they are going, it is a very poor service. Therefore, quality control is very much required. We think it is appropriate to do what the regulator plans to do in rolling out the new regulatory regime. Knowledge of the area in which drivers operate and route selection will be items on which drivers will be tested as a precondition in either receiving or renewing a licence. That is very much the way to go.

Senator Brady referred to the problem of an insufficient number of places in taxi ranks. I take that point very much as a given. The ranks were put in place at a time when the numbers and entry were limited. We know, for example, that in Dublin in the past six or seven years we have four and a half times the number of taxis than we used to have. The fact that there are not enough spaces in ranks is perfectly understandable. The solution is to provide more spaces, to add capacity. A similar problem occurred on the deregulation of the airlines. Fares came down and people travelled more and airports became more congested. As one liberalises, one must increase capacity in infrastructure. It is essential that this be done. I understand taxi ranks are the responsibility of local authorities.

Senator Brady suggested that what was needed was a temporary cap to limit entry pending the outcome of the review. The Competition Authority is strongly of the view that any temporary cap would be inappropriate in this market. Such a cap would artificially restrict supply and in this market where flexibility of supply is absolutely essential we think it would work to the detriment of consumers. The way to go in developing the market as it should be developed is to increase quality standards. That will address many of the problems experienced. Additional infrastructure is needed. We do not see any evidence that the introduction of a cap, even as a temporary measure, would benefit consumers. That is the yardstick against which we would measure such a proposal.

Deputy Kennedy asked a couple of questions about part-time and full-time taxi drivers and those who entered with a banger as opposed to a Mercedes. As I understand it, the regulator is coming out with new quality standards, including vehicle standards. That is the way to address that problem. People should ensure that when they enter a taxi, not only is the taxi driver qualified but that the car is safe. Quality safety regulations are the way to go. We could say a number of things on the issue of part-time and full-time drivers. Again, this is a market in which there are tremendous variations in terms of demand. Therefore, one needs maximum flexibility. Anything that limits this will not benefit consumers. If one wanted to limit part-time driver entry, it is unclear to me how any regulation would be workable. It has always been the case that a taxi driver is free to work whatever hours he or she wants. That is a sine qua non of the industry. If one were to introduce regulations in terms of when they can work, I have no idea how it could be implemented or policed. How would we know when someone was working?

Deputy Michael Kennedy

Even when it is a full-time taxi driver versus someone who has another job and is working a few hours over the weekend.

Deputy Thomas P. Broughan

On the same point, a few minutes ago in the Dáil we were discussing the new transport authority and the fact that there would be different contracts for both public and private operators in the delivery of a service. Could it be the case that people with a licence would also have a contract to carry out certain taxi duties? I accept, however, that it would be difficult to police such a system. What is the difference between this and the new authority awarding contracts to a major transport operator or to a man with a couple of buses to deliver a service on a particular route?

Mr. William Prasifka

We see nothing wrong with someone having a contract to provide a particular service. That can fill a niche in the market. What we need to do is find a way to meet demand in the market. I cannot think of any way to do this other than to have the greatest degree of flexibility. We know that there are certain times of the day when demand is being met. How will demand be met? There is a role for people who perform part-time work. If there is a concern that the part-timers are not qualified, that their vehicles are not suitable, that is an issue that can be dealt with by regulation, not by putting artificial constraints on entry and not by limiting the numbers who can enter.

Vice Chairman

As Mr. Prasifka is aware, there is much disquiet among the taxi business. Witnesses came before this committee and recounted sad experiences of having worked for hours on end each week with little financial return. When Mr. Prasifka speaks about the more stringent measures that are likely to be taken, is there a danger any such measures would clash with the principle of competition, so far as the Competition Authority is concerned?

Mr. William Prasifka

No. If one goes back to the position of the Competition Authority in 2002, we said there should be quality standards. Is it possible that quality standards could be over the top, could be a pretext to simply limit entry? For example, just to be absurd, one could say that all taxi drivers should speak four languages. Of course, they could. The quality regulations must be directed to provide an equality service. They should be proportionate and non-discriminatory. We met with the taxi regulator. Everything which she described to us falls well within the ambit of being non-discriminatory, proportionate and focused on delivering a better service. For those kinds of quality standards, the Competition Authority not only has no problem but we see it as very much appropriate for this market.

Vice Chairman

I thank the delegation for coming before the committee. I found the discussion very interesting. I am sure many will read with great interest the report of today's meeting.

Mr. William Prasifka

I thank the Vice Chairman and members of the committee for their courtesy and interest.