Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC staff cautions Chicago against over-regulation of Transportation Network Providers, (Apr 21, 2014)

The FTC staff has submitted written comments to the Chicago City Council regarding Transportation Network Providers (TNPs) and their software applications, used by consumers to arrange for passenger motor vehicle transportation services using personal vehicles. In the view of the FTC, TNPs may expand transportation options, better satisfy consumer demand, increase competition, and promote a more economically efficient use of personal vehicles. The agency staff cautioned that a proposed city ordinance regulating TNPs could have anti-competitive effects to the detriment of consumers.

Alderman Brendan Reilly, a member of the city council, had sought the FTC’s opinion on a proposed city ordinance that would regulate and license TNPs. In the opinion of the FTC staff, if regulation of TNP services were warranted at all, the ordinance should “focus primarily on ensuring the safety of customers and drivers, deterring deceptive practices relating to fares, safety and liability, …and addressing…data security and the prevention of identity theft.” The FTC staff specifically warned against using the ordinance to “favor one group of competitors over another or impose unnecessary burdens on applications or drivers that impede their ability to compete without any justification that benefits the public interest.”

The proposed ordinance would require each TNP to have significantly more liability insurance coverage than required for taxicab licensees and comparable public passenger vehicles, and would prohibit use of TNP vehicles at O’Hare Airport, Midway Airport and McCormick Place. The FTC staff urged the city council to consider the anticompetitive consequences of these restrictions with consequent harm to consumers.

The FTC staff comment also questioned the ordinance’s proposed $25,000 annual fee for a non-transferrable TNP license. The cost of such fees, greater than what was necessary to cover administrative costs, might unnecessarily inhibit TNP entry and expansion in the marketplace.

News: ConsumerProtection FederalTradeCommissionNews