Markets Wired

The Federal Trade Commission staff submitted written comments to the Colorado Public Utilities Commission expressing concern that proposed regulatory changes may hurt competition in the marketplace for passenger vehicle transportation services.  In particular, the staff stated that the changes could inhibit the use of mobile smartphone software applications that allow consumers to arrange and pay for transportation services in new ways.

The FTC staff comments were submitted in response to a request by the CPUC for public comments on proposed changes to the Code of Colorado Regulations.  One proposed rule change would create a barrier to the entry and operation of independent smartphone applications that match customers with transportation services.  According to the staff comments, this change would create an obstacle for applications that are not also motor carriers, and may inhibit, impair, or preclude new and innovative ways in which independent applications might partner with providers of taxicab and other transportation services.

Another proposed change would require charter contract services, such as stretch limousines and executive cars and vans, to use a specific fixed price.  As stated in the FTC comments, this change would prevent companies from adopting new forms of variable pricing that might be more responsive to consumer demands for transportation service.

A third proposed change would prohibit stretch limousines and executive cars and vans from stationing themselves within 200 feet of a hotel, motel, restaurant, bar, taxicab stand, or airport passenger pickup point unless a passenger pick-up has been prearranged and a completed charter order is in the vehicle.  The comments state that this proposed change likely would prevent many consumers from using a smartphone application to get transportation service quickly, especially in downtown and “urban village” areas.

In contrast to these types of prohibitions, the staff comments recommend that a motor vehicle regulatory framework should be flexible and adaptable in response to new and innovative methods of competition, such as smartphone applications for arranging transportation, while still maintaining appropriate consumer protections.  The comments further recommend that CPUC be guided by the principle that any restriction on competition designed to address potential harm should be narrowly crafted to minimize its anticompetitive impact.

The Commission vote approving the comment was 4-0-1, with Commissioner Leibowitz not participating.  (FTC File No. V130004; the staff contact is Christopher Grengs, Office of Policy Planning, 202-326-2612).