Saturday, September 25, 2010

Cabcharge Story

Cabcharge Story

Further to NSW bus boost Cabcharge's CDC earnings, User benefits in Cabcharge settlement and Cabcharge pays $15m in trade abuse case prominent taxi industry activist Faruque Ahmed found out that Cabcharge was established through lies, racism and concealing the truth. Faruque Ahmed also worked out that the profit of Cabcharge is directly dependent on indentured labor of taxi workers and at the expense of taxi drivers’ civil rights, industrial rights and human rights. Ironically the ACCC and Department of Transports facilitated the advancement of Cabcharge including granting of ACCC authorisation A301 12.

Faruque Ahmed has been submitting to the courts and authorities:

"Taxi co-operatives (not taxi companies or networks) obtained "the authorisation in contention" by not telling the truth, twisting the truth and using racism as well as some other false claims they made to misguide the then Trade Practices Commission. Ultimately, the original applicants, specifically the Red and Yellow Deluxe have used many false claims "for their own narrow benefit" and got away with them. Fortunately most of their typical false claims and lies were detected and eventually correctly rejected by the TPC in matter A30152."

“Finally, in Matter No - 3 of 2005 of the Australian Competition Tribunal, Justice Goldberg and three other eminent Judges revoked the contentious authorization which gave the Cabcharge the "exclusive power" and "monopoly" in the first place. It is interesting to note that during the proceeding neither the taxi network nor the Cabcharge made representation as to the (their) case.”

“Right now action should be taken to declare, “the Cabcharge is the proceeds of crime and all proceeds should be seized by the government and eventually to be utilized for the public and workers’ safety, welfare and benefit”.

Faruque Ahmed also requested for the Removal of Cabcharge Decals from Taxis with no luck! Would you believe many so called taxi industry activists refused to join with Faruque Ahmed.

For more information please visit Sydney Taxi Corruption should you wish.

Cabcharge pays $15m in trade abuse case

COURTS Philip Wen

September 25, 2010

THE 10 per cent surcharge on taxi fares for non-cash payments could be under threat after Cabcharge admitted breaching the Trade Practices Act by abusing its market dominance.

Cabcharge admitted it had taken advantage of its position in the market to refuse requests from competitors to process Cabcharge cards on their electronic payments systems.

The company also admitted to predatory pricing by installing its fare meters free or below cost, squeezing rivals out further.

It will pay penalties and costs of $15 million after agreeing to a settlement with the Australian Competition and Consumer Commission yesterday in the Federal Court, avoiding a lengthy court battle that was due to begin next month.

The ACCC chairman, Graeme Samuel, said the settlement was a ''clear message to Cabcharge it had gone too far'' and would lead to greater scope for competition in the industry - and lower prices for taxi customers.

''Generally where you can get some competition in the marketplace you tend to find service levels increase and prices reduce for consumers,'' Mr Samuel said.

''You could see potentially service providers saying to cab drivers and cab owners 'We can offer you a better deal than Cabcharge can offer', and Cabcharge will have to meet that competition.''

Cabcharge levies a 10 per cent surcharge on every fare processed on its systems paid by credit card, bank debit card or through its proprietary charge card and vouchers.

Its long-standing and popular charge account has helped it become the dominant player in the industry. It has its machines installed in 96 per cent of taxis across the country, though its rivals have increasingly encouraged operators and drivers to install their machines additionally, offering them a cut of the 10 per cent surcharge.

The court ordered Cabcharge to comply with a compliance program involving beefing up its internal controls and training to ensure it did not contravene the act again. It will also be subject to external audits.

Mr Samuel said the penalty would deter Cabcharge from repeating its behaviour.

''They now know what constitutes a breach of the act and misuse of market power.''

In a joint submission with the ACCC tendered to the court, Cabcharge said it had been unaware it was breaching the act but now accepted its actions were ''serious in nature and extent''. The submission said the contravening conduct was undertaken at ''the most senior level of the corporation'', including its prominent executive chairman, Reg Kermode.

Mr Samuel said the settlement had reaped the highest penalty imposed by the commission for the misuse of market power. But market analysts yesterday said the outcome was very positive for Cabcharge.

One analyst described the decision as no more than ''a very light slap on the wrist''.

''They have effectively gotten off very lightly,''

Investors agreed, sending Cabcharge's share price surging by as much as 17 per cent, before closing 57¢, or 10.6 per cent, higher at $5.95. The ACCC did not quantify any loss or damage to consumers or competitors, saying it was ''not likely to be readily ascertainable''. Cabcharge denied its behaviour had contributed to any such loss or damage.

Source: The Age

User benefits in Cabcharge settlement

Elisabeth Sexton

September 25, 2010

CABCHARGE'S rivals will judge yesterday's court settlement with the competition regulator by how much it changes the dominant player's behaviour in the marketplace.

''My understanding is there will be a broader competitive framework put in place,'' said Tom Varga, the chief executive of Live Payments, which installs rival eftpos machines in taxis and offers an alternative corporate charge card.

''We are going to see in this new era an increased competition that down the track has to start reducing the cost to service this industry,'' Mr Varga said.

Taxi users, who pay a 10 per cent service fee on all non-cash transactions for fares could see lower prices within 12 to 24 months, he said.

Live Payments installs electronic terminals which process credit, debit and charge cards, and wants to strike a deal allowing Cabcharge charge accounts to be processed on its machines and vice versa.

''The compliance program will now require them to look at us on a commercial basis, based on the merits of the commercial system we have in place,'' Mr Varga said.

In settling the case with the Australian Competition and Consumer Commission, Cabcharge admitted it had misused its market power in 2005 when it refused to allow a Perth rival, Mpos Australia Pty Ltd, to process Cabcharge charge accounts on Mpos eftpos machines on commercial terms.

Three years later it refused again when the Perth company renewed its offer and asked for a ''reciprocal arrangement'' for an Mpos-branded charge card.

Cabcharge undertook to the Federal Court that it would implement a compliance program ''revising the internal operations of Cabcharge's business which led to Cabcharge engaging in the conduct declared by the court in this proceeding to be in contravention of section 46 of the [Trade Practices] Act''.

The second breach of the act admitted by Cabcharge was undercutting producers of taxi meters by charging well below cost to install its own meters, which are integrated with Cabcharge eftpos terminals.

It admitted its purpose was to prevent its rivals Schmidt Electronic Laboratories, Martin Meters and Novax from engaging in competitive conduct.

Cabcharge bought more than 6000 meters between 2004 and 2007 for $250 each and charged its customers only $110 for 5600 of them. Others were supplied at no cost.

The regulator's statement of claim, filed last year, said that during an examination under oath in October 2007, the executive chairman of Cabcharge, Reg Kermode, said Cabcharge's loss on the sale of each meter was funded from the profits made from the 10 per cent service fee it charges for electronic processing.

In November 2007, Cabcharge starting charging $250 for each meter.

Bob Tesoriero, who owns a Sydney taxi meter company, Novax, said his sales plummeted when Cabcharge entered the meter market in 2004.

''It was virtually indescribable,'' Mr Tesoriero said yesterday. ''We had built up sales of 600 to 800 units per annum, and that dropped to about 100.''

Novax, which earned revenue from installing fare upgrades every year and from replacing meters every 10 years, needed to sell 400 meters a year to break even, he said.

It buys New Zealand machines for $217 each (compared with the $250 European model bought by Cabcharge), which it sells to dealers who charge end customers about $480 for a fully installed meter.

''Because they move slowly, we have to have a reasonable mark-up,'' Mr Tesoriero said.

''They [Cabcharge] were selling at factory cost and we couldn't compete.''

According to court documents, Cabcharge eftpos terminals were installed in 17,834 of Australia's 18,368 taxis in 2008. The proportion of taxis using a Cabcharge machine rose from 83 per cent in 2004 to 95 per cent in 2008.

That same year, its revenue from taxi payments was $113 million, and its processing costs related to that revenue were $2 million.

Taxis using rival terminals such as Live or Mpos typically install two machines, using the Cabcharge one for charge cards and the rival one for credit and debit cards.

Cabcharge Australia was fined $15 million yesterday following charges that it prevented other suppliers from processing Cabcharge dockets.

However, the Australian Competition & Consumer Commission dropped eight of a total of 11 charges against the group in the Federal Court in Melbourne, leaving Cabcharge to admit to three breaches of the Trade Practices Act. It denied the other eight.

Cabcharge's main business is servicing taxis with machines that process non-cash fares, via Cabcharge cards or credit cards.

The ACCC originally filed the trade practices charges last year, claiming Cabcharge had used its market dominance in that area to reduce competition. It claimed also that Cabcharge had supplied taxi meters to owners for less than their real cost in order to eliminate or damage competing suppliers of meters and electronic processing equipment.

Related Coverage

Cabcharge management declined to comment on the fine yesterday, apart from calling it "one blemish" on its record.

"Cabcharge is pleased to have avoided a lengthy trial and likely appeals, which will enable Cabcharge to focus its personnel and resources on its core business," the company said.

NSW bus boost Cabcharge's CDC earnings

August 16, 2010

A NSW government bus program has boosted the quarterly earnings of Cabcharge Australia Ltd's ComfortDelGro Cabcharge Pty Ltd joint venture by 24 per cent.

Cabcharge has a 49 per cent stake in the CDC joint venture, and today said its June quarter earnings before interest and tax rose by $2.6 million or 24 per cent over the previous corresponding period.

Turnover for CDC increased by $14.4 million or 23 per cent to $76.9 million, with the NSW operations contributing $13 million to the increase and the Victorian operations $1.6 million.

Cabcharge's executive chairman Reg Kermode said an additional 128 buses allocated to CDC under the NSW government growth bus program enabled CDC to put on extra routes, boosting earnings.

CDC operates Westbus and is 51 per cent owned by ComfortDelGro Corporation Ltd (Singapore).

Cabcharge's UK taxi unit, CityFleet Group, saw earnings fall by $200,000, or 10 per cent, to $1.7 million, while its turnover declined by $6 million to $29.6 million.

Corporate bookings in London dropped during the quarter, Mr Kermode said, but the UK operation still was profitable.

Earnings also were pared back also when translated into Australian dollars, he said.

Cabcharge shares closed on Friday at $4.39.


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