Part D – Understanding and improving industry performance (PDF ...

11.6. Complaints handling by NSPs
Under the accreditation scheme for primary NSPs they are
required to “operate a complaints management system
that is consistent with Australian Standard AS 10002,
including procedures for complaint resolution and referrals
to other parties”. 48 Despite this requirement, the inquiry has
heard that taxi users generally get very little satisfaction
from complaining about booking services to an NSP.
One customer relates that, after having booked a taxi
well in advance for an elderly friend and having the taxi
fail to turn up:
I rang [the NSP] to be informed that they had no
such record of my booking … I subsequently rang
the company’s head office and was told that in fact,
there was a tape recording of my original booking
request made the day beforehand with all details
exactly as I had related them. I once again emailed
the company. I received what I consider to be
barely an apology, let alone reassurances regarding
future improvements. 49
Another taxi user related their view to Ipsos during
their research:
It’s a well known fact that the taxi industry never does
anything about complaints. 50
This approach by NSPs in handling complaints is perhaps
further evidence of the weak competition that troubles
the market for network services and is a result of them
successfully evading any responsibility to taxi customers
for the delivery of services referring that responsibility to
taxi drivers and to a lesser extent taxi operators.
Inquiry findings
è Taxi users are highly dissatisfied with the
reliability of taxi booking services, particularly
during peak periods.
è Customers reasonably expect that the
company they contact for the booking of a
taxi is accountable to them for the delivery
of the taxi service, and despite NSPs being
well placed to guarantee the service of their
affiliates they have decided not to do so.
11.7. Concerns about NSPs
In addition to complaints about taxi booking services, a
number of other concerns relating to NSPs have been
raised with the inquiry.
11.7.1. Competition between NSPs and the
role of the ACCC
As noted earlier in this chapter, many taxi operators have
expressed the view to the inquiry that concentration in
the number of NSPs in Melbourne is problematic. These
operators argue that this concentration has contributed
to a lack of competitive pressure on NSPs to keep their
costs down or to improve their service offerings.
The market in which NSPs compete has become much
more concentrated over the last 25 years. At the time of
the Foletta inquiry in 1986, there were eight depots; by
the time of the KPMG NCP review in 1999, there were
seven. Currently, the market is highly concentrated,
with only two large firms and one smaller competitor.
By one conventional measure of market concentration,
the Hirshman-Herfindahl Index (HHI), concentration has
increased to a level where it would be considered highly
concentrated by competition authorities around the
world. 51 The inquiry’s calculations suggest that, if market
share is measured by the number of operators connected
to the NSP, the HHI for the metropolitan market has
increased from 3,240 to 4,750 over the last 12 years
(where 10,000 is consistent with a monopoly and 5,000
with a duopoly).
Some of this increase in concentration can be attributed
to smaller companies growing ‘organically’ at the
expense of their competitors. However, mergers and
acquisitions have also contributed substantially to the
increased concentration. Mergers and acquisitions
of NSPs have been overseen by the Australian
Competition and Consumer Commission (ACCC), the
statutory body charged with enforcing the Australian
Competition and Consumer Act 2010. Section 50
of the Act provides that mergers or acquisitions
are prohibited if they would have the effect or likely
effect of substantially lessening competition.
48 Transport (Compliance and Miscellaneous) Act 1983, section 133C,
Business and Service Standards, part 3 (22)
49 Irene Goldwasser, Op. Cit., p.3
50 Ipsos Social Research Institute (2012), Op. Cit., p.86
51 The HHI is calculated by adding the sum of the squares of the postmerger
market share of the merged firm and each rival firm in the
relevant market, thereby giving greater weight to the market shares of
the larger firms. (ACCC, Merger Guidelines 2008, p.37)
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