CMA Approve Uber Autocab Acquisition
November last year saw the announcement that industry behemoth Uber would be acquiring UK-based dispatch software provider, Autocab. It is fair to say there has been mixed feelings following this announcement which ultimately led to an investigation by the Competition and Markets Authority (CMA).
The CMA is a non-ministerial government body that is responsible for making sure that there are healthy levels of competition within the UK economy. They determine whether mergers and acquisitions could create unfair competition, or monopolies that would negatively impact consumers and businesses.
Responses to this acquisition from the taxi trade have generally been critical. Lots of concern has been raised about Uber’s history of data breaches and fears that having access to so much data could allow them to monopolise the industry. A live poll carried out during this month's Taxi Summit event, saw around 90% of attendees state that this was a worrying development for the industry.
The CMA’s initial investigation began in January 2021 and provided industry reps invitation to comment their thoughts on the investigation. After 2 months, the investigation was concluded. The 29th of March saw the CMA announce that they had cleared the decision and Uber’s acquisition of Autocab could continue.
When asked to comment, Joel Bamford, Senior Director of Mergers at the CMA said:
“Millions of people across the UK rely on taxis every day and technology has transformed the way this industry works. It is therefore important that mergers like these are properly scrutinised to ensure that customers aren’t negatively affected.
“After a thorough investigation, the CMA has found no competition concerns as a result of this deal. This is because the companies are not close competitors, the two businesses will continue to face competition from rivals and Autocab’s customer taxi companies can switch to credible alternative providers if they wish.”
The basis for the CMA’s decisions seems to stem from their assertion that Uber and Autocab do not compete directly. As Autocab are a supplier of booking dispatch technology and Uber are a ride-hailing app, the CMA determined that they have a different target demographic. At most they believe that this would leave to indirect competition that would not negatively impact others in the marketplace.
The CMA do acknowledge that Uber could, in theory, be able to manipulate the quality of Autocab’s software offering to the detriment of Uber competitors. Whilst this is the case, they also state that “any degradation in the quality of Autocab’s services would need to be significant in order to cause passengers and/or drivers to switch ... to competitors (such as Uber)”.
An Autocab spokesperson commenting on the CMA’s decision said:
“We welcome today’s decision from the CMA. By working with Uber, we can scale up our ambitions, and provide hundreds of thousands of additional trips for our customers and help cement the place of licenced operators in their local community.”
Industry representatives have expressed disappointment at the ruling but conceded in light of the CMA’s decision. Dotted CEO, Azmat Sherwani, one of the proponents of the campaign calling for the merger to be investigated commented saying “Although this news is disappointing, I am very satisfied knowing that we gave it a go.”
It remains to be seen whether the industry’s fears about Autocab’s acquisition will come true.
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