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LETTER | Interesting class-action lawsuit by cabbies

LETTER | It has now surfaced that the Malaysian Association of Taxi, Rental Car, Limousine and Airport Taxi have mounted an RM100 million class-action lawsuit against Grabcar for allegedly running an illegal e-hailing service in the country from 2014 to 2017 that contravened the Transport Act 2012, the Competition Act 2010, and the Federal Constitution.

The Kuala Lumpur High Court has directed Grabcar to file its statement of defence by Jan 14 and cabbies to file any reply to the statement of defence by Jan 28. The next case management is scheduled for Feb 11.

The case is likely to be followed closely by the various hotel associations, as they too have suffered from lower occupancy over the past decade because the relevant authorities did not act against unlicensed operators using private residences to rent out rooms, apartments or bungalows for short term guests using online platforms such as Airbnb.

Over the past decade, I have probably written more published letters on local taxis and e-hailing services than others combined. 

My interest stemmed from the fact that I had driven limousine, premier and budget taxis, and had trained taxi divers under various programmes such as Teksi Wanita for a taxi company, Teksi 1Malaysia for Land Public Transport Commission (Spad), and Pangkor taxi drivers under Northern Corridor Implementation Agency (NCIA).

Grabcar started operations as MyTeksi, a taxi app, which was launched on June 5, 2012 and received 11,000 requests on that day. For the next two years, taxi drivers using the app enjoyed more trips and their passengers no longer have to wait indefinitely for taxis, unlike radio cabs which are difficult to get during peak hours on rainy days unless passengers offer a bribe.

But on Aug 7, 2014, UberX entered the Malaysian market with RM1.50 as starting fare, RM12 per hour and 55 sen per km, compared to RM3, RM17.14 and 87 sen respectively for budget taxis. 

Naturally, e-hailing passengers abandon MyTeksi and metered taxis in droves and switched over to Uber using private cars. Globally, Uber decimated the taxi market by charging ridiculously low rates by subsidising fares heavily. On average globally, only 42 percent of the fares were charged to passengers.

Locally, there was no way for MyTeksi using taxis to compete with Uber. MyTeksi had no choice but to take the bull by the horns by adding private cars to compete with Uber, and morphed into Grab. 

It managed to compete successfully against Uber in seven Asean countries, with Uber finally exiting Southeast Asia in March 2018 after being taken over by Grab.

On July 28, 2017, amendments to the Land Public Transport (LPT) Act 2010 and the Commercial Vehicles Licensing Board (CVLB) Act 1987 were passed in the Dewan Rakyat. 

Hence, the cabbies are claiming that Grab was operating illegally from May 16, 2014 to July 27, 2017, but the starting date cannot be earlier than UberX entering the local market.

The aggrieved cabbies said Grabcar had breached provisions of the Transport Act by presenting a misleading statement that it was qualified to operate an online public transport service without approval from the Road Transport Department. But this matter was under the jurisdiction of Spad at that material time.

Interestingly, the cabbies have also claimed that Grabcar had misused its position in the service industry under Section 10 of the Competition Act 2010 that the defendant had carried out unfair trade. 

However, in the court of public opinion, passengers would think that many metered taxi drivers were guilty of abusing their service by fixing fares or choosing routes.

They also wanted every profit the e-hailing service received for that period to be returned to the cabbies as "remedy of restitution to the plaintiffs". But what if Grabcar had been making losses? 

This is not surprising as Uber had been incurring huge losses in recent years to the tune of US$2.2b in 2017, US$2.8b in 2018, US$8.5b in 2019 and US$2.96b in the first quarter of 2020.

In any case, it is the most interesting lawsuits by cabbies. Should they win, how will they be distributing the RM100 million to 10,000 taxi drivers? 

Will each get RM10,000 equally? Or passengers who have been victims of unscrupulous taxi drivers gang up and file a class-action lawsuit against cabbies for RM100 million before the money is spent? 

The law allows anyone to sue but plaintiffs must be prepared to bear all costs. All is fair in love and war.

 

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