[OPINION] Regulating motorcycle taxis and ensuring competition (Part 1)

In our view, there is enough ambiguity in the law that allows for a provisional framework in regulating motorcycle taxis. A similar approach was used in dealing with Uber and Grab when they began operating in the Philippines. Even without a law, the LTFRB established a system to regulate Transportation Network Companies (TNCs) and Transportation Network Vehicle Services (TNVS) that continues to be the regulatory framework for that type of service today. The emergence of motorcycle taxis in the past few years has created a lot of debate. Replete with controversies, the motorcycle taxi business has battled car owners and drivers, law enforcers, and regulators.  Some argue that it is  prohibited  by law as Republic Act No. 4136  or the Land and Traffic Code specifically excludes two-wheeled motor vehicles as allowable public transportation; others believe it has become the most viable option for segments of the riding public seeking out a good, reliable, and (relatively) inexpensive transport system. 

It is of course urgent for Congress to enact a law on motorcycle taxis. We have had enough experience to come up with good regulations. Although there are currently 9 pending bills in Congress as of this writing, in the meantime, the government must regulate pending legislation. 

Regulation absent legislation

As a middle ground for pending legalization of motorcycle taxis, a pilot run was allowed (but limited geographically to Metro Manila and Metro Cebu and extended through March 23, 2020) by the Inter-agency Technical Working Group (TWG) created to monitor the current stream of motorcycle taxi operations. The TWG’s tasks are to set regulatory guidelines to ensure safety and security, ensure compliance of data sharing, general monitoring and evaluation, price regulation, setting of vehicle specifications and operational requirements, and to provide a final report to the DOTr and the House of Representatives, to aid the latter in its future and potential legislative actions. The same TWG, moreover, has now allowed two new players, JoyRide and Move It, to join the current industry player, Angkas. 

The regulatory guidelines released last December 19, 2019, is the working document which the pilot run for motorcycle taxis is based on.  This document, however, does not contain the ride-capping mechanism imposed by the LTFRB. Section 11 of the document included operational requirements imposed upon the ride-hailing platforms.  It included that (1) all bookings shall only be made within and via the app platform; (2) accident insurance should be secured on par with or above Passenger Personal Accident Insurance Program (PPAIP) rates; (3) a comprehensive safety campaign should be conducted for the public so that all passengers become knowledgeable; (4) existing motorcycle units with OR/CR as of December1,  2019 shall be allowed to be included in the pilot implementation; and (5) "one motorcycle-one rider" must strictly be observed in the implementation. Participating Riders shall be registered to one ride hailing platform only.  The last statement is deemed problematic.  

Competition vis-à-vis regulation 

The new and current players are capped at 39,000 registered bikers – or a limit of about 10,000 bikers per transport network company (TNC) in Metro Manila and 3,000 in Metro Cebu.  Angkas strongly opposed this cap as their registration is at the 27,000-mark as of late December 2019.  Thus, to impose the price cap means 17,000 of its riders can lose their means of livelihood.  As a remedy, it has asked the Mandaluyong City Regional Trial Court to issue a temporary restraining order against the policy. This was granted as the court had said that the policy “puts a cap on the number of bikers that Angkas is entitled to” and enjoined the respondents “from performing any act that limits and impairs their rights to deal with and continue with their contracts with Angkas.” This TRO was only valid for 72 hours.

In a similar fashion, the Philippine Competition Commission (PCC) has, through one of its commissioners, stated that “forcing Angkas to displace 17,000 riders will take away what was rightfully obtained by the company” and appealed to the LTFRB to consider other solutions such as to allow riders to use more than one ride-hailing app.   

It is in this very precept that the entry cap imposed shows that the LTFRB regulation is anti-competitive. The regulator’s perspective in this regard,looks to defend its policy of preventing Angkas from becoming monopolistic in nature. However, anti-competitive conduct does not rely solely on how big or how dominant a particular business/company has become; but rather also looks at the interplay of other factors surrounding the circumstances of the industry.  Competition authorities all over the world have allowed individual riders/drivers multiple registration in the different ride-hailing platforms (driver/operator non-exclusivity clause) as a solution for competition rather than to restrict. A fundamental concept of competition, after all, is not to restrict entry but to open the market as freely as possible to allow small and big players alike to participate in the market.  

It can be conceded that anti-competitive conduct may be affected when unfair individual fare pricing affects the industry as a whole. As an illustration, surge pricing has been disallowed and specifically included in the regulatory guidelines of the LTFRB. This also makes fare prices fixed a justified regulatory intervention.  Likewise, it is also not a displaced fear that Angkas might take control because of its first-mover advantage and more commercially popular reputation in the motorcycle taxi market, which can greatly affect consumer welfare in the long term.  Look at how Grab has emerged in the TNC market.   

Moreover, the ongoing debate on the seemingly overlapping competition and regulatory issue does not end today.  In fact, in many parts of the world, the ride-hailing platforms and similar digital platforms which disrupt different sectors (not limited to transportation alone), are being declared illegal due to industry concerns of “virtual monopoly,” tax arbitrage, surge pricing violations, and labor issues. Some of these issues are not even anti-competitive conduct per se but can be considered more as regulatory setbacks. 

We stop at this rider cap issue for now but there lies the bigger problem we might face in the next few years. The online platform industry – which is easy to enter, is relatively inexpensive, and is clearly innovative – is simply for now, difficult to regulate.  Joseph Schumpeter is right to think of "creative destruction."  That is precisely what ride hailing platforms has become in the transport industry.  Now transportation has to battle the bigger issue of safety and mobility. Do ride-hailing platforms for motorcycles, specifically provide safe mobility for people?  – Rappler.com

Tony La Viña teaches law and is former dean of the Ateneo School of Government.

Yla Paras is a policy expert on regulation and road safety. She is currently Deputy Director of the Energy Program of Manila Observatory.