South Korea’s antitrust regulator has objected proposed revisions to the country’s passenger transportation law that could suspend operations of the country’s rental van-hailing service Tada, citing unfair market competition, and called for a revisit of the proposal.

The Fair Trade Commission (FTC) on Thursday submitted an opinion statement for examination of the proposed revision in the country’s passenger transportation act to the sub-committee for land, infrastructure, and transport at the National Assembly with recommendation for reconsideration.

In the statement, the antitrust watchdog raised concerns that a revision banning anybody that rents out commercial-use vehicles from hiring drivers is discrimination against a certain type of transportation business, which can result in hindering fair market competition and limiting consumer benefit. It eventually found a flaw in the bill that rules the business method of Tada that provides rent cars and drivers illegal in principle.

The FTC also raised the issue with the revised passenger transportation act that defines passenger transportation platform business as one that provides paid service for passenger transport or additional transport services using a transportation platform and vehicles.

It pointed out that it is not clear whether the platform operators must own service vehicles or lease or rent the cars in the revision. Instead, it suggested that the bill should not be too restrictive on the vehicle ownership, saying that it’d better allow a passenger transportation platform operator to run business with a wide array of vehicle options including lease and rent cars.

The FTC objected a revision in the bill that requires the Ministry of Land, Infrastructure and Transport to approve operation of a platform transportation business only for a limited period. That raises business uncertainty and restricts market competition, the antitrust watchdog added.

The country’s lawmakers have proposed revisions in the vehicle law that could outlaw vans from carrying passengers beyond tour purpose, a setback to Tada that has been offering a new type of ride-hailing service in 11-seat vans.

The current law allows rental vans with 11 to 15 seats to be legally leased with a driver, but the proposed revision in the law will limit such a passenger transportation service to tour services with each van entitled to operate for six or longer hours only. If the proposed revision is passed at the parliament, Tada would be literally put out of business. Lawmakers are expected to put the revised bill to a vote next week.

Since its launch in October 2018, Tada’s ride-hailing service in a 11-seat van has surged in popularity in the country where Uber-like services are banned. In just a year of its launch, Tada has become the country’s ride-offering service, securing 1.3 million subscribers and 9,000 registered drivers.

Despite its legitimate service under the current vehicle law, it has met strong opposition from the country’s die-hard taxi industry. Uber and Kakao Mobility all had to fold their business in Korea before they could take off.

In a media interview last month, Joh Sung-wook, chairwoman of FTC, already expressed belated regret over state inaction in refereeing between new and traditional mobility services, saying that Tada is definitely a “plus” to the local industry because it spurs market competition with new service and innovation.

By Lee Ji-yong and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]