Thursday, December 08, 2011

How Big Car Services Use Legislation to Drive Over Competition

by J. L. Green, December 8, 2011, The Huffington Post

NASHVILLE, Tenn.-- In June 2010 the Nashville Metropolitan City Council passed legislation raising the city's minimum fee for limo and sedan rentals, bumping it from $25 to $45. Drivers were prohibited by law from charging less. Other new regulations forbid limo companies from using leased vehicles, require cars to be dispatched only from the place of business, compel companies to wait 15 minutes before picking up a client, and ban parking in front of hotels and bars to wait for customers. More laws that take effect in January 2012 would also require companies to replace all sedans and SUVs over seven-years-old, and all limos 10-years-old and older. Vehicles older than five years cannot enter into service.

Passed under the guise of consumer protection, the net effect is to give large, existing car companies (also known as livery services) a huge advantage over smaller companies, and to effectively prevent any new companies from entering the market. Prior to the new laws, Tennesseans could purchase transportation from downtown Nashville to the airport in a limo or sedan for the same price as an average taxi ride. Nashville residents and visitors will now pay almost double for the same service. (link)

My Comments

This is an excellent article explaining how Nashville came to adopt price fixing for limousine services. Please read the whole article.

According to this story, the bill that fixed prices was actually written by Matthew Yorke, president of the Tennessee Livery Association and owner of Signature Transportation. In addition to Matthew Yorke, another player in the push to fix prices was Opryland Hotel which operates their own limousine service and the Nashville Chamber of Commerce.

In this article, Green says of the move to fix prices that, "It's a case of regulations actually costing jobs and driving up costs, just as Republicans charge they always do. But this time, the regulations are being pushed by the GOP's so-called "job creators," the new name given to big business."  I think Green is right. Many in big business do not really believe in free enterprise. They are not above using government to get or maintain an economic advantage. Much of the regulation of business is simply an effort to suppress competition and has little to do with health and safety. I also would not be surprised if the folks at Signature Limousine and Opryland and the Chamber are not indeed Republicans. 

Too often, Republicans and Democrats are indistinguishable when it come to who is willing to use government power to get an economic advantage. Party labels are often nothing but names used to identify members of your team. Many seem to view politics as a chance to help your friends and Republicans help other Republicans and Democrats help other Democrats. Republicans are often just as guilty as Democrats of using regulation or eminent domain or awarding of contracts to benefit their business or institution or friends. 

When I first posted on this topic some moths ago, an anonymous person left a comment that said, "HAHA! A disgruntled Republican! Step into Mr. Bokhari's office and you will see a life size photo of President Obama."

Mr. Bokhari, who I have never met, is an owner of an economy limousine service and leader in the effort to overturn Nashville's limousine price fixing. I have no idea if it is true or not that he has a life size photo of President Obama in his office but it is irrelevant. I take position on issues because of my values not because the affected party is a Democrat or a Republican.

While the article tells how the price fixing bill was pushed through Council, the article credits Councilman Eric Crafton and Councilman Sean McGuire for last year trying unsuccessfully to repeal the price fixing bill. The story does not report that the issue is now back on the Metro Council agenda. Sponsored by Council member Blalock, Council bill BL2011-49 would repeal the limo price fixing bill and establish new limousine regulations devoid of the price fixing feature.

Last Tuesday the Council voted to defer BL2011-49. I don't know what is going on behind the scene with this bill. I don't know if the "fat cats" at Opryland and the Chamber who can make nice campaign contributions are twisting arms or not but it is not a good sign when a bill is deferred. If will be a shame if Council fails to undo their imposition of limousine price fixing. I was very disappointing that in June 2010 when Council imposed limousine price fixing that not a single member of the Council who identify themselves as conservative or Republican opposed it. I still wonder how it can happen that not a single member of the council looked at the bill and said, price fixing is contrary to my principles.

Perhaps many on the Council did not really know that the regulations they were adopting was price fixing. If an individual Council member was not on one of the committees that considered the bill, they may very well not have known the impact of the bill. Perhaps also they did not know their was any opposition to the bill. This time however, there are no excuses.

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  1. Be careful ... you should probably check all of your facts before opining so blindly. There was never a minimum fee of $25 and it was therefore never 'bumped'. Companies do not have to wait 15 minutes under the current law. Companies may use leased vehicles currently. The Tennessee Livery Association is made up of 'smaller companies' predominantly. Mr. Bokhari himself stated he has one of the largest fleets in Nashville ... so who indeed is large and who in turn is small? You CAN park in from of hotels and bars to wait for customers (so long as it's prearranged and you're not hailing ... like a taxi cab ... which is regulated much more heavily). There are no limits as to how many livery companies can operate, unlike taxi cabs, and therefore there are not any measures that effectively 'prevent any new companies from entering the market' ... again ... unlike taxi cabs. As far as 'price fixing' ... there are countless other markets that have the very same regulations of minimum rate in effect.

    Lastly ... the bill was written by the Metropolitan Transportation Licensing Commission ... period. Suggestions were taken from ANY AND ALL operating limousine companies at the time ... but the final bill was submitted to council by the MTLC ... and in turn adopted UNANIMOUSLY (with one abstention) by the council.

    When you point a finger ... remember that three are pointing right back at you.

  2. Be careful…..let’s do check the facts. You are correct; there was never a price fix of $25. It was always $45 or larger. Matter fact, let’s see exactly what Mr. McQuistion himself stated: please see, page 2, mid-way down. And you’ll find there that the Director actually gave the livery association credit for the price of $50. Why would the Director need a recommendation, rather than researching what would be appropriate? Later in that very same meeting, you can read there was opposition to the high price fix. And you’ll see that Chair Rogers wanted to talk about it later. Let’s see what Chair Helen Rogers had to say later: see page 3 under proposed min rates. Well!, Now it is suddenly “inappropriate” to discuss something that has NOT been passed as an Ordinance yet. But wait! There’s more….she wants to readdress it AFTER the passage of the Ordinance. Can the Commission change what is in the Ordinance once it is past? So, why on this earth would she refuse to hear discussion when there was clear opposition? Something stinks here!
    The Tennessee Livery Association is made up of mainly Limousine companies. A limousine is NOT a sedan. Metro Livery and the other independent small businesses Mr. Bokhari speaks of are NOT limousine operators. They are sedan companies who compete in a different market. They are NOT limo and they are NOT taxi.
    Yes, depending on who YOU are, you can indeed part in front of hotels, etal. But, if YOU are not the right kind of YOU, sadly you must have a dispatch release that shows you are allowed to wait for a specific customer. (sad even the customer names are not private). And if YOU are that kind of extra-special “right”, YOU can actually allow unlicensed drivers to drive around without permits right in front of inspectors. I have never seen a regulatory authority as confused about their jobs as this one.
    If indeed the bill was written by the TLC, why then was Matthew York so very proud to take credit for it? Remember, it took him hundreds of hours. Are you saying all those hours were spent with the TLC forming it? And perhaps you are not aware when you state that suggestions were taken from “any and ALL limousine operators” you should have also invited, instead of EXCLUDED the livery (sedan) service in town.
    In a nutshell, the Transportation Licensing Commission by regulating price, has stepped into Constitutional issues. I don’t think the Commission Board really understood what was going on behind the scenes when they approved the price fix. I am certain the Director did. The Commission Board probably was not aware, at the time, that their Director was having private dinners with the fine Limousine owners. Is the ethical for a public servant to do? I guess it is for a public servant that says he can do anything he wants.

  3. This bill still establishes some sort of price fixing and dictates to business owners how to run their business. It is awful and should be voted down.