The competition watchdog is being accused of protecting ride sharing service Uber after it flagged it may stop the taxi industry introducing a rival booking app.
Taxi representatives are furious that the Australian Competition and Consumer Commission plans to block the release of ihail, an app that acts as a one-stop booking service for major taxi networks nationally.
In a draft decision, the watchdog said it has fears about ihail's impact on competition and Cabcharge's role in handling payments.
Australian Taxi Industry Association chief executive Blair Davies said the decision would hurt local taxi companies and commuters.
"The ACCC has sided on the side of Uber against Australian companies and that's not it's role," he told AAP on Monday.
"We've got a niche product that we believe a significant number of customers want and have been crying out for and they've forgotten completely about those consumers."
ihail counts Cabcharge, Yellow Cabs, Silver Top Taxi Service, Black and White Cabs, Suburban Taxis and the NSW Taxi Council as stakeholders.
If launched, the app would allow customers to make bookings across the networks, which represent more than half of all taxis in Australia and an even greater proportion in capital cities.
ACCC chairman Rod Sims said while ihail would be convenient, it would involve a larger fleet of taxis, in a broader range of locations, than any existing taxi booking app.
Prices and quality of service would probably be affected as a result, he said.
"If you go to each city there are two main taxi networks which probably have over 80 per cent of the taxis. That's who's getting together and that's one of our problems," Mr Sims said.
The taxi industry had been banking on ihail to compete with ride-sharing service Uber and intended to run the niche platform alongside individually branded apps.
But a key sticking point for the ACCC was ihail's requirement that all payments be handled by Cabcharge.
Cabcharge, which owns 10 per cent of ihail, said that the mandatory in-app payment was nothing new and its provision of the service was no different to the function being provided by a bank.
Chief executive Andrew Skelton said the ACCC's draft decision wouldn't affect the company's rollout of its own app.
The Australian Taxi Industry Association's Mr Davies also accused the ACCC of double standards in terms of dealing with the taxi industry and the unregulated Uber.
"It does nothing to create a fair and level playing field for taxi services in the respect that Uber operates," he said.
But Mr Sims said that issue was not in the ACCC's remit.
"We understand the debate going on about Uber and appropriate regulations of taxis, but that's very much for state regulators to deal with. It would be inappropriate for the ACCC to get involved," he said.
The ACCC will seek further submissions about ihail before making a final decision at the end of 2015.
AAP fm/bt
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