Taxicab Monopoly Alleged in Dallas-Fort Worth

     DALLAS (CN) – An Association of Taxicab Operators accuses two Fort Worth men who control 75 percent of legal cabs in the area of fixing stand fees that cabbies must pay to drive a taxi legally.
     The Association of Taxicab Operators USA and the operators of Starcab, United Cab, Alamo Cab and Ambassador Cab Co., among others, sued Jack Bewley, Jeff Finkle, Executive Cab Co., Taxi Dallas and Golden Cab in Federal Court.
     The plaintiffs say cab drivers must contract with franchise or annual permit holders approved by local governments to drive a taxi legally.
     They say Bewley and Finkle have “dominant” control of 75 percent of legal cabs in the area and used the power to engage in predatory pricing of stand fees, monopolizing the market.
     “It is no coincidence that all the defendant and co-conspirator holders are priced in lockstep,” the 18-page complaint states. “While they maintain the appearance of being competitors in the taxicab market, all these defendants and co-conspirators are controlled, and most are indirectly owned, by Jack Bewley and Jeff Finkel. Irving Holdings and Yellow are owned by Bewley and Finkel, and they are the only directors of either company.”
     The plaintiffs add: “Irving Holdings is the 100 percent owner and parent corporation of defendants’ co-conspirators JetTaxi, Freedom, Eagle, State, Diamond, and U.S. Cab. Bewley is president of all such entities, and further is the top executive manager of operations by which dispatch facilities and other services are provided to defendants Executive, Taxi Dallas, Golden, and co-conspirator Checker. Through this control structure, defendants engage in the anti-competitive conduct that forms of the basis of this suit.”
     The plaintiffs say the defendants have been fixing stand fees since 2007.
     “The $300 per month DFW Only Stand Fee charged by defendants is below the average increased costs incurred by defendants for insurance alone on each additional taxicab authorized and serviced,” the complaint states. “Other marginal costs, such as decals, airport usage fees, marginal dispatch costs and the like, make the disparity between pricing and costs even more imbalanced.”
     The plaintiffs say that no new competitors can enter the market due to a Dallas moratorium on the addition of new holders in 2003. They say Dallas-Fort Worth International Airport enacted a similar ban in 2009.
     “As long as the moratoriums remain in effect, any consolidation among the limited number of holders causes a permanent reduction in competition that as a practical matter, cannot be offset by new market entries,” the complaint states.
     The plaintiffs say the effect of this in the stand fee market is that any time a taxi with DFW Airport-only authority becomes available through the defendants, one of the plaintiffs loses a taxicab operator.
     “The erosion caused by this phenomenon is accelerated by the fact that smaller holders such as plaintiffs are unable to maintain authorities for dormant taxicabs,” the complaint states. “Thus, defendants’ and their co-conspirators’ predatory pricing scheme not only diminishes plaintiffs’ competitive position through loss of drivers, but also damages their long term competitive position by causing them to lose taxicab authorities. The moratorium further compounds this anticompetitive effect by ensuring that there will be no new entries into the market.”
     The scheme has caused the plaintiffs to lose 8 percent market share to the defendants since 2007, they say.
     The plaintiffs seek injunctive relief for antitrust predatory pricing, price fixing and violations of the Clayton Act. They are represented by Kelly Hollingsworth of Dallas.

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