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Is ride sharing unfair competition for taxi services?

California has long been known as a place conducive to innovation, particularly in the tech industry. Certainly, it's important that startup companies and other business efforts continue to thrive and make pioneering developments, but it's also critical that they play by the rules.

In order to ensure that the market stays fair for consumers and business owners, California enforces unfair competition laws. Businesses can file claims when they feel that other entities are using unfair tactics to gain an edge in the marketplace. Over the last several months, smartphone-based ride-sharing services have become the subject of scrutiny from both the state government and traditional taxi services.

Tech startups, such as Lyft and Sidecar, allows private drivers to share their vehicles with people looking for rides using a cellphone app. Recently, the California Public Utilities Commission decided to allow these companies to continue operating, but under the condition that drivers and vehicles meet certain industry standards. This ruling was seen as a huge victory for the app-based services, but taxi companies feel as though it only fosters unfair competition.

Although no taxi companies have filed business torts against ride-sharing companies up to this point, reports from the San Francisco Examiner suggest that it's a real possibility. Those in the taxi industry say that the vehicles used for ride sharing aren't required to meet the same fleet standards for emissions and fare limits, which puts taxi drivers at a competitive disadvantage.

These developments in the transportation industry are certainly complex, but could have a serious impact on many companies. As such, businesses should take steps to be mindful of unfair competition claims that could impact their standing in the marketplace.

Source: SF Examiner, "Taxi association threatens suit over app-based ride services," Jessica Kwong, Oct. 3, 2013

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