Portland Protects Taxicabs from Luxury Competition

In 2009, officials of Portland, Oregon, instituted protectionist regulations on the city’s limousine and sedan service companies to protect larger taxicab companies from luxury competition. The regulation requires limousine and sedan services to 1) charge a minimum price of $50 from downtown Portland to the airport, 2) charge 35% more than taxicabs in general, and 3) force their clients to wait one hour before pickups.

What’s worse is that city officials admit these regulations have nothing to do with helping consumers. With the following statements, Frank Dufray, administrator for Portland’s Private-for-Hire Transportation Program, argued the law is meant to protect taxicab companies from competition:

“The main thing is that you don’t want the Town cars to take all of the best fares, which are to the airport, and not leave any for the taxi industry. That’s why there’s a minimum fare and a one-hour wait requirement.”

Sound ridiculous? Well, last fall Portland officials gave another low-blow to luxury car companies. Towncar.com and Fiesta Limousine both offered Groupon.com discounts to their customers, offering a $32 one-way trip to the airport. The intent was to provide customers with an upscale experience at an affordable price.

Although this discount was a reasonable business practice, it violated the $50 minimum price that Portland mandated. As the Institute of Justice notes, Towncar.com and Fiesta Limousine proceeded to sell hundreds of Groupons.  However, Portland threatened the luxury car companies with fines of $500 for their first sold Groupons, $1,000 for all further sales, and suspension of their business licenses. Rather than face $895,000 in combined fines and the permit suspensions, both companies refunded all sales to their almost-customers.

Last week, the Institute for Justice filed a lawsuit against Portland on behalf of both companies. Institute for Justice Attorney Wesley Hottot represents the plaintiffs and argues the following:

“These laws amount to nothing more than naked economic protectionism; they are designed to protect the profits of Portland’s taxicab companies, and now they are being enforced at everyone else’s expense. Portland’s minimum-fare law and minimum wait time have nothing to do with protecting the riding public. They have everything to do with protecting the city’s taxicab companies from competition and driving up prices for consumers.”

With the following criticism, Mike Porter, owner of Towncar.com, argues consumers should choose with whom they do business:

“We had 630 Portlanders who bought our Groupon deal. They wanted to experience our service at an affordable price, and that should be their choice. The city responded by threatening to put me out of business for charging my customers too little. How is that good for consumers?”

Follow the case here and watch the short informational video below.

About Tony Escobar

Tony Escobar is publisher of LibertyBlog.org and owner of the digital media company AMTG Solutions. He's also a decorated combat infantry veteran of the U.S. Army. If you liked this post, you can follow him on Twitter at @EscoTony.