Connecticut Threatens Mexicana Taxi, the State's Black Market Solution to the Cab Cartel

Earlier this month, the Connecticut Post covered a crackdown on Mexicana Taxi, a cab service in Bridgeport that does an apparently brisk business without permission from the state.

"We see them as predators who are endangering the public and taking business away from companies that are following the rules," said Dennis King, manager of regulatory compliance for the state Department of Transportation [DOT]…. Police here have arrested drivers for Mexicana Taxi, a new company that finds clients by leaving business cards in bodegas and churches, and caters mostly to a Hispanic clientele.

To follow the rules, Mexicana would need to apply for a "certificate of public convenience and necessity" from the DOT, which kicks off a regulatory process that can take four (4) years and generally results in no certificate. This is because the law allows incumbent cab companies to formally oppose applications from potential competitors and because DOT staff believe competition is inherently bad.

From a 2010 ruling:

Flooding the market with too many vehicles leads to taxicab drivers not making enough money and can result in fights between the drivers, customer stealing, bad maintenance on the vehicles and a host of other ills that occurs when the market place is flooded with a service and people can't make a decent wage.

It's not only startups that have a difficult time getting permission to do business. Last year, the department rejected an application from Metro Taxi, an established company that wanted to expand its fleet to include more handicapped-accessible cabs—despite testimony from residents saying there is a need for more such cabs.

Other recent rulings shed light on whether Mexicana might realistically expect to get a fair hearing.

In 2009, USA Taxi applied for authorization to operate 20 cabs in Norwalk. All three of Norwalk's existing companies opposed the application, which the DOT denied this October, three years and nine months after it was filed:

The applicant argued that the taxicabs should be granted based on the increase in population in Norwalk. That is not how our taxicab regulatory system works…. Merely showing an increase in population is not enough to show that additional taxicabs are needed as there is no direct correlation established between increased population and increased need for taxicabs in Norwalk.

Independent Taxicab applied in September 2008 for authorization to operate 18 cabs in Stamford—in addition to the eight it already runs. The DOT denied the application, also opposed by a competitor, in September 2012:

The applicant's real problem is not the lack of vehicles, but rather the administration of how the vehicles it already has are being used…. Clearly, [additional] calls can be absorbed by the applicant if it was operating an efficient service.

For more Reason coverage of state-enforced taxi cartels, click here, here, and here.