MEMPHIS—City officials, citing public safety concerns, have imposed cease-and-desist orders against private ride-share companies Uber and Lyft. Now, in the wake of those decisions, officials are facing questions of possible cronyism.
Memphis officials have a strong incentive to help cab companies beat back any competition, said Justin Owen, president of the Nashville-based Beacon Center of Tennessee.
Taxis pay permitting fees to city officials. Lyft and Uber do not. Taxi companies often cooperate with city officials on regulations because those regulations can discourage competition. Uber and Lyft do not. And taxi officials know they are competing with a product that could very well appeal to many of their not-always-satisfied customers.
“There have long been cozy relationships between taxi companies and cities all across the country,” Owen said.
Taxi companies, he added, have the power to pressure city officials to defend their market and crack down on competition. And that, he believes, may have been what happened in Memphis.
“You have a situation where a lone bureaucrat decided to do this arbitrarily without getting approval by elected officials,” Owen said. “These officials aren’t looking out for the best interests of the consumer. They are looking out for the best interests of the taxi industry.”
The lone bureaucrat whom Owen refers to is Memphis Permits Administrator Aubrey Howard.
In response to Owen’s criticism, Howard said ride-sharing companies must comply with city ordinances and let city officials know who they are, lest a resident inadvertently do business with “a known rapist or someone who robbed 12 people in the last four years,” Howard said. He acknowledged he knows of no such case.
Unless the ordinance changes, Howard said, nothing will prevent him and members of his office from laying down the law, and that includes ordering police to issue citations.
“People who get citations will go before the Memphis Transportation Commission and it just depends on the charges for doing business without a permit,” Howard said. A first citation costs $1,000 and a second $2,000, he said.
“If it happens a third time, it’s $3,000, but very likely if they continue to operate without a permit we will likely go into the environmental court and treat them as a public nuisance, which literally means we can put locks on their doors,” Howard said.
“Uber and Lyft don’t have offices here, but if they did then we would lock their doors.”