Tehran Municipality Files Lawsuit to Terminate Permits of Online Taxis

EghtesadOnline: Tehran Municipality has filed a lawsuit against Iran E-Commerce Union, arguing that the latter has illegally issued permits to online taxi firms like Snapp and Tap30, and demanding the revocation of their permits.

News ID: ۷۴۸۱۹۷

18 August 2019

For long, Tehran’s municipal authorities have clashed with online taxi firms and the Iran E-Commerce Union over who should oversee the activities of such companies.

The current law mandates that taxi firms should be regulated by the city’s taxi organization that operates under the municipality’s watch. However, many legal experts argue that these companies are taxi firms in name only.

In separate talks with Financial Tribune, Reza Olfatnasab, the union’s spokesperson, and Mohammad Jafar Nanakar, Iran IT Organization’s deputy for legal affairs, discussed the issue, Financial Tribune reported.

Tehran Municipality officials were not immediately available for comment, but they have defended the lawsuit on Twitter.

The complaint has been filed by TM’s Transportation and Traffic Organization last week and the union is to head to court on Aug. 26.

Operating in dozens of cities, Iran’s leading ride-hailing company Snapp reports that it has a 1.7-million-strong fleet, while 800,000 drivers are working for Snapp’s archrival Tap30. Reportedly, the two firms undertake 300,000 trips per day in the capital.

Hypocritical Policy

Olfatnasab told Financial Tribune that Tehran’s mayor and city council claim that they support startups, but this lawsuit exposed this proclaimed policy for the empty promise that it is.

“To my knowledge, they have not filed a complaint against the firms to avoid confrontation with them. These companies are vastly popular with their customers and such a confrontation would have badly tarnished the municipality’s public image,” he added.

The unionist censured the municipality for falling out of line with President Hassan Romani’s publicly praised policy of supporting startups.

“Tehran Mayor [Pirouz] Hanachi is well aware of the president’s support for startups, especially online taxi firms. ICT Minister Mohammad Javad Azari Jahromi and Vice President for Science and Technology Sorena Sattari are also strong supporters of startups,” he said.

Rouhani has commended online taxi firms for providing millions of Iranians with affordable transportation services and creating jobs for thousands of people.

According to Olfatnasab, the lawsuit and the municipality’s stubborn stance against the E-Commerce Union and by extension online taxi firms will certainly mar the Tehran mayor’s record and damage ties between startups and municipal authorities.

“Such hostilities will not derail startups’ growth. The union is capable of shielding startups against headwinds. We will certainly march forward,” he said.

Thoughtful Legal Deliberation

Nanakar told Financial Tribune that as per the current laws and regulations, the taxi union is authorized to issue permits to taxi firms.

According to the official, legal experts should establish whether online taxi firms should be treated as taxi companies or e-commerce platforms.

“If these startups are categorized as platforms easing business to customer relations, the municipality would have zero jurisdictions over their activities. However, if the startups are categorized as transportation firms, as per the current laws and regulations, they should accept the local taxi organization’s oversight,” he said.

The taxi organization is managed and regulated by the municipalities.

The ITO deputy argued that these companies are taxi firms only in name.

“They are online platforms that allow people to hail rides. These companies play the role of the broker between passengers and drivers,” he said.

Nanakar believes that the municipality is acting in line with its mandated responsibilities while the union and its members are also defending their legal rights.

He noted that the dispute can and should be settled through thoughtful legal deliberation.

Municipality’s Stance

After the news about the lawsuit broke on Twitter on Thursday, Tehran Municipality’s Public Relations Director Gholamhossein Mohammadi wrote on the microblogging service, “The municipality has nothing against startups, but we are opposed to unregulated business activity in the capital.”

According to the TM official, cabbies and bus drivers registered with the municipality go through regular tests and their activities are monitored by the municipality.

“Online taxi firms must not be exempted from oversight,” he said.

Mohammadi further said that in case of a data breach, “Who should take action against these firms? Who will be responsible?”

“Protecting users’ privacy and preserving drivers’ rights are high on the municipality’s agenda,” he added.

This is while many argue that the municipality simply wants a share of online taxi companies’ revenues.

Earlier, Mohsen Pourseyyed-Aqaei, managing director of TM’s Transportation and Traffic Organization, told reporters that Tehran Municipality has proposed that online taxi firms should pay 2% of each ride’s fare as tax to the municipality.

He argues that online taxi firms are “using the city [infrastructure] therefore they should pay a tax to the municipality”.

This was the first time TM officials demanded a share of transportation startups’ income. So far, urban authorities have argued that they merely want “to monitor and regulate the activities of these firms”.

Hopefully, the verdict will ensure that the long-drawn fight between the urban authorities and online taxi companies ends in favor of citizens.