Fate of Iranian Ride-Hailing Firms Hang in Balance

EghtesadOnline: Tehran Municipality took Iran E-Commerce Union to court on Monday over “illegally” issuing permits to local ride-hailing companies Snapp and Tap30.

News ID: ۷۴۸۲۷۵

27 August 2019

Mohammad Rahmani, the union’s lawyer, told Webna, “The judge postponed the hearing by demanding representatives of the transportation startups to also attend the court.”

Reza Olfatnasab, the union's spokesman, wrote on Twitter that Tehran Municipality’s ICT Organization Chief Mohammad Farjood is making efforts to make the two sides reach an out-of-court settlement, "however, this has not materialized so far".

Mohammad Jafar Nanakar, Iran IT Organization’s deputy for legal affairs, tells Financial Tribune, “Since both Snapp and Tap30 will be affected by the court’s ruling and they are well aware of the process that led to the issuance of permits by the union, the firms should be present in court.”

“The court may also call upon Iran ICT Guild Organization to participate in the proceedings as an independent observer,” Financial Tribune reported.

Nanakar noted that ITO is not legally permitted to intervene in the proceedings, but would be prepared to collaborate with the court if called upon.

According to the ITO deputy, both parties can ask the judge to call on ITO and ICT Guild Organization to contribute to the proceedings.

Long-Drawn Fracas

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 ride-hailing companies.

The current law mandates that taxi companies 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.

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. The two firms reportedly undertake 300,000 trips per day in the capital.

Nanakar had earlier noted that as per the current laws and regulations, the TM-affiliated taxi union is authorized to issue permits to taxi companies.

According to the official, legal experts should decide whether online taxi firms could 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 ITO deputy argued that these companies are online platforms that allow people to hail rides and play the role of broker between passengers and drivers.

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.

“The dispute can and should be settled through thoughtful legal deliberation,” he said.