South Korea's antitrust regulator on Thursday voiced its opposition to a revised bill that would significantly restrict the business of ride-hailing operator Tada.
The Fair Trade Commission said it will convey its stance to a parliamentary subcommittee later in the day as lawmakers begin deliberations on the revised bill.
Tada, the Korean word for "ride," was launched in October 2018 and has rapidly grown to become Korea's leading ride-offering service. It offers ride-hailing services with rented vans.
The revised bill prevents companies from offering paid ride-sharing services with rented vans that have a seating capacity of 11 to 15 passengers.
The FTC said it is "desirable" for companies to offer ride-hailing services without restrictions on vehicle ownership and that rented cars need to be allowed for paid ride services.
The FTC also recommended that lawmakers need to "cautiously review" the revised bill, citing risks of hurting competition and undermining consumer protection.
Critics say the revised bill could have a negative impact on the government's plan to promote new business sectors.
South Korea's transportation law has already prohibited companies from providing paid ride services with rented vehicles.
If the revised bill becomes a law, it will effectively force Tada to scale down its operations.
Taxi drivers have claimed that Tada threatens their livelihoods and violates the transportation law that forbids rented vehicles from offering rides in exchange for money.
Tada has argued its business is within legal boundaries based on a written exception that specifically allows rented vans -- or vans with 11 to 15 seats -- to be offered with drivers.
The local taxi industry argues this is an arbitrary application of the rule, irrelevant to its original purpose of promoting tourism.
At issue will be whether Tada should be considered as a type of rental car service or an illegal taxi service operating without a license.
In an interview with Yonhap News Agency last month, Joh Sung-wook, chairperson of the FTC, said she is in favor of new services and other disruptive innovation.
Joh said Tada has had a positive effect in terms of boosting competition in a country where there had been no alternative to the taxi industry.
"The FTC should have talked about the market-friendly aspects and effects in terms of competition when Tada was launched," Joh said. (Yonhap)