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FTC regretful over Tada executives’ indictments

Nov 04,2019
The chief anti-trust regulator expressed regret at a lack of coordinated government response to the controversy surrounding ride-hailing service Tada as its legality now lies in the hands of the court, following indictments of the start-up’s executives last week.

Prosecutors indicted two Tada executives last Monday for operating a transportation business without a license, which has sparked worry among senior government officials of a potential court decision that may weigh on the development of new mobility services.

Fair Trade Commission (FTC) Chairwoman Joh Sung-wook admitted the lack of participation by the regulator on the running dispute over Tada, while hailing the service in an interview with Yonhap News.

“By providing a new service in an innovative way, Tada has been a positive factor in bringing competition to the market,” said Joh.

“The negative effects from Tada should be tackled by government ministries,” argued the chairwoman, hinting at the indictment. “It was a problem that we did not point out [Tada’s contribution] to the market and competition.”

While the ride-hailing company has proven popular since it was introduced last year as an alternative mobility service offering rides in rented vans, it has met fierce opposition from taxi drivers who argue that it’s illegal.

Local transportation law bans unlicensed companies from offering paid ride services.

While the company claims it is simply linking customers with van drivers, prosecutors argue that Tada is similar to taxis and that the start-up should obtain a government license.

Park Jae-wook, CEO of VCNC, which operates Tada, as well as VCNC parent company SoCar CEO Lee Jae-woong, were both indicted without detention.

Lee has criticized the indictment, arguing that the police and the government have not disputed the service’s legality.

“Domestic law states [Tada] can work; the police concluded it doesn’t breach the law; for over a year, the Transport Ministry never stopped us for reasons of illegality,” Lee said in a Facebook post last Tuesday after the indictment.

Joh said in the interview that the FTC will have a more active role in new mobility services.

“I think it’s a positive thing for new mobility or products to be introduced to the market,” said the chairwoman. “[If a new service comes out] we will let our thoughts be known.”

The Ministry of Land, Infrastructure and Transport, which has recently directed a reform plan to resolve the conflict between new mobility services and taxis, has expressed surprise at the indictment, saying they were blindsided by the prosecutors’ decision.

“We have proposed a law through discussions with the taxi industry and start-ups for nearly a year,” said Transport Minister Kim Hyun-mee at the National Assembly last Wednesday. “A legal approach seems to be too rushed.”

Other senior officials have expressed disappointment at the indictment.

“It was on the same day that the president announced a new plan [to develop the artificial intelligence industry], and I was perplexed,” said Joh’s predecessor Kim Sang-jo, current Blue House policy chief, during a radio interview last week.

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]