SINGAPORE/JAKARTA (Reuters) - Indonesia’s Supreme Court has ruled that tariff ranges imposed by the government last month on online ride-hailing services are illegal, saying they impede competition.
The Southeast Asian nation’s transport ministry introduced minimum and maximum tariffs for ride-hailing firms such as Uber Technologies, Indonesia’s GO-JEK and Southeast Asia’s Grab from July 1.
It had cited a need to ensure comparable pricing with conventional transport providers and address complaints of undercutting.
Drivers of Indonesia’s PT Blue Bird Tbk and PT Express Transindo Utama Tbk taxis had called for a ban on ride-hailing services, claiming they were subject to less stringent requirements than conventional taxis.
But the Supreme Court, responding to a petition filed by a group of individuals, ordered the scrapping of the tariff ranges in a ruling that was published on its website.
“The upper and lower tariff limits do not provide healthy business competition,” the ruling stated, adding it hiked fares for consumers.
The ruling annuls more than a dozen clauses in the recently released public transportation ministry regulation, including regional quotas for ride-hailing vehicles, requirements for all vehicles to be registered to companies, and restrictions on where “special hire” vehicles can operate.
Indonesia’s Transportation Minister Budi Karya Sumadi said his office was studying the ruling and would abide by the decisions and seek to avoid “unrest” in the sector.
The managing director for Grab in Indonesia and a spokeswoman for Uber in Jakarta also said they were studying the ruling and declined to comment further.
Blue Bird Investor Relations head Michael Tene told Reuters the court ruling would not impact its operations because “the implementation of these regulations has been minimal and online taxis continued to operate outside the rules even before this Supreme Court ruling was issued.”
Indonesia is a key battleground in the region for ride-hailing companies which have been driving rates lower to attract more customers in the country with the world’s fourth-largest population and a youthful, Internet-savvy demographic.
Reporting by Fergus Jensen and Cindy Silviana; Additional reporting by Bernadette Christina Munthe; Editing by Muralikumar Anantharaman