Is the Metropolitan Taxicab Commission Acting Illegally?

At a hearing on SB 351, which would create state regulations on ridesharing companies, the bill’s sponsor warned that existing taxicab regulatory bodies in the state, especially the St. Louis Metropolitan Taxicab Commission (MTC), may be violating federal law. The source of this trouble is a recent U.S. Supreme Court ruling.

In the case, North Carolina Board of Dental Examiners v. Federal Trade Commission, the FTC claimed the North Carolina dental board violated federal antitrust laws in its attempt to eliminate market competitors, even though the board was empowered by the state to regulate dentistry.

Prior to this case, it was assumed that state-created professional boards and regulatory bodies were immune from antitrust law. But in their decision, the Supreme Court held that this is not always the case. The majority opinion stated that active state supervision is required for bodies that act as regulatory agents of the state but are controlled by market participants. In the case of the North Carolina dental board, the supervision was found lacking.

This brings us to the MTC. While the commission was created by the state, many of its members represent taxicab companies. There is no meaningful state oversight of what the MTC actions. It is possible that, if a court holds that the commission is effectively controlled by taxi market participants, the MTC would not be immune from antitrust legislation.

This would be a serious legal problem for the MTC, which fixes pricing, limits the number of taxi permits, and blocks the entry of ridesharing companies like Uber and Lyft. To preempt this type of legislation, the state could either make sure taxicab companies do not control the commission or more closely supervise the MTC’s actions. Given the anti-competitive behavior of the MTC as it exists today, either outcome would be an improvement for Saint Louis residents.