The National Assembly plenary session of Friday passed the revision bill aimed at banning TADA, a car-sharing service operated by Value Creators & Company (VCNC). The amendment to the Passenger Transport Business Act, also known as the “Anti-TADA Bill,” passed the South Korean plenary session on Thursday making TADA illegal.
SoCar, the owner of VCNC, for the past months, met aggressive criticism from the local taxi industry over the legality of its service. Traditional taxi drivers claimed that TADA’s service violates the transportation law that forbids rented vehicles from offering rides in exchange for money. They also argue that the local taxi industry suffers from the market share rental van services take.
However, TADA argued that its business is within legal boundaries. Launched in 2018, the mobility provider based its service on a written exception that specifically allows rented vans with 11 to 15 seats to be offered with drivers.
The revised bill would recognize rental cars as a type of transport platform business. Proponents claim the bill would effectively allow TADA to continue its operation.
The panel argued that the measure leads to allowing ride-hailing service providers to conduct business within the legal boundaries as long as they register for the appropriate licenses.
However, the passage of the bill would stop TADA from offering the current level of services as it demands strict conditions for rental, such as the outsourcing of drivers for the use of the rental vans to tour purposes only.
The National Assembly plenary session approved the bill on Friday, forcing TADA to shut down its primary service. Under the revised legislation, VCNC would receive a grace period of one and a half years before they need to exit the ride-hailing business. The company can also opt for acquiring a taxi service platform license if it wants to stay in the industry.
After the proclamation, the revision bill specifies that it would take effect after a year.
The ministry of land and transport said in a statement that the proposal would aid ease conflicts within the mobility industry, allowing service providers to push for innovation as long as they are within the legal boundaries.
The Judiciary Committee on Wednesday passed the bill to the plenary session without obtaining consent from all 18 members. Lee Chul-hee, a member of the Democratic Party of Korea and Chae-bae, a member of the People’s Party, publicly disagreed the passage.
Lee argued that the committee could not verify the damage suffered by the taxi industry due to TADA’s acquittal last month. He added that the committee should consider the nation’s interest, saying that the bill is going against innovation.
However, Yeo Sang-yoo, chairman of the Judiciary Committee, did not allow any further objections.
Some point out that most lawmakers of the Judiciary Committee agreed to ban TADA because they were conscious of the votes of taxi drivers.
National Assembly and Government: “Dead”
SoCar CEO Lee Jae-woong, through a statement posted on Facebook on Wedneday, expressed his disappointment with the passing of the revision to the Passenger Transport Act. He condemned the approval stating that the National Assembly and the government are “dead.”
The CEO apologized to the TADA’s startup colleagues and drivers whose livelihoods might be affected. He said that the Ministry of Land, Infrastructure, and Transport and the National Assembly took away the people’s choice halting innovation.
The National Assembly’s decision makes us return to past time.
– SoCar CEO, Lee Jae-woong
Rep. Park Hong-geun, along with lawmakers from the Democratic Party of Korea, authored the revision bill to the transportation act last October, tightening services allowed for car rental businesses.
Startups also expressed their concern over the National Assembly’s decision over the ‘TADA Prohibition Act.’
Choi Sung-jin said that the startup community regrets that the passing of the bill without reasonable amendments and despite criticism. Choi is the President of Korea Startup Forum.
He also cited the Seoul Central District Court’s ruling that the ride-hailing service TADA is a legitimate rental car service. On February 19, the court acquitted Socar CEO Lee Jae-woong and VCNC CEO Park Jae-wook of charges of violating the passenger transportation service laws with their ride service. The startup community initially thought that the verdict would support the mobility platform industry and other budding startups.
Meanwhile, startups related to the taxi industry stated that although TADA’s case is regrettable, they argue that it is urgent to oversee the mobility platform business.
Lee Haeng-ryeol, CEO of KST Mobility, welcomed the passage of the bill. He also said that it is necessary to push from enforcement ordinances quickly so that they can speed up their business.