This newsletter provides an in-depth analysis of recent regulatory developments concerning taxi dispatch apps and fare systems in Japan. With the rapid proliferation of taxi dispatch apps and the anticipated introduction of robotaxis, the Ministry of Land, Infrastructure, Transport and Tourism (the “MLIT”) is reassessing the legal framework governing fare regulation, and the Fair Trade Commission (the “FTC”) is reviewing competition policy. This newsletter outlines (i) the current legal structure, and key regulatory and future directions about fare regulation, including potential amendments to the Road Transport Act, based on a report on the regulation of taxi fares and fee systems published by the MLIT on March 17, 2025, and (ii) competition law issues related to the practices of taxi dispatch apps and taxi stand management, based on a fact-finding report on taxi dispatch apps published by the FTC on April 23, 2025. Special attention is given to the challenges posed by the increasing integration of digital platforms in the taxi industry and the need to ensure fair competition and consumer protection.

(1)　Transaction Structure

In conventional taxi services, contracts are formed directly between the taxi operators and the passengers. However, when using taxi dispatch apps, contractual relationships are established between the dispatch app providers and the passengers, as well as between the dispatch app providers and the taxi operators.

(2)　Fee Structure

When a passenger uses a dispatch app to book a taxi, the total payment typically consists of:

(i)　the “Fare”;
(ii)　the “Pick-up Fee”; and 
(iii)　the “App Usage Fee”. 

Items (i) and (ii) are related to the passenger transport service and are received by the taxi operator, whereas item (iii) is related to the dispatch app service and is received by the app provider. Additionally, taxi operators pay “service fees” to the app providers for the matching services.

(3)　Legal Regulation

Two laws, the Road Transport Act and the Travel Agency Act, are relevant to transactions involving dispatch app services.
 

• Road Transport Act: Taxi operations fall under the “general passenger automobile transport business” (ippan ryokaku jidosha unso jigyo) which is regulated by the Road Transport Act. Fares and certain fees require approval and are subject to strict upper limits.
• Travel Agency Act: Dispatch app services are considered “travel agency” activities, which require registration as a travel agent. While the Act stipulates that travel agents must set clear standards for handling fees, it does not impose upper limits on such fees or other restrictions.

As a result, app usage fees (item (iii)) and service fees are not subject to any particular regulatory caps and can be freely set by app providers.

Since the app usage fees are not regulated under the Road Transport Act, there is a risk that such fees could be excessively high. Furthermore, from the passenger’s perspective, the distinction between regulated fares and unregulated app usage fees is often unclear.

Given these issues, subjecting certain app usage feesーespecially those which are indistinguishable from regulated fares from the passenger’s perspectiveーto fare regulation under the Road Transport Act is under consideration. However, for services that are considered a “travel product” (e.g., matching with premium vehicles or drivers), the MLIT’s published report indicates that it may be appropriate to treat these services outside the scope of the Road Transport Act.

The report emphasizes the need to clarify the relationship between fare/fee systems for taxis (including autonomous taxis) and app usage fees, and to develop a coherent regulatory framework as the use of dispatch apps continues to expand, particularly in urban areas, and as the use of dispatch applications will become mandatory for autonomous taxis.

(1)　Discriminatory Treatment and Unilateral Changes to Matching Criteria

If a dominant app provider arbitrarily favors or disadvantages certain taxi operators, this may constitute discriminatory treatment under the Antimonopoly Act. Unilateral changes to matching criteria that unfairly disadvantage taxi operators may also be considered abuse of superior bargaining position.

Given the foregoing, app providers are encouraged to clarify and be transparent in communicating their matching criteria, to provide sufficient notice and explanation before implementing any changes, and to allow for sufficient time before introducing new matching criteria.

(2)　Restrictions on the Use of Competing Apps

If a dominant app provider requires taxi operators to refrain from using competing apps as a condition for preferential treatment, and if the business activities of new entrants or existing competitors may be adversely affected by that requirement, that requirement may constitute exclusive dealing or tie-in arrangements which are prohibited under the Antimonopoly Act.

(3)　Tying of Dispatch Apps and Taxi Meters

If a dominant taxi meter provider requires the use of its own dispatch app as a condition for using its software meter, or prohibits the use of competing apps, and if the business activities of other providers may be adversely affected, that requirement or prohibition may constitute tie-in sales or exclusive dealing.

The report emphasizes that, to ensure fair competition, it is desirable for software meters to be interoperable with multiple dispatch apps, thereby allowing taxi operators to freely choose among them.

(1)　Entry of App-Dispatched Taxis

In some cases, the management of taxi stands (by local governments, railway operators, or airport authorities) is effectively delegated to taxi operator associations, which may unfairly block new entrants or app-dispatched taxis from accessing the stands. Such conduct may constitute interference with competitors under the Antimonopoly Act.

Thus, stand managers should establish and enforce entry criteria that do not hinder new entrants, and respond appropriately to individual applications from taxi operators.

(2)　Boarding of App-Dispatched Taxis

At certain transport hubs (e.g., train stations and airports), the boarding of app-dispatched taxis may be restricted to prevent disputes among passengers, and in such cases, passengers must board app-dispatched cabs at locations which are at some distance away from the transportation hub. The report indicates that in order to enhance passenger convenience and ensure fair competition, stand managers should take necessary measures to facilitate the smooth boarding of app-dispatched taxis, even within spatial constraints.

The regulation of fees for taxi dispatch apps is expected to be further examined, including whether certain app usage fees should be subject to the Road Transport Act. Stakeholders should closely monitor future developments. 

Additionally, various practices in the operation of dispatch apps and management of taxi stands have been identified as potentially problematic under the Antimonopoly Act. Dispatch app providers, taxi operators, and stand managers should take steps to mitigate legal risks and ensure compliance with competition law. 

Mori Hamada will continue to provide updates and legal analysis as the preceding matters progress⁠.