Nevada law that allows limo companies to nix new competition is ridiculous

Wouldn’t it be nice to run a business that was allowed to stamp out any and all competition just by saying you didn’t want to deal with it? Of course, that might not be nice for consumers or for businesses looking to expand and create more jobs. But who cares about all that, right?

The state of Nevada certainly doesn’t, with its ridiculous anti-competitive law regarding limousine companies. The current statute says the Nevada Transportation Authority can deny additional vehicles to small companies if the expanded fleet “would tend to increase or create detrimental competition in motor transportation.”

In other words, if such additions would force bigger companies to be more competitive, those companies can effectively veto such competition. It’s the antithesis of a free marketplace. And yet somehow in 2015, Republican Gov. Brian Sandoval vetoed a bill that would have halted the practice, citing safety concerns. In reality, the governor was throwing a bone to the state’s transportation cartel after signing a bill allowing Uber and Lyft to operate in Nevada.

As Anastasia Boden wrote last month in an op-ed for the Review-Journal, one of those smaller operators sued the state on the basis that the law violates their constitutional right to earn a living free of arbitrary government regulation. Reno residents Ron and Danell Perlman have the authority to operate seven limousines in Nevada, but own nine others for use in California that they’d like to also use here due to increasing demand.

But the Perlmans were thwarted from doing that, as pointed out by Ms. Boden, an attorney with the nonprofit Pacific Legal Foundation, which represented them in their suit. An existing business protested the Perlmans’ application on the basis that new competition would harm its profits.

Then the NTA denied the Perlmans’ application because they couldn’t prove to the agency’s satisfaction that the market would support any additional limousines. Guess what? That’s not a problem for the NTA to solve. That’s a problem for the marketplace. Imagine a panel with the power to nix a franchisee’s plan to build a new Burger King because the additional fast-food restaurant might siphon profits from a nearby McDonald’s.

The 2017 Legislature could get another crack at this, through Assembly Bill 240. Ms. Boden noted the bill maintains all current existing safety regulations while getting rid of provisions allowing larger companies to protest new applications. Furthermore, it requires the NTA to grant licenses to qualified applicants, which clearly these smaller companies are, or they wouldn’t be in business in the first place.

The Legislature must stand up for competition in the marketplace rather than tolerate naked rent seeking and protectionism. Get this bill on Gov. Sandoval’s desk, pronto. And the governor must not make the same mistake twice. Sign AB 240 into law.

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