Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Regulators asked to modernize Canada’s taxi industry rules, (Nov 30, 2015)

By Michael Menzhuber, J.D., LL.M.

According to a Canada Competition Bureau white paper, entitled “Modernizing Regulation in the Canadian Taxi Industry,” the check engine light “is glowing on the dashboard of the Canadian taxi industry.” The white paper noted that this is a result of the entry of ride-sharing services, such as Uber and Lyft, into what has been traditionally a tightly-regulated business.

The taxi industry is subject to regulations that govern taxi price levels, vehicle safety and insurance requirements, minimum quality standards for service, and entry restrictions in the form of limits on the number of taxi licenses that are available within a jurisdiction. Because ride-sharing services are not subject to these regulations, this has created an uneven playing field in the taxi industry.

The white paper noted that regulators are trapped between: (1) maintaining their existing systems, which severely restrict competition but provide for oversight and public safety; and (2) the demands of consumers, who are attracted to the low prices and high service levels of innovative new providers.

Because competition is the best means to ensure that consumers have access to the broadest range of products and services at competitive prices, the Bureau supports efforts to regulate ride-sharing applications instead of prohibiting them. However, to even the playing field, where possible, regulators should relax restrictions on traditional taxis, rather than imposing additional regulations on new entrants in the industry. Also, when new regulations are needed, they should be limited to meeting legitimate policy objectives, like protecting the safety of passengers and drivers.

The white paper identified the Guiding principles for regulating the taxi and ride sharing industry:

• Provincial and municipal governments should limit regulations to those required to achieve legitimate policy goals, such as protecting passenger safety;

• Care should be taken to ensure that regulations do not restrict competition and innovation any more than is necessary to achieve legitimate policy goals;

• Regulations should be applied equally to taxis and ride-sharing services to ensure that one does not gain a competitive advantage over the other; and

• Where possible, restrictions on traditional taxis should be relaxed, rather than imposing additional regulations on ride-sharing services.

It also identified the key Competition Bureau recommendations:

• Ease price controls, such as regulated taxi fares, to allow fares to be adjusted during periods of varying demand, such as weekends, evenings, and bad weather;

• Eliminate restrictions on the number of taxi plates issued and move to a system where additional qualified drivers may operate as vehicles-for-hire;

• Allow all drivers to respond to street hails, regardless of whether they work for a taxi company or ride-sharing service, unless there is a compelling policy reason not to do so; and

• Provide incentives to drivers to operate accessible vehicles in areas where consumers are under-served.

News: Antitrust