Canadian Underwriter

Canada’s Competition Bureau calls on regulators to modernize taxi industry regulations

November 27, 2015   by Canadian Underwriter

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Canada’s Competition Bureau, an independent law enforcement agency, is recommending a regulatory overhaul of the taxi industry to allow these vehicles and ridesharing services to compete on an even playing field.

The taxi industry is regulated at the municipal and provincial levels in Canada, while ridesharing services are not, creating an uneven playing field in the industry, the whitepaper said

On Thursday, the Competition Bureau released a whitepaper entitled Modernizing Regulation in the Canadian Taxi Industry, which addressed factors such as price, availability and wait times, convenience and quality of service. “Consumers stand to benefit from lower prices, reduced waiting times and higher quality services if regulators allow the forces of innovation and competition to shape the industry,” the whitepaper said.

The whitepaper noted that while the taxi industry is regulated at the municipal and provincial levels in Canada, ridesharing services are not, creating an uneven playing field in the industry. “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,” the Competition Bureau suggested in a statement. “When new regulations are needed, they should be limited to meeting legitimate policy objectives, like protecting the safety of passengers and drivers.”

Related: Toronto drops base taxi fare in bid to compete with vehicle for hire providers

John Pecman, Commissioner of Competition, said in the statement that “the arrival of ridesharing services presents an important opportunity for regulators – an opportunity to inject increased competition into the taxi industry by creating a single, level playing field for all. Consumers would benefit from competitive prices on a variety of innovative choices, while all service providers would have an equal chance to compete.”

The Competition Bureau supports efforts to regulate ride sharing applications instead of prohibiting them, noting in the statement that “competition is the best means to ensure that consumers have access to the broadest range of products and services at competitive prices.”

Among the recommendations contained in the whitepaper:

• 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 ridesharing 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.

Related: Toronto Taxi Alliance calls upon city to apply for injunction against UberX

Ridesharing Transportation Network Companies (TNCs) offer rates that can be substantially lower than the regulated rates imposed by municipal governments, the report noted. For example, a report by the City of Ottawa in October found that Uber prices were about 36% less than the estimated fare for a taxi, and that passengers in Ottawa waited between five and 15 minutes for a traditional taxi, but less than four minutes for an Uber driver. “Taxi drivers in several cities have reported that they are experiencing difficulties attracting consumers due to the low rates charged by Uber drivers, to the point that the City of Toronto has reduced the base fare for a taxi ride from $4.25 to $3.25 to help traditional taxis compete with Uber drivers,” the whitepaper noted.

In addition, the cost of a single taxi plate in 2012 could be as high as $360,000 in Toronto, according to the same report. The report also found that since ridesharing services were introduced in Toronto, the price of taxi plates declined to $188,235 in 2014.

The release of the whitepaper comes just one day after the Toronto Taxi Alliance (TTA) called upon the City of Toronto to apply for an injunction against UberX. In a letter to Toronto Mayor John Tory on Wednesday, TTA president Gail Souter asked the city to apply for an injunction in the Superior Court prohibiting Uber from “carrying on its illegal operation in our city.”

Pecman took a different view. “When was the last time you watched a movie on VHS?” he asked. “In the early 2000s, nobody was talking about banning DVDs to protect those who manufactured VCRs and video tapes. Instead, we embraced innovation, and benefitted from the superior quality of DVDs. Why then are some regulators taking steps to ban ride sharing applications?”