Business

Competition Bureau urges regulators to fix taxi rules to compete with ride sharing

Regulations that govern the taxi industry must be overhauled to let them compete on a level playing field with ride-sharing services like Uber and others, Canada's top competition watchdog says.
Competition between taxi companies and ride-sharing companies like Uber has heated up, but the playing field is still uneven due to regulatory burdens on taxis, the Competition Bureau says. (CBC)

Regulations that govern the taxi industry must be overhauled to let them compete on a level playing field with ride-sharing services like Uber and others, Canada's top competition watchdog says.

The Competition Bureau said Thursday that consumers and all stakeholders in the industry would benefit in the form of lower prices, reduced wait times, better services and lower overhead if regulators allow the forces of innovation and competition to shape the industry.

"The taxi industry is regulated at the municipal and provincial levels in Canada," the bureau said. "While taxi companies are subject to these regulations, ride‑sharing services are not. This creates an uneven playing field in the industry." 

The 30,000 taxicab drivers and owners across the country have been urging just that, saying their costs are higher because of the myriad rules and regulations they adhere to, which don't apply to upstart rivals like Uber, Lyft and the now-defunct Hailo. Taxi companies and drivers have staged boisterous protests across the country trying to get governments to ban ride-sharing services unless they are forced to live up to the same standards.

But rather than increase red tape on the new guys, the Competition Bureau says regulators should relax restrictions on traditional taxis to let them compete.

"When new regulations are needed, they should be limited to meeting legitimate policy objectives, like protecting the safety of passengers and drivers," the bureau said.

Among other things, the bureau urges local regulators to:

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

Competition bureau wants taxi regulations overhauled

7 years ago
Duration 6:50
Head of the Competition Bureau, John Pecman, discusses the need to overhaul the rules that regulate the taxi industry

Statistics Canada data shows Canadians spent almost $1.2 billion on taxi and limousine services last year, but anecdotal evidence suggests that a similar sum is being spent on ride-sharing services like Uber.

Those services are often cheaper to the end user because Uber has much less overhead due to being outside the rules. A report by the City of Ottawa last month found that Uber fares were about 36 per cent less than the estimated cost for a taxi, and that passengers in Ottawa waited between 5 and 15 minutes for a traditional taxi, but less than 4 minutes for an Uber driver.

Taxicab licences were a veritable licence to print money for several decades, as paucity of supply and tight restrictions allowed them to turn into virtual monopolies or duopolies in many markets. 

The city of Toronto caps its fully fledged taxi medallions at just under 5,000 vehicles, and the value of owning one was as high as $360,000 in 2012, the same report found. By 2014, after the rise of ride-sharing services in the city, that same medallion was only worth $188,235 by last year.

ABOUT THE AUTHOR

Pete Evans

Senior Business Writer

Pete Evans is the senior business writer for CBCNews.ca. Prior to coming to the CBC, his work has appeared in the Globe & Mail, the Financial Post, the Toronto Star, and Canadian Business Magazine. Twitter: @p_evans Email: pete.evans@cbc.ca

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