Uber warns of higher prices and longer wait times following Toronto’s decision to freeze new licences for Uber, Via and Juno. (See their press release) As with every other new entrant, they’re going to have to prove to the regulators that there are no hidden costs, and that their drivers aren’t hurting anyone, as well as to make their drivers profitable.
While Uber has been dealing with a bunch of problems lately (see my recent post at Legal Insurrection on problems with the Uber software and other issues), they finally rolled out their much-anticipated drivers’ app a week ago, which is the big problem for the regulators and for Ontario’s taxi industry. If you look, you’ll see lots of grey areas, and the problem is that Uber has refused to deal with the drivers directly. The company’s only response is to send a bunch of letters, telling drivers to sign up for their plans, which means they have to go through the registration agent, who does the registration and does the checks.
All of this is going to give the regulators a whole boatload of reasons to be skeptical of the new companies that have entered a Toronto market that traditionally was dominated by taxis. If a taxi could become a startup and compete directly with an incumbent, why is it so hard to take the same approach here? Because, of course, there’s no incumbent here. The problem is that taxis have used the monopoly power that comes with being Ontario’s dominant taxi company to rig the market in their direction, and now they’re going to have to prove their innocence.
The Ontario Motor Vehicle Act, which regulates taxis in Ontario, makes it a legal requirement for taxi companies to have a commercial licence. All new companies, like Uber, Via, and Juno, must meet that requirement as well, and Uber, for now, doesn’t appear to have the necessary commercial licence (see here for more on what it takes to obtain one).
And, as I’ve been pointing out lately, because Uber is required to be a licensed taxi company (and you have to run a commercial business to get the taxi licence), they have to be a licensed taxi company. They don