Uber Nation: Fighting the Taxi Cartel

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The recent arrival of Uber Nation in Canada has stirred up significant controversy and debate. Uber has launched its UberX service in several cities such as Toronto, Montreal, Ottawa and Edmonton in recent months despite protests from local governments, regulators and the taxi industry. Uber operated its black-car service in Vancouver for about 6 months in 2012 but the company withdrew from B.C. after the provincial transportation regulator imposed a minimum fare of $75 per trip.

Uber is an app based transportation network and taxi company headquartered in San Francisco, California which employs a smartphone application to receive ride requests and then sends these trip requests to their drivers. Customers use the app to request rides and track their reserved vehicle’s location. All the drivers and vehicles are privately owned. As of December, 2014, the service was available in 53 countries and more than 200 cities worldwide.

What’s all the fuss about? Why are legal battles being waged against Uber in France, Germany, China, India, and South Korea? It’s essentially a modern day example of a monopolistic cartel using every legal and political means possible to shut down a new innovative player in the market. Lawsuits have been filed by Vancouver’s 4 main taxi companies against Uber and the battle is now raging.

The taxi cartel is alleging that Uber is ignoring taxi regulations to save money and gain an unfair competitive advantage. The cartel is arguing that Uber is preparing to launch in Vancouver with unlicensed drivers in an attempt to undercut traditional cabs. Uber has not applied for taxi licenses for any of its drivers. While Uber does not currently operate in Vancouver, job postings for managers and drivers have appeared regularly on Facebook.

The cartel has responded by seeking an injunction to prevent Uber from commencing operations in Vancouver. A central theme of their position is that allowing unlicensed drivers to operate is a violation of the “health and safety” of the public because government mandated standards involving driver training, insurance and vehicle maintenance are being bypassed.

Uber has responded by declaring that it does not currently operate in Vancouver and that the lawsuit is simply the taxi cartel protecting its monopoly and profits at the expense of consumers and drivers. Uber’s legal position is that it is a technology company, not a taxi service therefore it shouldn’t be forced to comply with regulations which are outdated and hurt consumers. Uber asserts that its insurance and background checks for drivers meet or exceed those of the taxi industry. In Toronto, potential Uber drivers are screened over their lifetime for impaired driving offences, traffic violations and sexual criminal offenses whereas local taxis companies are only required to screen retroactively for a period of 5 years. Additionally, Uber insures every ride with $5M of liability insurance whereas the industry standards in the taxi cartel are typically $2M. Who has the more comprehensive screening process?

The politicians have also entered the battle. Vancouver’s city council responded to rumours about UberX with a vote to place a 6 month moratorium on all new taxi licenses. In addition, B.C.’s transportation minister announced that the Province would stage undercover stings targeting Uber vehicles. He threatened significant fines and legal action if drivers are caught without proper taxi licenses. Operating an unlicensed taxi can fetch a fine of up to $5,000 per violation. Is this really a proper use of taxpayer’s funds? Is the government in cahoots with the taxi cartel? These are all questions that are being posed by many Vancouverites.

Uber has launched a campaign to win the “hearts and minds” of the public with a petition that has accumulated well over 10,000 signatures. Uber views Vancouver as a terribly underserviced market with the lowest number of taxis per capita in North America. They definitely have a point. Try finding a taxi in downtown Vancouver on a busy Friday or Saturday night. Good luck!

Neither side in this battle is backing down. Until the court proceedings conclude, Uber and the taxi cartel remain in a “Mexican standoff.” The shootout at the O.K. Corral is fast approaching. It may make the feud between the Hatfields’ and the McCoys’ look like a childhood sandbox spat. Stay tuned!

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*The content of this article is intended to provide a general guide to the subject matter and should not be relied upon as legal advice. Custom legal advice should be sought about your specific circumstances.

© Bal Bhullar, President, C2K Law Corporation.

Bal Bhullar
Bal Bhullar is a corporate/commercial lawyer who owns and operates C2K Law Corporation. Bal has over 20 years of international and domestic practice experience. He has worked in private practice in Vancouver and Bermuda as well as in-house with public and private companies in the mining, aviation, telecom and technology, construction, oil and propane, insurance, management consulting and health care industries. Bal's areas of expertise include corporate finance, banking law, mergers and acquisitions, joint ventures, corporate restructurings, governance and compliance, company law, contracts and all types of commercial transactions. Bal is the member of the Law Society of B.C. and is admitted as a Barrister and Attorney in Bermuda. Bal is a business savvy lawyer who is solutions oriented and focused on delivering high value advice and service to all of his clients.