VANCOUVER, B.C. (CN) - The battle between traditional taxi companies and app-based Uber has come to Vancouver, B.C., two weeks before its municipal elections.
Uber has faced dozens of lawsuits across the United States, many from taxi companies that claim Uber unfairly undercuts prices by operating without regulation, including safety regulations. Cities also have gone to court to insist that Uber seek licensing. Some European cities have banned it.
Uber tried to enter the Vancouver market in 2012, but discontinued the service after being shot down by the Passenger Transportation Board.
In October, the city government imposed a 6-month moratorium on new taxi licenses, which essentially shut the company out, at least temporarily. The provincial government announced recently that it would use undercover agents to investigate and fine unlawful services such as Uber.
But that hasn't made Uber give up on Vancouver, prompting the Yellow Cab Company, Black Top Cabs, Maclure's Cabs, and Vancouver Taxi Ltd. to join forces in a lawsuit claiming that Uber and its affiliates plan to infiltrate the Vancouver market unlawfully by around commercial passenger transportation service regulations.
The four cab companies claim that Uber has been posting job ads for "drivers and various management and/or administrative positions" including ads for a marketing manager, operations manager, logistics manager, and a general manager, all to be based in Vancouver.
The cab companies claim Uber already has met with prospective drivers and plans to launch without having applied for taxi licenses from the city or provincial government, while being "aware that it not permitted to operate lawfully in Vancouver."
By classifying its drivers as independent contractors, making each one a competitor, Uber violates the Competition Act by requiring drivers to charge the same fees, or fixing prices for their services, the cab companies say. The claim Uber also is unlawfully passing itself off as a "taxi service."
"Over the course of years abiding by the shared regulatory code for the provision of Vancouver Taxi Services, the plaintiffs have established shared or collective goodwill in the plaintiffs' Vancouver Taxi Services product," the complaint states.
Notwithstanding the irony of four competing cab companies joining forces to keep out competition by, in part, relying on the Competition Act, a recent Master's Thesis submitted by Simon Fraser University's Benn Proctor claims the current regulatory regime in the city "has created an artificial taxi shortage in Greater Vancouver."
"Entry into the Greater Vancouver taxi industry is restricted by an arbitrary application process that requires new entrants to prove that there is a 'public need' for the service and that if entry is granted it would continue to promote 'sound economic conditions' in the passenger transportation business," Proctor wrote. "The shortage of taxis is a public safety concern as the industry lacks sufficient capacity to move people out of downtown after bars and pubs close and public transit has stopped running for the night, raising risks of conflicts outside drinking establishments and of intoxicated persons driving themselves home. Because entry is restricted, the four Vancouver taxi companies behave like oligopolists, raising industry profits at the expense of passengers."
Proctor adds: "The sole beneficiaries of existing regulations are the taxi company shareholders. The entry regulations effectively free license holders from competition and allow them to earn super-normal profits. These profits are capitalized into the value of licenses, which can sell for as much as $800,000 per vehicle on the secondary market."
Uber claims the cabbies' lawsuit is an attempt to protect "its own cartel at the expense of consumers and its own drivers" and that "the Vancouver taxi industry in now venturing into uncharted territory by suing a business that doesn't even exist in the market yet."
Named as defendants are Uber Technologies, Uber B.V., Uber Canada Ltd., Rasier Operations B.V., Rasier LLC, and persons unknown.
The cab companies are represented by Peter A. Gall in Vancouver.
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