The federal competition watchdog is urging municipal governments to relax “heavy-handed” regulations on taxis rather than crack down on alternative ride-hailing services like Uber.

“Old school regulations need to be modernized to enable innovation to take place,” said Commissioner of Competition John Pecman.

The Competition Bureau issued a white paper Thursday questioning why some regulators are trying to stifle a shakeup in the $1.2 billion taxi industry. Instead, the paper called for a level playing field between established players and new entrants.

It was a rare step into a controversial issue outside the watchdog’s federal purview.

Pecman said Canada risks falling behind global peers if regulators crack down in the face of growing consumer demand for innovative services such as UberX.

“It’s a question of regulators understanding that customers want this and making adjustments to the rules to enable this innovative approach to services to flourish in Canada.”

The watchdog called for an end to oppressive taxi regulations, including strict pricing structures and licensing systems, to give operators the flexibility required to compete with alternative ride-hailing services.

The paper suggested Uber drivers should be allowed to pick up street passengers, while taxis should feel free to adopt Uber’s controversial surge pricing, which raises prices when demand is higher.

The UberX driver for hire app provides rides for 40 per cent cheaper and wait times that are about half those of traditional taxis. It has raised the ire of city councils and cab companies because it operates outside of regulations imposed on cabs.

Toronto, Montreal, and Ottawa have laid charges against hundreds of UberX drivers, while the service is banned in Vancouver and Halifax. Calgary suspended its Uber service last week after a judge granted the city a temporary injunction.

Both Uber and taxi industry players said Thursday they welcome the call for a more level playing field, though each side feels it is the current underdog.

Uber Canada general manager Ian Black believes the report confirms that current bylaws are anti-competitive and that any regulations should solely focus on safety and consumer protection.

“Taxis should have a lower regulatory burden and be allowed to compete in a freer market,” he said.

“Similarly there should be regulations on ride sharing and we welcome regulations on ride sharing in Canadian cities.”

Meanwhile, Kristine Hubbard, Beck Taxi’s operations manager believes the report’s findings mean Uber will have to become more like cab companies to ensure the same levels of vehicle safety and insurance coverage.

However, she doubts that asking Uber to follow any regulations is the way to go, pointing out that Uber has flouted existing licensing laws as well as the City of Toronto’s request that it stop operating while new rules are established.

Taxi drivers shouldn’t direct their anger at Uber, but at the government-imposed system that allows a handful of people to own licences and resell them at exorbitant prices, said Mark Satov, founder of Satov Consultants, a customer strategy advisory firm.

“It’s the system that’s wrong and so any moves to create a system where everyone can compete, I think are sane and sound,” Satov said.

A scare number of taxi licences has lead to a lack of competition and higher consumer prices, the competition watchdog said. License plates sold for as much as $360,000 in Toronto in 2012 but dropped to $188,235 since Uber came to market in 2014.

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The City of Toronto said Thursday its staff have spoken with the bureau and it will include the advice in review of the industry. The city will present a new regulatory framework for the ride-hailing industry in spring 2016.

In the meantime, it has reduced the base fare for a taxi ride from $4.25 to $3.25 to help traditional taxis compete with UberX drivers.

Pecman said the bureau reached out to municipalities prior to issuing his first White Paper since becoming commissioner in 2013 because it wanted to be part of the conversation.

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