Time to fully free Toronto’s food trucks

  • Subtitle: Competing Interests
Written by  Posted Date: July 24, 2017
Time to fully free Toronto’s food trucksSeveral years ago, when Toronto was working on amendments to its street vending bylaw, I wrote a column arguing that the city needed to increase food truck competition.

At the time, I wondered why a municipality would enforce rules that, if agreed to by private sector competitors, would likely violate the Competition Act.

In this respect, Toronto’s current street vending bylaw, though somewhat liberalized in 2015, still retains rules that are essentially legislated output restrictions or market allocation rules. In the unregulated sphere, s. 45 of the Competition Act prohibits agreements between competitors to fix prices, divide/allocate markets or customers or restrict output.

Current competitive restrictions in Toronto’s street vending bylaw include:

•    Limiting the number of food truck permits to 125;

•    Capping the number of food trucks to two per city block;

•    Limiting food truck hours of operation to five per day

•    Requiring food trucks to operate more than 30 metres from open and operating restaurants. The city has in fact established an elaborate map of “Potential Mobile Food Vending Zones” and the sole purpose appears to be to keep food truck competition away from bricks-and-mortar restaurants (see: here).

•    Prohibiting food trucks in or near Business Improvement Area boundaries during BIA organized paid food events.

Legitimate policy objectives aside, such as safety, congestion and noise, it is not clear why a municipality should limit business expansion, restrict where businesses can operate or, most troublingly, protect particular sectors from competition — whether traditional or new business models. I would have thought Torontonians would want more innovation and choice (and more great food!).

On the topic of increased food truck competition, earlier this month the Competition Bureau released a new issue of its Competition Advocate also arguing that local food truck regulation across Canada should be liberalized to increase competition (see: Promoting Fair Competition in the Restaurant and Mobile Food Industry).

In general, the Bureau argues that restrictions on food truck operations reduce consumer choice and stifle innovation. Some of the specific benefits of increased food truck competition that the Bureau points to include attracting new customers, affordable and convenient food options and increased employment opportunities.

Some of the particular recommendations the Bureau makes for food truck regulatory reform by municipalities include:

•    Repeal or reduce proximity requirements;

•    Limit where food trucks can operate only when necessary to achieve legitimate policy objectives;

•    Let the market choose economic winners;

•    Avoid overly restrictive operating hours that inhibit food trucks from operating during peak dining hours.

In the case of Toronto specifically, my view is that the city should eliminate the 30 metre proximity restriction to restaurants, lift the cap on operating hours and remove the limit on the number of food truck permits that can be issued.

In this respect, it is difficult to understand why food truck operators should be subject to competitive restrictions not imposed on traditional restaurants or why bricks and mortar restaurants should be insulated from food truck competition.

Toronto should also review its two peculiar rules that prohibit food truck vendors from operating either within a BIA boundary or within 50 metres of a BIA boundary when a BIA is operating a paid food vendor event. Again, it is not clear why food trucks should be prohibited from operating and competing, particularly if there is no similar restriction on traditional businesses. Why does or should the city care whether food trucks are generating revenue or local BIA paid food events? Why should BIA food vendors be preferred to food truck operators?
Shouldn’t Toronto foodies have more not less choice?

To test the logic of my arguments for lifting Toronto’s (still anti-competitive) food truck restrictions, one need only consider a hypothetical restaurant bylaw restricting the number of traditional restaurants on a city block to two, limiting operation to five consecutive operating hours (say 10 a.m. to 5 p.m.), capping the number of restaurant permits to a total of 125 in the city and prohibiting restaurants from operating within 30 metres of competitors.

Now extend this minor thought experiment to Little Italy, the Entertainment District, Chinatown or one of many other restaurant-rich Toronto districts — such a bylaw would be clearly absurd — so why impose similar restrictions on food trucks?

While some critics of food truck liberalization have argued that reforms and more competition would be unfair for traditional restaurants, competition is not about “fairness” but rather allowing competitors to determine what services they want to offer and allowing consumers to make choices. Companies innovate, consumers choose and the market operates. That’s how we got Apple, Amazon, Tesla and Google.

Local municipalities should not be in the business of limiting competition (whether in the food truck sector or otherwise), apart from legitimate non-competition concerns, such as planning, safety and noise.

In short it’s time to fully free Toronto food trucks. Hopefully the Bureau’s recent advocacy efforts lead to increased food truck competition and far fewer competition-throttling rules from municipal legislators.  

Let consumers choose where and what they eat — that’s what competition is all about.

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Steve Szentesi

Steve Szentesi is a competition and advertising lawyer based in Toronto. He is a former adjunct professor of competition law at the University of British Columbia, Faculty of Law, author of a number of competition law publications and is lawyer-editor for Practical Law Canada Competition. He writes regularly with particular interest in competition policy and innovation and law. He can be reached at steve@szentesilaw.com.


Column: Competing Interests

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