Position Statement
See the news release that corresponds to this position statement.
May 18, 2022 – Gatineau, QC — The Commissioner of Competition has been investigating the competitive impact of an exclusivity policy imposed by Turo Inc. on its car sharing platform. Turo has now discontinued its exclusivity policy within Canada after being made aware of the Bureau’s concerns. This is good news for market participants and competition. This statement summarizes the Bureau’s abuse of dominance investigation, its areas of concern, and the recent changes made by Turo to this policy in Canada.
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Summary
Turo runs a peer-to-peer (P2P) car sharing platform that operates internationally. The Bureau’s investigation relates to the potential impact of Turo’s former exclusivity policy on competition in Canada, to the detriment of current or prospective hosts. This policy prohibited users who share their cars (known as hosts) from listing the same vehicles on competing platforms at the same time that they were listed on Turo’s platform. When the Bureau began its investigation in the summer of 2021, the policy applied to hosts in all countries where Turo operates.
After the Bureau raised concerns over the exclusivity policy, Turo changed its terms of service to indicate that the exclusivity policy no longer applies in Canada. This is good news for market participants and competition in the car sharing space. The Bureau recognizes Turo’s prompt cooperation by amending this policy.
Despite this action, the Bureau is aware that Turo could re-establish this policy or a similar policy in the future. The Bureau will continue to monitor this industry and it encourages the public to report any concerns regarding similar conduct by Turo or other market participants at any time.
Background
P2P car sharing platforms allow hosts to share their vehicle(s) with users who wish to book a vehicle (usually called guests). Hosts range from those who share their personal car(s), to those with fleets of cars. In addition to bringing together hosts and guests, P2P car sharing platforms also typically facilitate insurance coverage for these trips. To book a trip, guests search for specific makes and models of cars they may wish to book through the appropriate mobile application or website.
On Turo’s platform, a suggested list price is provided to the host, but the ultimate decision for the price is up to the host. The host is paid a percentage of the price at which they have chosen to list the vehicle. Turo charges additional fees to the guest and/or host depending on the particulars of the trip.
Turo began operating in Canada in 2016 and during the course of the Bureau’s review has been active in British Columbia, Alberta, Ontario, Quebec, and Nova Scotia. On July 15, 2019, Turo introduced an exclusivity policy that restricted its hosts from listing vehicles on other car sharing platforms at the same time that the vehicles were also listed on Turo’s platform. The policy applied in all countries in which Turo operated.
The Bureau initiated an investigation under the abuse of dominance provisions of the Competition Act after hearing concerns and gathering preliminary information from the marketplace. In the course of its investigation, the Bureau contacted a wide range of market participants to collect information, verify the allegations, and conduct its analysis.
After the Bureau expressed its concerns and notified Turo that it had opened an inquiry under the Act, Turo ceased enforcing the exclusivity policy within Canada. Its terms of service were updated to exclude Canada from the application of the exclusivity policy as of January 17, 2022. Turo thereafter took steps to communicate this change to current and recent hosts.
Analysis
i. Dominance
Turo is the largest P2P car sharing platform in Canada, with more guests and hosts than any other such platforms. In the course of its review, the Bureau established that there are limited alternative options for many hosts to share their personal vehicles beyond P2P car sharing platforms.
Network effects occur when the value that certain consumers derive from a product depends on use of that product by others.
Barriers to entry and expansion include obtaining insurance coverage and network effects. Based on information gathered, it appears to be challenging and time intensive to establish insurance coverage when launching a P2P car sharing platform. Requirements to obtain coverage and coverage options also differ between provinces.
Network effects are also important for P2P car sharing platforms. The value of the platform for hosts is greater if there are more guests on the platform looking to book cars. The value for guests is greater if there are more hosts, as this provides a wider variety of options that may better meet their needs.
Turo’s exclusivity policy heightened barriers to entry. The policy made it more challenging for competing platforms or potential entrants to attract hosts and in turn guests, thereby limiting their ability to gain further traction in the market.
ii. Anti-competitive Conduct
Prior to changing its terms of service, Turo’s exclusivity policy was in effect within Canada and publicly stated on its website. This means that hosts who listed the same vehicle on Turo’s platform and on any competing platforms were asked to remove one those listings. If they did not then the host may have been subject to sanctions from Turo, including removal of the vehicle from Turo’s platform. The Bureau is of the view that Turo’s exclusivity policy likely constituted a practice of anti-competitive acts that impeded the ability of actual or potential competitors to enter or expand their operations.
iii. Substantial Lessening or Prevention of Competition
Based on information gathered by the Bureau, it appears that Turo’s exclusivity policy impacted expansion of existing platforms and frustrated entry by new players. The impact of Turo’s conduct on price, service quality, and innovation were considered.
Anti-competitive conduct can be particularly damaging in digital markets, which often change and evolve rapidly. This is particularly the case in nascent markets such as this, where conduct can frustrate the development of robust competition by new and innovative players striving to gain a toehold in the market. The increased risk of a nascent digital market tipping in favour of a single, large competitor can magnify the impact of such conduct on the market. For this reason, the Bureau felt it particularly important to quickly gather facts during a preliminary investigation, open an inquiry, and communicate its concerns to Turo.
Conclusion
The Bureau appreciates Turo’s action to remove its exclusivity policy in Canada after hearing the Bureau’s concerns. The removal of this policy supports healthier competition amongst P2P car sharing platforms. However, the Bureau is also aware of the possibility of Turo easily re-establishing this or a similar policy at any moment in the future. As such, the Bureau will continue to monitor the market.
The Bureau encourages the public to report any circumstances where similar conduct is observed in the marketplace, by submitting a complaint or a request for information on the Bureau’s website.
This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.
However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.
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