In a commentary published on its website, the federal regulator said Tuesday that municipalities should look to see if less restrictive regulations could address their concerns.
"The Competition Bureau is of the view that these innovative business models have the potential to offer important benefits to consumers through more competition, including lower prices, greater convenience and better service quality for a variety of reasons," the regulator said.
The comments follow a move by Toronto last week to seek a court injunction to force Uber Canada Inc. to stop operations in that city.
The Competition Bureau said municipalities have raised concerns that digital dispatch services may not comply with local regulations and licensing requirements.
It noted that Montreal, Calgary and Vancouver recently disallowed ride-sharing services and Ottawa and Toronto have taken enforcement action.
The regulator said some have also raised concerns about consumer protection issues, including safety and privacy concerns.
"While the bureau is not well-placed to assess safety concerns, which may well be legitimate, we are able to highlight to regulators what they give up in terms of reduced competition when these innovative offerings are prohibited," the regulator said.
"In addition, such regulations should be no broader than what is reasonably necessary to achieve consumer protection objectives."
Uber, which operates around the world, has faced criticism and bitter opposition from established players to its operations.
The company, in turn, has accused the taxi companies of trying to stifle competition and said ride-sharing brings costs down for users and creates jobs.
In seeking its injunction, Toronto accused Uber of carrying on the business of a taxicab broker or limousine service company because it is accepting and processing requests for taxicab or limousine services from passengers, but it has not applied for or received a licence.
For its part, Uber does not own the vehicles or employ the drivers, but has said it "partners" with them and takes a percentage of their earnings.
Also on HuffPost: