This is the predictable result when you put government bureaucrats in control. Canada's National Post and the Washington Post have articles. In the Financial Post, Lawrence Solomon summarizes:

"In Ontario, car pooling is a prohibited activity that can only be allowed under strict government control, as determined by a government regulatory agency set up to oversee such conduct. Those who violate the law – as did a nonplused outfit called PickupPal — can and will be punished with the full force of the law. With the government's blessings, you can share expenses by car pooling from home to work and back again, but only under certain conditions. You have crossed the line if you try to car pool to work across a municipal boundary — the government frowns upon suburbanites who commute this way. As for car pooling for a frivolous, non-work purpose — to school, to the hockey arena, to the doctor’s office — this is outlawed outright, regardless of whether you cross a municipal boundary."

The more power you hand to regulators, the more often you get back-room back-scratching that protects other members of the in-guild (in this case, a bus company). Sometimes, there's enough public outrage to overturn it. Most of the time, there isn't.