European Court states: Uber is also “only” a taxi company! Why the judgment is significant for the whole future economy

Well finally you never knew what to call Uber – a provider of a mediation platform for individuals who play chauffeur after work? Now the European Court of Justice (ECJ) states in a judgment published today: Uber is also “just” a normal taxi company. In recent years, especially in the tech industry, Uber had been a kind of cool, innovative service provider, exactly in the spirit of the “future economy” that is just spreading.

Because Uber had simply ignored all conventional requirements. You are not a taxi provider, but just an online platform where rides are taught by independent drivers. That’s why Uber saved licenses and fees, unlike established regular taxi companies worldwide. But in the last few years this has been the main question: where is the difference to the good old “taxi center”? The ECJ now notes, at least for the EU, that Uber ultimately offers the same services as all other “old” taxi companies.

Thus, the alleged $ 60 billion expensive company valuation could be a little bit lower… Uber says that Europe the Company already works with drivers who have a passenger transportation licence. Uber also already works together with real taxi companies. Thus, the Uber that looks so fresh and dynamically does not look so sexy anymore. The travel costs are likely to gradually adjust to the normal taxis. Maybe!

But that’s not the interesting thing about this official definition of a court. It seems much more important as a guidepost for the so-called “platform economy”. For everything (food deliveries, rides, crafts services, cleaning services, etc.), there are now Internet portals where customers can book individual services of these new “self-employed”, or even negotiate their compensation in an auction process. Here is the question: Are all these “self-employed” actually really independent self-employed workers?

Or are they a fully integral part of a provider who hides behind his façade as an intermediary platform? Because the platform saves social security, does not have to hire anyone, has no dispute with the customer and much more. The platform provider collects commissions, and can put the individual self-employed in competition with all other providers.

While this may be good for the customer at first glance, it brings extremely bad pay for the employee side, no permanent employment, and all costs and risks also remain with the supposedly self-employed. The Uber judgment by the ECJ shows that for this “platform economy” it´s not possible to outsource all activities to supposedly self-employed persons. For the future this could be a groundbreaking judgment in other areas as well! Here is the text of the ECJ on Uber:

The electronic platform Uber provides, by means of a smartphone application, a paid service consisting of connecting non-professional drivers using their own vehicle with persons who wish to make urban journeys.

In 2014, a professional taxi drivers’ association in Barcelona (Spain) brought an action before the
Juzgado de lo Mercantil No 3 de Barcelona (Commercial Court No 3, Barcelona, Spain) seeking a declaration from that court that the activities of Uber Systems Spain, a company related to Uber
Technologies (together ‘Uber’), amount to misleading practices and acts of unfair competition. Indeed, neither Uber Systems Spain, nor the non-professional drivers of the vehicles concerned, have the licences and authorisations required under the Regulation on taxi services in the metropolitan area of Barcelona. In order to determine whether the practices of Uber can be classified as unfair practices that infringe the Spanish rules on competition, the Juzgado de lo Mercantil No 3 de Barcelona considers it necessary to ascertain whether or not Uber requires prior administrative authorisation. To that end, the court considers that it should be determined whether the services provided by Uber are to be regarded as transport services, information society services or a combination of both. Indeed, whether or not prior administrative authorisation may be required depends on the classification adopted. In particular, if the service at issue were covered by the directive on services in the internal market1
or the directive on electronic commerce , Uber’s practices could not be regarded as unfair practices.

In today’s judgment, the Court declares that an intermediation service such as that at issue in the main proceedings, the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and, accordingly, must be classified as ‘a service in the field of transport’ within the meaning of EU law. Consequently, such a service must be excluded from the scope of the freedom to provide services in general as well as the directive on services in the internal market and the directive on electronic commerce. It follows that, as EU law currently stands, it is for the Member States to regulate the conditions under which such services are to be provided in conformity with the general rules of the Treaty on the Functioning of the EU.

The Court takes the view, first of all, that the service provided by Uber is more than an intermediation service consisting of connecting, by means of a smartphone application, a onprofessional
driver using his or her own vehicle with a person who wishes to make an urban journey. Indeed, in this situation, the provider of that intermediation service simultaneously offers urban transport services, which it renders accessible, in particular, through software tools and whose general operation it organises for the benefit of persons who wish to accept that offer in order to make an urban journey. The Court notes in that regard that the application provided by Uber is indispensable for both the drivers and the persons who wish to make an urban journey. It also points out that Uber exercises decisive influence over the conditions under which the drivers provide their service.

Therefore, the Court finds that that intermediation service must be regarded as forming an integral part of an overall service whose main component is a transport service and, accordingly, must be classified not as ‘an information society service’ but as ‘a service in the field of transport’. The Court states that, consequently, the directive on electronic commerce does not apply to that service, which is also excluded from the scope of the directive on services in the internal market. For the same reason, the service in question is covered not by the freedom to provide services in general but by the common transport policy. However, non-public urban transport services and services that are inherently linked to those services, such as the intermediation service provided by Uber, has not given rise to the adoption of measures based on that policy.

Strike of Uber drivers last year in Paris. Photo: Guilhem Vellut / Wikipedia (CC BY 2.0)

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