The European Court of Justice (ECJ) decided Wednesday that Uber is indeed a taxi service, despite protests to the contrary, and must comply with national laws. The ruling has major implications for on-demand transport services across the European Union.
“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,” says the ECJ press release.
The decision also could increase legal risks for other “sharing” economy companies including Airbnb. Cities could use the ECJ ruling as precedent and argue that Airbnb is a hotel operator and should only list “hosts” with valid tourist licenses.
Uber has been claiming for years that is a “computer services business”, providing an e-commerce platform for connecting people offering and receiving a service. A Barcelona taxi association disagreed and in 2014 went to the European court arguing that Uber was directly involved in carrying passengers. The ECJ ruling puts the argument to rest.
Taxi drivers in Barcelona had complained about UberPOP which, according to Spanish legislation, is currently illegal. The law forbids private individuals — nonprofessional drivers — from offering transportation services for profit, and this is exactly what that Uber’s service did.
Also in December 2014, the Spanish taxi drivers association got an injunction against Uber. On December 9 of the same year a Madrid judge declared that Uber drivers didn’t have official authorization and accused the service of “unfair competition”. Uber stopped operations in Spain right after, blaming the authorities and the law: “Spain has one of the most restrictive transport laws in Europe, limiting choice for anyone who wants to get around safely and affordably.”
After receiving news of the ECJ ruling, Mercedes Vidal, Barcelona’s councillor for mobility and president of the Metropolitan Transportation Authority, said:
“We are satisfied with the court decision. [It means] that these kind of companies are not just online platforms connecting people for transport, they are in fact transportation companies, and they are subject to the same rules of any passenger transport operator.” She added, “This [court decision] also means that we, as local governments, have the authority to regulate their operations and these kind of services in our cities.”
The ECJ ruling means that Uber cannot continue its usual policy of entering a city with UberPOP, establish a market, and then try to negotiate with authorities. The ruling doesn’t stop Uber operating in most of the European markets; after suffering several local court loses, Uber has been resuming operations in many cities obtaining passenger transportation licenses and using professional drivers as a private-hire operation.
Uber drivers work in many European cities with valid licenses. Their services, in this form, are entirely legal. What Uber is now afraid of is that authorities will impose new regulations that make it more difficult to obtain new licenses. One recent case is London, where the city has not renewed Uber’s license to operate, arguing that its drivers need more training, on a par with London cab drivers.
“It’s the first ruling by the bloc’s court on how an app such as Uber should be qualified and it has been closely watched by the technology industry, because it could set a precedent for how firms in the burgeoning gig economy are regulated across the 28-nation bloc,” Bloomberg says.