UberPOP: directing towards a European regulatory solution
Supervisor: Dhr. mr. dr. R.H. Van Ooik Second supervisor: Mw. dr. D. Obradovic
Laura van Leijden
Student number: 11388064
International and European Law: European Competition Law and Regulation University of Amsterdam
Content
Abstract...4
List of abbreviations...5
Introduction...6
1 The collaborative economy...9
1.1 Key elements of the collaborative economy...9
1.2 The view of the EU on the collaborative economy...11
1.3 Conclusion...12
2 UberPOP within the European Union...13
2.1 Legal framework of the taxi market...13
2.2 UberPOP’s service...14
2.3 The free movement of services and the free movement of establishment...16
2.4 Cross-border element of UberPOP...17
2.5 Spanish preliminary ruling...18
2.6 Conclusion...20
3 Analysis of the issues raised in the preliminary ruling...21
3.1 UberPOP’s service as an information society service...21
3.2 UberPOP as a transport service...24
3.3 UberPOP as neither an information society service nor a transport service...26
3.4 UberPOP in part an information society service...26
3.5 Conclusion...28
4 Regulatory implications of defining UberPOP’s activities...31
4.1 UberPOP as an information society service...31
4.2 UberPOP as a transport service...32
4.3 UberPOP as neither an information society service nor a transport service...33
4.4 UberPOP in part an information society service...34
5 Conclusions...37 Bibliography...39
Abstract
This thesis aims to define the legal nature of the service UberPOP and the regulatory implications of this definition. Using the preliminary questions of the Commercial Court of Barcelona as a departing point, this thesis shows that UberPOP should be classified as a transport service. UberPOP is a composite service, comprising first, a supply whereby passengers and drivers are connected with one another by means of the electronic platform and, secondly, the supply of transport in the strict sense. UberPOP’s transport service should be regarded as the main component of the platform. This service is not provided by electronic means, one of the four criteria of Article 1(2) of Directive 98/34 on technical standards and regulations, and therefore UberPOP should not be classified as an information society service. Furthermore, UberPOP is inherently linked to the physical act of moving persons or goods from one place to another. Secondly, considering the usual meaning of UberPOP in everyday language and by taking into account the context and the purposes of the rules of which it is part, UberPOP must be classified as a transport service.
The regulatory implications are far-reaching for the service UberPOP. Defining UberPOP as a transport service, would exclude the service from the scope of Directive 2006/123 on services in the internal market and Article 56 TFEU. Although the field of transport lies within the competences of the Member States, this would not give Member States the opportunity to regulate the service as it wishes. According to settled case law, national legislation may not restrict the freedom of establishment. Consequently, it is necessary to examine whether the national measures may be justified objectively by overriding reasons of general interest, provided that it is appropriate for ensuring realisation of the objective pursued and does not go beyond what is necessary for attaining that objective. In this thesis, it will be argued that imposing licensing requirements on UberPOP should be seen as a purely economic objective that cannot be justified in the public interest. Thus, the free movement of establishment may not be restricted by imposing licensing requirements on the service UberPOP.
List of abbreviations
AG Advocate General
CJEU Court of Justice of the European Union
EC European Commission
ECJ European Court of Justice
E-Commerce Directive Directive 2000/31/EC
EP European Parliament
EU European Union
Services Directive Directive 2006/123/EC
Technical Standards Directive Directive 98/34/EC as amended by Directive 98/48/EC (codified)
TEU Consolidated version of Treaty on the European Union
TFEU Consolidated version of Treaty on Functioning of the
European Union
TNC Transport Network Company
TfL Transport for London
Introduction
The past ten years, the so-called collaborative economy has been rapidly emerging and growing within the European Union1. The businesses operating in the collaborative economy
characterize themselves by using a multisided platform that facilitates exchange. The platform provider matches buyers and sellers but does not purchase goods or services. The buyers and sellers access the platform through the internet, typically using a website or a mobile
application2.
An example of a sharing economy platform is Uber3. The electronic platform was developed
by Uber Technologies Inc., a company which has its principal place of business in San Francisco. In the European Union, the company is managed by Uber BV, a company
governed by Netherlands law and a subsidiary of Uber Technologies.4 Since its foundation in
2009, Uber quickly grew out to be the current world’s largest transportation network company (TNC)5. Uber’s business model differentiates itself from traditional taxi companies, by using a
mobile software application to connect drivers offering rides and passengers seeking one. Passengers can online select drivers near their location and submit a trip request which is then sent to the driver. After the trip, the fare is automatically charged to the bank card which the user is required to enter when signing up to the application.6 Charges are based on a
combination of time and distance parameters and all payments are facilitated by Uber7.
Uber offers several services, one of which is the service UberPOP. Providing this service, drivers use non-commercial vehicles which are subject to a background check and car requirements. Any citizen can sign up as a driver without having a professional taxi license. Individual taxi companies and taxi associations in France, Spain, Germany, Portugal and the Netherlands have filed lawsuits based on existing national legal frameworks8. They
experience Uber as a threat and claim that Uber engages in unfair competition9.
1 G. Lougher & S. Kalmanowicz, ‘EU Competition Law in the Sharing Economy’, Journal of European Competition Law & Practice 2016, 7(2), p. 87-102.
2 Idem. 3 Idem.
4 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015], § 12.
5 I. Dosen & H. Rosolen, Uber and Ridesharing, Victoria: Parliamentary Library & Information Service 2016. 6 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015].
7 D. Geradin, ‘Online Intermediation Platforms and Free Trade Principles – Some Reflections on the Uber Preliminary Ruling Case’, CPI 2016, p. 119-133.
8 Supra note 5. 9 Supra note 7.
In one of these cases, the Spanish trade association Asociación Profesional Élite sued Uber, which led to preliminary questions to the Court of Justice of the European Union (CJEU). The Spanish association claims that Uber is a transport service and therefore should not be
exempted from the licensing requirements imposed on taxi companies by public authorities. On the other hand, Uber argues that it supplies smartphone users with a user interface. Following this argumentation, Uber should be considered as an e-commerce and information society service. Uber claims it is thereby protected by the EU principle of freedom of
establishment. Accordingly, Uber should not have to comply with the requirements imposed on traditional taxi companies and would not need authorisation for carrying out its business. This thesis aims to clarify the nature of the services provided by Uber, using the preliminary questions of the Commercial Court of Barcelona as a departing point. The thesis will examine whether Uber’s service UberPOP should be regarded as a transport service, an information society service, neither of them or as in part an information society service. Furthermore, this thesis will assess the regulatory implications of this outcome. This thesis sets out the answer to the following central research question: How should the ECJ interpret the activities of
UberPOP within the EU regulatory framework on the internal market? This research will be
conducted by using the Opinion of Advocate General Szpunar as a basis. From there, it assesses settled case law to analyse this opinion. This thesis is written from an internal, normative and critical perspective.
Chapter one will put the activities of Uber in a broader context by explaining the concept of the collaborative economy in which Uber is operating. Chapter two zooms in on the service of UberPOP and places this services within the legal framework of the European Union.
Subsequently, chapter three discusses whether the nature of the activity carried out by Uber should be interpreted as an information society service, a transport service, neither of them or as in part an information society service. These four scenarios have different regulatory implications for UberPOP. Accordingly, chapter four deals with these implications. Finally, chapter five concludes by summarizing the outcomes of the research and addressing the stated issues.
1 The collaborative economy
Uber operates its services within the so-called collaborative economy. To understand why the service UberPOP is legally challenging for the European Union and its Member States, it is necessary to understand how UberPOP is functioning. Therefore, this chapter will sketch the
context of UberPOP’s activity by explaining the concept of the collaborative economy (paragraph 1.1). Secondly, the perspective of the European Commission on what the
collaborative economy means for the EU and its Member States, will be set out in paragraph 1.2.
1.1 Key elements of the collaborative economy
Companies in the collaborative economy operate cross-sector and cover various types of business.10 Despite its significant growth in recent decades, there is no universally accepted
definition of the collaborative economy, which is also referred to as the sharing economy, the peer-production economy, or the peer-to-peer economy.11 However, three key elements are
common to most definitions.
Firstly, scholars agree that collaborative economy businesses turn unused or under-used assets owned by individuals into productive resources by intermediation.12 The European
Commission defines the collaborative economy as a business model where platforms create and facilitate an open marketplace that allows private individuals to use goods or services on a temporary basis.13 The businesses act as intermediaries between the owner of an under-used
asset and the buyer or lessee of that asset. The first key characteristic can therefore be described as the pairing of people.14
Secondly, common to most definitions is a digital element. Consumers access collaborative economy platforms via online websites or smartphone applications.15 Improved data storage
and analytics make the transaction costs of matching buyers and sellers lower than ever. Likewise, widespread GPS tracking allows for both better customer service and more careful monitoring. Furthermore, digital reputation ratings can form a functional substitute for personal trust, making more, and more credible, transactions possible.16
Thirdly, transactions within the collaborative economy typically do not involve a change of ownership and can be carried out for profit or non-profit.17 The reasons for the shift from 10 G. Lougher & S. Kalmanowicz, ‘EU Competition Law in the Sharing Economy’, Journal of European Competition Law & Practice 2016, 7(2), p. 87-102.
11 C. Koopmans, M. Mitchell & A. Thierer, ‘The sharing economy and consumer protection regulation: The case for policy change’, The Journal of Business, Entrepreneurship & the Law 2015, 8(2), p. 529-545. 12 S. Wallsten, The competitive effects of the sharing economy: how is Uber changing taxis?, New York: Technology Policy Institute 2015.
13 COM/2016/0356. 14 Supra note 10. 15 Idem.
16 D. Rauch & D. Schleicher, ‘Like Uber, but for Local Government Law: The Future of Local Regulation of the Sharing Economy’, Ohio St. LJ 2015, 76, p. 901.
buying to borrowing are diverse. For some customers, growing ecological consciousness plays a role when making a choice between new or borrowed products. Besides, because of urbanisation processes, people in urban areas can now easily find sharing and renting opportunities.18
The EC distinguishes three categories of actors within the collaborative economy.19 First,
providers share their assets, resources, time or skills. They can do so by either offering their services as private individuals occasionally, or as professional service providers. The second category contains consumers using the services provided. Lastly, the two categories
communicate via online platforms that function as intermediaries.20 The intermediaries
facilitate and ensure the quality of the transactions.21
The collaborative economy offers various advantages to consumers. Firstly, the new business models will lead to increased consumer welfare by offering new innovations, more choices, more service differentiation, better prices and higher-quality services.22 Secondly, the
collaborative economy can lead to productivity growth and efficiency. For instance,
innovative technologies significantly reduce the transaction costs of matching sellers of the under-used assets to consumers willing to buy the services those assets provide.23
Furthermore, the businesses facilitate production that is more efficient, allow a greater level of output to be created from the same level of physical assets and labour and lastly, create production and exchange opportunities that were not previously possible. Moreover, it is likely that the collaborative economy will stimulate innovation by creating
micro-entrepreneurship opportunities that empower individuals previously constrained by employment at traditional businesses.24
1.2 The view of the EU on the collaborative economy
To date, no specific legislation has been implemented at EU level to regulate the collaborative economy. However, already in 2015, the EC issued the Digital Single Market Strategy for Europe.25 According to the EC, individuals and services should easily have access to and be 18 Supra note 16.
19 COM/2016/0356, supporting analysis. 20 Idem.
21 Idem. 22 Supra note 16.
23 S. Wallsten, The competitive effects of the sharing economy: how is Uber changing taxis?, New York: Technology Policy Institute 2015.
24 M. Avital e.a., The collaborative economy: a disruptive innovation or much ado about nothing? Proceedings of the 35th International Conference on Information Systems 2014.
able to exercise only activities under conditions of fair competition.26 Also the European
Parliament (EP) announced its willingness to support innovative businesses in its resolution.27
Moreover, the European Commission has issued non-binding guidelines for Member States on how existing EU law should be applied to the collaborative economy28. In its guidelines,
the EC acknowledges the potential of the collaborative economy for consumers and entrepreneurs29. The collaborative economy creates new employment, flexible working
arrangements and new sources of income and helps small businesses reach a wider market and customer base. They also make markets more competitive and efficient by improving matching between demand and supply. The EC expresses its desire to support innovative businesses30.
At the same time, the EC also expresses its concern for the risks caused by the collaborative economy. The EC points out that the application of existing legal frameworks has become more challenging since it has become more difficult to differentiate between actors acting within the collaborative economy, such as consumer and provider, employee and
self-employed, or the professional and non-professional provision of services.31 In particular when
combined with regulatory fragmentation on Member State level, this could result in legal uncertainty over applicable rules. Legal uncertainty in turn would hinder the development of the collaborative economy in the European Union. Furthermore, there is a risk that regulatory grey zones are exploited to circumvent rules designed to preserve the public interest32.
Member States could impose licensing requirements on organisations such as UberPOP that are actually disguised restrictions on the free movement of services, objectified by the wish to protect the economic interest of incumbent operators. According to the EC, there is need for a European approach to help ensure the balanced development of the collaborative economy33.
1.3 Conclusion
In this chapter, the concept of the collaborative economy was examined. Despite the lack of a universally accepted definition, scholars agree that businesses operating in the collaborative economy all possess three main characteristics. Firstly, scholars agree that collaborative
26 Idem, p. 3.
27 EP Resolution, 19 January 2016. 28 COM/2016/0356, supporting analysis. 29 Idem.
30 Idem. 31 Idem.
32 COM/2016/0356. 33 COM/MEMO/16/2002.
economy businesses turn unused or under-used assets owned by individuals into productive resources by intermediation. Secondly, common to all businesses is a digital element. Consumers access collaborative economy platforms via online websites or smartphone applications. Thirdly, transactions within the collaborative economy typically do not involve a change of ownership and can be carried out for profit or non-profit34.
2 UberPOP within the European Union
To understand why so many Member States attempt to regulate or even ban UberPOP, it is necessary to find out how the service operates across the European Union. Therefore, paragraph 2.1 explains the legal framework of the taxi market as it was before Uber entered the market. Accordingly, paragraph 2.2 explains in detail the service provided by UberPOP. Moreover, it explains the extent to which the service differs from the companies operating within the original taxi market. Thirdly, the principles of the free movement of services and the free movement of establishment will be examined in detail in paragraph 2.3. Then, the cross-border element of UberPOP’s activity will be established. Lastly, the preliminary ruling from the Court of Barcelona will be examined in detail in paragraph 2.5. This chapter ends with a short conclusion (paragraph 2.6).
2.1 Legal framework of the taxi market
The relevant market for taxi transport can be divided into two relevant markets: first, a market in which licensed taxis are allowed both to ply for hire, for instance by picking up passengers at taxi ranks or to gain custom through pre-booking. Secondly, there exists a market in which private hire vehicles (PHVs) are not permitted to ply for trade and are required to be pre-booked.35 In case Eventech, Advocate General Wahl also wielded the distinction between the
two taxi markets. However, he noted that “in view of the constant evolution in technology, time will tell whether smartphones and the various phone applications created by operators might change this market structure”.36
At first sight, UberPOP could be placed within both relevant markets. The service could be placed in the first market, since Uber taxis may be hailed by individuals without having to contact a central headquarters to pre-book a ride. Uber’s application seems to provide just an additional feature by allowing passengers to hail the closest available taxi.37 On the other
hand, Uber could better be placed within the second relevant market, since Uber rides must be pre-booked and chauffeurs must pick up their passengers from a specified location and transport them to a location agreed prior to the customer’s entry into the taxi.38
35 G. Lougher & S. Kalmanowicz, ‘EU Competition Law in the Sharing Economy’, Journal of European Competition Law & Practice 2016, 7(2), p. 87-102.
36 Opinion of AG Wahl of 24 September 2014, Case C-518/13 The Queen, on the application of Eventech Ltd v The Parking Adjudicator [2015] All ER (D) 81, § 64.
37 G. Lougher & S. Kalmanowicz, ‘EU Competition Law in the Sharing Economy’, Journal of European Competition Law & Practice 2016, 7(2), p. 87-102.
Historically, the two taxi markets are highly regulated with little variations across countries and cities.39 Regulation by public authorities is considered necessary for several reasons.
Firstly, in absence of control on entry, there would be too many taxis available on the streets. This would cause traffic congestion and damaging competition in the taxi market. This in turn would result in low quality of service.40 Furthermore, regulatory car requirements would
ensure the safety of passengers. Lastly, without public authorities exercising rate control, fares could be set at an unfair and unreasonable height, which would harm the consumer.41
Consequently, regulation of the taxi market classically is based on four pillars: control of entry, licensing and performance requirements to ensure safety standards for both chauffeurs and vehicles, financial responsibility standards and the setting of maximum rates.42
The regulation of the taxi market brought along some unforeseen complications, such as the insufficient availability of taxis during rush hours or in areas considered as less profitable by drivers.43 Attempts from public authorities to prevent oversupply of taxi services often led to
an undersupply. Furthermore, by setting pricing and quality standards, public authorities discouraged taxi companies to innovate or improve their quality of service.44 This induced
some public authorities to deregulate the taxi market. Although often the quantity of vehicles increased, this did not automatically lead to lower waiting time or cheaper services. Studies show that deregulation often led to decreased service performance, which incentivized public authorities to re-regulate the sector.45
2.2 UberPOP’s service
For nearly a century, taxi companies worldwide were based on a similar business model. Customers wanting a ride could hire taxis by queuing at a taxi rank, by hailing them in the street or by making telephone reservations.46 In 2009, the taxi market changed when Uber
created a smartphone application through which consumers could choose from a range of services.47 Uber’s services are divided into different categories depending on the quality of the
39 D. Geradin, ‘Should Uber be allowed to compete in Europe? And if so how?’ CPI 2015, p. 1-14. 40 Idem.
41 Idem. 42 Idem.
43 C. Koopman, M. Mitchell & A. Thierer, ‘The sharing economy and consumer protection regulation: The case for policy change’, The Journal of Bus. Entr. & L. 2015, 8(2), p. 528-545.
44 Supra note 36. 45 Idem.
46 Idem.
47 D. Geradin, ‘Online Intermediation Platforms and Free Trade Principles – Some Reflections on the Uber Preliminary Ruling Case’, CPI 2016, p. 119-133.
drivers and the type of vehicle.48 Already in January 2016, Uber was active in over 20
Member States of the European Union and in 50 European cities.49
Uber is a marketplace that connects drivers offering rides and passengers seeking them through its mobile software application. By downloading the application, consumers can set up a user account. The application shows Uber chauffeurs closest to the location of the consumers, which can on that basis submit a request for a ride.50 Furthermore, the application
shows its customer an estimation of the expected waiting time.
Uber BV facilitates the payment and determines the price of the trips by combining time and distance parameters. The algorithm used allows the rates to vary depending on the level of demand at a given time, a process called surge-pricing.51 The fare is calculated by the
application and charged automatically by the platform operator, who withholds a proportion in respect of its fee, usually between 20% and 25%, and pays the remainder to the driver.52
After the destination is reached, the customer receives the receipt on his email address. Furthermore, the application allows drivers and customers to rate each other through a one-to-five stars system. Average scores falling below a given threshold may result in exclusion from the platform.53 The chauffeurs are self-employed and use their own cars. Therefore, Uber does
not employ drivers or own cars.54
In the EU, the two main services provided by Uber are UberX and UberPOP. UberX is a service making use of licensed PHV drivers using licensed private hire cars. UberX drivers are professional chauffeurs who need to meet the requirements applicable to licensed PHV drivers.55 On the other hand, UberPOP drivers are non-professional drivers, who must satisfy
the minimum requirements set by Uber, such as the possession of a driving licence and a clean criminal record.56
48 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015].
49 D. Geradin, ‘Online Intermediation Platforms and Free Trade Principles – Some Reflections on the Uber Preliminary Ruling Case’, CPI 2016, p. 119-133.
50 Idem.
51 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015], § 15.
52 Idem.
53 Supra note 45. 54 Supra note 46. 55 Supra note 51. 56 Idem.
2.3 The free movement of services and the free movement of establishment
According to Uber, the restrictions proposed by the Spanish taxi association are violations of the freedom to provide services and the freedom of establishment. Article 56 TFEU prohibits restrictions on the freedom to provide services between Member States. Likewise, Article 49 TFEU prohibits restrictions on the freedom of establishment between Member States.
The two fundamental freedoms differ from each other with regard to the duration of the activity pursued. If the economic is provided on a temporary basis, the freedom of services applies. If the economic activity is provided on a permanent basis, the freedom of
establishment applies.
The Court has developed exceptions to these two principles in its case law. In Gebhard57, the
Court stated that national measures liable or to hinder or make less attractive the exercise of the freedom to provide services or establishment can be justified under certain conditions. First, the restriction must be non-discriminatory, which means that it should be equally applicable to national and foreign services. Secondly, the restriction must be justified by some legitimate public interest objective. Thirdly, the restriction should be proportionate, in other words suitable and necessary, to the objective it pursues.58
The E-Commerce Directive and the Services Directive are the main pieces of secondary legislation in the field of services and establishment. The purpose of the Services Directive is to eliminate all interstate barriers to the freedom of services and establishment.59 It does so by
clarifying the application of the Directive. Furthermore, it provides which national measures are prohibited. Article 9(1) states that authorization schemes constitute restrictions on the freedom of establishment. As stated in Gebhard, those restrictions must be
non-discriminatory, justified by some legitimate public interest objective, and proportionate in order to be justified under EU law.60
The E-Commerce Directive has supplemented the provisions of the Services Directive with regard to information society services. The E-Commerce Directive has as its objective to integrate the single market in the field of information society services. In that regard, it
57 Case C-55/94 Reinhard Gebhard v Consiglio dell'Ordine degli Avvocati e Procuratori di Milano (Gebhard) [1995] ECR 411 § 37.
58 D. Chalmers, G. Davies & G. Monti. European Union law: cases and materials. Cambridge: Cambridge University Press 2010.
59 Idem.
eliminates barriers to the provision of information society services and it harmonises liability.61
2.4 Cross-border element of UberPOP
In several Member States, individual taxi companies and taxi associations have filed lawsuits against UberPOP. They state that UberPOP does not comply with national license obligations required for taxi companies, thus Uber would engage in unfair competition.62 Uber reacted by
submitting complaints to the European Commission for violation of Article 49 (right of establishment) and Article 56 (freedom to provide services) of the Treaty on the Functioning of the EU (TFEU).
For Uber to invoke Articles 49 and 56 TFEU, their service needs to have a European dimension. Although Member States are under the obligation of sincere cooperation, which requires them not to frustrate EU Treaty provisions, the EU can only act if has the competence to do so.63 Purely internal situations are usually left to Member States.64 When exercising its
competences, the EU needs to take account of the fundamental EU principles, subsidiarity and proportionality.65
Traditionally, Member States strongly opposed to European legislation in the taxi market because of the local character of the market.66 However, according to the CJEU in Gebhard67,
a cross-border element can easily be established. The Court stated that “national measures liable to hinder or make less attractive the exercise of fundamental freedoms”, could entail restrictions on free movement of services or establishment.68
Demonstrating that UberPOP has a cross-border element may seem difficult at first glance, since drivers and passengers are almost always located within the same Member State.69
However, Uber’s service always involves information and money crossing borders. Uber BV, located in the Netherlands, processes the payments for every ride taken in Europe. If a rider in another Member State requests a ride, the payment is sent to Uber BV in the Netherlands,
61 Directive 2000/31/EC, recital 1, 5-8. 62 Idem.
63 Article 4(3) TEU.
64 Case C-52/79 Procureur du Roi v Marc JVC Debauve and others [1980] ECR 833. 65 Article 5(3) TEU and 5(4) TFEU.
66 European Parliament [2015], accessible on
http://www.europarl.europa.eu/RegData/etudes/BRIE/2015/563398/IPOL_BRI(2015)563398_EN.pdf. 67 Case C-55/94 Reinhard Gebhard v Consiglio dell'Ordine degli Avvocati e Procuratori di Milano (Gebhard) [1995] ECR 411.
68 Idem, § 39.
which retains about 20% of the payment and then sends approximately 80% back to the driver’s bank account. Furthermore, the majority of staff providing support services for riders and drivers throughout the EU, is based at Uber BV in Amsterdam.70 Their services also
continuously cross European borders.
Additionally, Uber drivers can transport customers between Member States. Moreover, an Uber branch established in one Member State could expand its services to another MS. Banning UberPOP’s services in a Member State would affect competition in the taxi market of another Member State.71 Furthermore, the Court established that a purely internal situation
cannot be established when services may also be enjoyed by nationals of other Member States or provided by service providers from other Member States.72 Concluding, Uber has a clear
cross border element.
2.5 Spanish preliminary ruling
In 2014, Uber started to operate its service UberPOP in Barcelona, Madrid and Valencia. On 29 October 2014, Asociación Profesional Elite Taxi, a trade association representing taxi drivers in the city of Barcelona, filed a lawsuit against Uber Systems Spain SL (Uber Spain), a company governed by Spanish law, on the ground that UberPOP breached Spanish Act 3/1991 on Unfair Competition (“Unfair Competition Act”).
The trade association asked the Commercial Court No 3 of Barcelona to declare that Uber Spain had infringed Article 5. This provision concerns misleading practices that are considered as acts of unfair competition. Furthermore, the trade association claimed the infringement of Article 15(2) of the Unfair Competition Act. The association asked the Court to stop Uber supporting other companies in the group by providing on-demand booking services by means of mobile devices and the internet, when that is directly or indirectly linked to use of the digital platform Uber in Spain. Lastly, the referring Court asked the ECJ to prohibit Uber from engaging in such activities in the future.73
70Uber, Vacatures accessible on https://www.uber.com/careers/list.
71 G. Stadtmann, e.a., ‘Uber and Taxi Regulations: are Member States preserving a legal monopoly to the detriment of consumers?’ 2016.
72 Joined Cases C-340/14 and C-341/14, Trijber v. College van burgemeester en wethouders van Amsterdam and Harmsen v. Burgemeester van Amsterdam [2015] I-0000, § 41.
73 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015], § 16.
In essence, the Spanish Court had to establish whether UberPOP’s services can benefit from the free movement provisions Article 49 (freedom of establishment) and Article 56 (freedom of services). Moreover, it is the question whether Uber’s services can benefit from the guarantees included in Article 9(1) of the Services Directive74 and Article 3(2) of the
E-commerce Directive.75 Whether Uber’s services can benefit from the guarantees depends on
how the legal nature of the service will be defined by the CJEU. In particular, it depends on whether Uber’s services can be classified as an information society service within the
meaning of Article 1(2) of Directive 98/34/EC or as a transport service within the meaning of Article 2(2)(d) of Directive 2006/123.76
The Spanish Court decided to suspend its proceedings and referred four questions for preliminary ruling to the CJEU. With its first question, the referring Court essentially asks whether Uber’s activity must be regarded as a transport service or as an information society service. With its second question, the Court asks whether Uber, were the company to be classified as an electronic intermediary service or an information society service, could benefit from the principle of freedom to provide services as guaranteed in Article 56 TFEU.77
With its third question, the Court seeks an answer to the question whether Article 15 of the Law on Unfair competition is contrary to Article 9 of Directive 2006/123. Fourthly, the Court asks whether, were the E-commerce Directive considered to be applicable to Uber,
restrictions in one Member State regarding the freedom to provide the electronic intermediary service from another Member State, are valid measures under the E-commerce Directive.78
Uber Spain denies having committed any infringement of transport legislation. The company reasons that Uber BV operates the Uber application in the European Union. Uber Spain therefore argues that the applicant’s claims should be directed at that company. The analysis in this thesis does not comment on this issue and will be conducted on the assumption that the referring Court meant Uber BV instead of Uber Spain.
The request for a preliminary ruling was received at the ECJ on the 7th of August 2015.
Written observations were submitted by the parties to the main proceedings, the Spanish, Finnish, French and Greek Governments, Ireland, the Netherlands and Polish Governments,
74 Directive 2006/123/EC. 75 Directive 2000/31/EC.
76 D. Geradin, ‘Online Intermediation Platforms and Free Trade Principles – Some Reflections on the Uber Preliminary Ruling Case’, CPI 2016, p. 119-133.
77 Case C-434/15, Request for a preliminary ruling from the Juzgado Mercantil No 3 de Barcelona (Spain) lodged on 7 August 2015 — Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015].
the European Commission and the European Free Trade Association (EFTA) Surveillance Authority. Except for the Greek Government, the parties and the Estonian Government were represented at the hearing on the 29th of November 2016.79
2.6 Conclusion
In this chapter, the activity of UberPOP within the European Union has been analysed. The legal framework of the taxi market in the European Union has been described in paragraph 2.1. Secondly, the service of UberPOP has been explained in detail. Thirdly, the free
movement of services and the free movement of establishment have been examined in detail (paragraph 2.3). Thereafter, the European dimension of UberPOP has been analysed
(paragraph 2.4). As a provider of information and communication technology services, Uber is covered by European provisions on free movement of services and freedom of
establishment. Finally, in paragraph 2.5, the Spanish lawsuit leading to the preliminary ruling has been analysed.
79 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015], § 21.
3 Analysis of the issues raised in the preliminary ruling
In this chapter, the legal nature of the service UberPOP will be analysed by taking the questions of the Commercial Court No 3 of Barcelona as a starting point. In particular, this chapter analyses whether Uber should be qualified as an information society service (paragraph 3.1), as a transport service (3.2), as neither of them (3.3) or as being in part an information society service (3.4). This chapter ends with a conclusion (3.5).
3.1 UberPOP’s service as an information society service
As has been stated by the Advocate General, information society services are services meeting the four requirements of Article 1(2) of Directive 98/34/EC (Directive on Technical Standards). The service needs to be provided i) for remuneration, ii) at a distance, iii) by electronic means and iv) at the individual request of a recipient of services.80
Article 1(2) of the Directive on Technical Standards specifies that within the meaning of this provision, “at a distance” means that the service is provided without the parties being
simultaneously present. Secondly, “by electronic means” has to be interpreted in such a way, that the service is sent initially and received at its destination by means of electronic
equipment for the processing and storage of data. Moreover, the service has to be entirely transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means. Offline services are excluded from the scope.81 Lastly, the fourth
condition entails that the service is provided through the transmission of data on individual request.82
In my opinion, UberPOP meets the first requirement set in Article 1(2) of the Directive on Technical Standards. The concept of remuneration has been explained by the CJEU in
Commission V Germany, where the Court stated that “the essential characteristic of
remuneration lies in the fact that it constitutes consideration for the service in question”.83 The
service does not even need to be carried out with the view of making a profit.84 The only
condition for the information society service is to have a commercial character.85 In the case
of UberPOP, drivers receive a payment for transporting their customers which is higher than
80 Article 1(2) Directive 98/34/EC. 81 Idem.
82 Idem.
83 Case C-318/05, Commission v Germany [2007] ECR I – 6962, § 67. 84 Case C-157/99 Smits and Peerbooms [2001] ECR I-5473, § 50, 52. 85 Case 263/86 Belgium v. Humbel [1988] ECR 5365.
just a compensation for the costs of the drivers. Therefore, it is evident that the service UberPOP is provided for remuneration.
Second, the service UberPOP is provided without the parties being simultaneously present when the transaction is performed. UberPOP connects drivers and passengers through a mobile software application. The transaction between those two parties is performed before the drivers and passengers meet. Therefore, UberPOP is provided by matching the parties at a distance. It also is evident that only individual customers can request a trip through the application.86 Therefore, UberPOP is provided through the transmission of data on individual
request and thereby also fulfils the fourth condition of Article 1(2) of Directive 98/34/EC. It is the third criterion, ‘provided by electronic means’ that is more difficult to assess. The Advocate General states that UberPOP can be regarded as a composite service, since UberPOP on the one hand connects passengers and customers by an application, and on the other hand provides transport for its customers. According to the Advocate General, in the case of composite services, a service may be regarded as entirely transmitted by electronic means, in the first place, when the supply which is not made by electronic means is
economically independent of the service which is provided by that means.87
In case the two components are not independent, it should be established whether the provider of the service supplied by electronic means is also the provider of the service not supplied by such means or whether he exercises decisive influence over the conditions under which the latter service is provided, so that the two services form an inseparable whole. In that case, the main component of the supply must be identified.88
The AG explains that “the main component is the service which gives it meaning in economic terms”.89 It becomes apparent that composite services must fulfil two conditions in order for
them to be established as the main component. In sum, assessing whether a component forms the main component of the service, can be done by looking whether 1) the services has control, either direct or indirect, over the economically significant aspects of the service, and 2) workers exercise their activities for the platform do not pursue their activity independently of the platform. If the main component of the service is provided by electronic means, a service should be classified as an information society service.
86 COM/2016/0356.
87 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015], § 33.
88 Idem, § 35. 89 Idem, § 35.
First, services must have control, either direct or indirect, over the economically significant aspects of the service offered through its platform. In this case, the Advocate General finds that Uber exerts control over all the relevant aspects of an urban transport service: over the price, the minimum safety conditions, the accessibility of the transport supply, over the conduct of drivers and over possible exclusion from the platform. Although this control may be indirect, it is just as effective as direct control. This leads to the conclusion that, from an economic point of view, the service is provided by Uber or on its behalf.90
Secondly, workers exercising activities for the platform should not pursue their activity independently of the platform. In this case, the activity of the drivers exists solely because of the platform, and without which the activity would have no sense. An indication for workers pursuing an independent activity, is the situation in which the intermediary platform is simply one of many ways of marketing their services, as is the case with hotels and airlines. Another indication for pursuing an independent activity, is the situation in which the traders
themselves determine the conditions under which their services are provided, starting with prices. Moreover, Uber exerts prior control over drivers’ access to the activity. Lastly,
independence could be indicated by providing users with the option to choose between several providers, whose offers differ on several important points from the users’ perspective, such as flight and accommodation standards, flight times and hotel locations. By contrast, with Uber, these aspects are standardised and determined by the platform, so that the passenger will accept the service of the most quickly available driver.91 In my opinion, we should follow the
opinion of the Advocate General in this respect. UberPOP does more than just connecting passengers with drivers. It exercises decisive influence over the conditions under which the transport service is provided.
Thus, the two components of UberPOP’s activity are not independent. Transportation, rather than connecting people, forms the main component of the service. It can be said that UberPOP controls the economically significant aspects of the transport service offered through its platform.92 This component is not transmitted by electronic means and therefore does not
fulfil the four criteria of Article 1(2) of Directive 98/34/EC. Therefore, UberPOP should not be classified as an information society service.
90 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015], § 53.
91 Idem, § 60.
92 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spaisn, S.L. [2015], § 44-51.
3.2 UberPOP as a transport service
When determining whether UberPOP should be regarded as a transport service, the AG starts with analysing Article 2(2)(d) of Directive 2006/123. Although this provision explicitly excludes services in the field of transport from the scope of that directive, the AG does not find it sufficient to reach such a finding. However, the AG finds that recital 21 of that directive leaves no doubt as it states that the services in question include urban transport and taxis.93
In the case of composite services, consisting of a component provided by electronic means and another component not provides by such means, the first component must be either economically independent of the second or the main component of the two in order to be classified as an information society service. Since Uber’s activity must be regarded as a whole and, as has been stated in paragraph 3.1, the supply of transport constitutes Uber’s main component. This activity cannot be split in two and the service must therefore be classified as a service in the field of transport.94
In my opinion, indeed Article 2(2)(d) should be taken as a starting point. The provision states that the Directive does not apply to services in the field of transport falling within the scope of Title V of the Treaty. However, this Title does not explain what constitutes “services in the field of transport”. Nevertheless, Recital 21 of Directive 2006/123 indicates that urban transport and taxis fall within the meaning of transport services.
Although Recital 21 may seem to point in this direction, the reference to taxi’s in Recital 21 does not necessarily mean that UberPOP should be considered a taxi service. According to the CJEU in Eventech, although PHV’s and conventional taxi services compete directly in the same market sector, this does not mean that the factual and legal situations of those services are comparable.95 Thus, although UberPOP competes directly in the market of conventional
taxis, this does not mean that the services are comparable.
Also, Advocate General Wahl stated in his Opinion in Grupo Itevelesa that the process of defining what constitutes a ‘service in the field of transport’, should be carried out “with care”.96 The concept of services within the field of transport must be interpreted narrowly.97 93 Idem, § 68-70.
94 Idem, § 71.
95 C-518/13 Eventech Ltd v The Parking Adjudicator [2015] ECLI:2015/9, § 59.
96 Opinion of Advocate General Wahl delivered on 3 June 2015, Case C-168/14, Grupo Itevelesa et al., [2015] ECR I-0000, § 22.
According to Wahl, a service in the field of transport “must consist of or should be inherently linked to the physical act of moving persons or goods from one place to another”.98 Moreover,
Advocate General Spuznar states that “the meaning and scope of a term must be determined by considering its usual meaning in everyday language, while also taking into account the context in which it occurs and the purposes of the rules of which it is part.”99 He then agrees
with Advocate General Wahl that “where the main purpose of the activity is not the physical conveying of goods or people but other matters […], one cannot speak of services in the field of transport.”100
Subsequently, the CJEU points out in case Trijber and Harmsen101 that it does not follow
from the exclusion in Recital 21 that any service consisting in the provision of transport by waterway must automatically be classified as ‘transport’ or ‘urban transport’ within the meaning of that directive.102 The CJEU continues by stating that it would be possible for a
service “to include, besides transport, one or more other elements that fall within a
commercial sphere that the EU legislature has included in the scope of Directive 2006/123”.103
Lastly, the Court states that it follows from Recital 7 that the directive secures a general legal framework which advantages different types of services. The directive allows for the services to have distinctive features, different systems of regulation and different general interest objectives. The directive seeks to ensure the balance between the objective of eliminating obstacles to freedom of establishment and the freedom to provide services and the need to protect the specific features of certain sensitive activities.104
In my opinion, UberPOP should be classified as a transport service. One should be careful to classify the term ‘services in the field of transport’ too broadly. Keeping this in mind,
Advocate General Wahl points out that transport services must, by definition, consist of or should be inherently linked to the physical act of moving persons or goods from one place to another. Since transporting people should be regarded as UberPOP’s main component, UberPOP’s service can be characterised by moving persons from one place to another.
98 Supra note 95, § 28.
99 Opinion of Advocate General Spuznar on 16 July 2015, Joined Cases C-340/14 and C-341/14, R.L. Trijber and J. Harmsen, 2015 [E.C.R.] I-0000, § 30.
100 Idem, § 36.
101 Joined Cases C-340/14 and C-341/14, Trijber v. College van burgemeester en wethouders van Amsterdam and Harmsen v. Burgemeester van Amsterdam [2015] I-0000.
102 Idem, § 50. 103 Idem, § 51.
104 Joined Cases C-340/14 and C-341/14, Trijber v. College van burgemeester en wethouders van Amsterdam and Harmsen v. Burgemeester van Amsterdam [2015] I-0000, § 52.
Secondly, the meaning and scope of a term must be determined by considering its usual meaning in everyday language and by taking into account the context and the purposes of the rules of which it is part. Taking this into consideration, one could point out that the verbs “to Uber” and “Ubering” have become known in everyday language. Furthermore, when looking from the perspective of the consumer, one must conclude that consumers use the application solely as a means to order a taxi. The taxi service could thus be considered as UberPOP’s main activity. Therefore, UberPOP must be classified as a transport service.
3.3 UberPOP as neither an information society service nor a transport service If UberPOP were not to be considered an information society service, this would not automatically lead to the conclusion that it is thus a transport service, and vice versa. Other scenarios are possible, such as when a service would not charge commission for
intermediating between drivers offering rides and passengers seeking them.105 However, since
UberPOP does ask commission for its intermediation (usually between 20% and 25%), this scenario is implausible.
3.4 UberPOP in part an information society service
The AG also analyses if UberPOP’s connecting component could be regarded as an
information society service, while UberPOP’s main component would still be considered a transport service. The AG starts again by repeating the criteria of Article 1(2) of Directive 98/34, which provides that an information society service is a service provided for
remuneration, at a distance, by electronic means and at the individual request of a recipient.106
According to the AG, a service that connects potential passengers and drivers with one another by means of a smartphone application, would certainly meet those criteria. Uber provides that part of the fare paid by the passenger goes to Uber. Therefore, the connection service is remunerated by the passenger once the supply of transport has been conducted.107
Next, the service is provided at a distance since Uber and its passengers are not
simultaneously present. Thirdly, UberPOP makes use of a smartphone application that operates by means of the internet, which is clearly covered by the notion of provision by electronic means. Finally, the service is provided at the individual request of the passenger,
105 D. Geradin, ‘Online Intermediation Platforms and Free Trade Principles – Some Reflections on the Uber Preliminary Ruling Case’, CPI 2016, p. 119-133.
106 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015].
and not in a continuous way. By fulfilling the four criteria of Article 1(2) of Directive 98/34, Uber’s service falls within the scope of the provisions of Directive 2000/31.
Before starting to analyse whether UberPOP should be regarded as in part an information society service, it is important to note that this question can be interpreted in two different ways. First, the referring Court could have in mind that UberPOP is both an information society service within the meaning of Directive 98/34 and a transport service at the same time within the meaning of Title VI TFEU. According to Geradin108, a second scenario would be
that the referring Court sees UberPOP as composed of two distinct services, namely a transport service operated by the drivers and an intermediation service based on UberPOP’s software application and platform. This latter service could thus be seen separately from the provided transport service. This scenario would explain why the Spanish Court refers in its question to the applicability of Article 56 TFEU and Directive 2006/123, since these two would be excluded if UberPOP were to be classified as a transport service.109
Clearly, the AG agrees with the latter scenario. Advocate General Szpunar then states that we are dealing with a composite service, since part of UberPOP is provided by electronic means while the other part, by definition, is not.110 In my opinion, the Advocate General does not
explain why we should regard UberPOP as a composite service. Albeit using a different name for the phenomenon, the European Commission explains the concept of composite services in an OECD report of 2009. The EC explained that these so-called two-sided businesses operate in ‘a situation where two distinct user groups interact with each other through a common platform’.111
In its report, the Commission identified Global Distribution Systems as an example of a two-sided business. This transactional platform facilitates interactions between travel service providers and travel agents.112 In Google/Doubleclick113, the Commission identified another
two-sided business for the intermediation between publishers and advertisers. According to Lougher and Anowicz114, it must be concluded that sharing economy platforms are active on 108 D. Geradin, ‘Online Intermediation Platforms and Free Trade Principles – Some Reflections on the Uber Preliminary Ruling Case’, CPI 2016, p. 119-133.
109 Idem.
110 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015].
111 Travelport/Worldspan (Case COMP/M.4523) Commission Decision [2007] OJ L 314, § 9–11.
112 G. Lougher & S. Kalmanowicz, ‘EU Competition Law in the Sharing Economy’, Journal of European Competition Law & Practice 2016, 7(2), p. 87-102.
113 Google/DoubleClick (Case COMP/M.4731) Commission Decision [2008] OJ C 184, § 20–23. 114 Supra note 111.
one relevant market for two-sided intermediation. Furthermore, the ECJ concluded in these cases that two sided markets should be defined by looking at the product or service which is supplied through, and intermediated by, the platform.115 Thus, the current decision practice is
that sharing economy platforms are generally active on the relevant product market for the intermediation of the relevant underlying supply.116
UberPOP’s underlying supply constitutes the transfer of persons from A to B. This would thus mean that UberPOP is active on the transport market and therefore, in my view, should not be seen as a composite service, but solely as a transport service.
3.5 Conclusion
In this chapter, the legal nature of the service UberPOP has been analysed by taking the questions of the Commercial Court No 3 as a starting point. Four scenarios have been examined: whether UberPOP could be considered as an information society service (1), a transport service (2), neither of them (3) or as being in part an information society service (4). In scenario one, it must be established whether UberPOP meets the four criteria of Article 1(2) of Directive 98/34. In assessing whether UberPOP is provided by electronic means, the AG first concludes that UberPOP’s components are not economically independent.
Subsequently, the main component of the supply, which gives it meaning in economic terms, must be identified.117 First, the AG states that UberPOP has indirect control over the
economically significant aspects of the transport service. Secondly, drivers exercising activities for UberPOP do not pursue their activity independently of the platform. The
transport service thus forms the main component of UberPOP. This service is not provided by electronic means, and therefore UberPOP should not be classified as an information society service.
In scenario two, transport services must consist of or should be inherently linked to the physical act of moving persons or goods from one place to another. Since transporting people should be regarded as UberPOP’s main component, UberPOP’s service can be characterised by moving persons from one place to another. Then, the meaning and scope of a term must be determined by considering its usual meaning in everyday language and by taking into account the context and the purposes of the rules of which it is part. One could point out that the verbs
115 Travelport/Worldspan (Case COMP/M.4523) Commission Decision [2007] OJ L 314, § 9–11 and Google/DoubleClick (Case COMP/M.4731) Commission Decision [2008] OJ C 184, § 20–23.
116 Supra note 111.
117 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015], § 35.
“to Uber” and “Ubering” are being used regularly in everyday langfuage. Furthermore, consumers use the application solely as a means to order a taxi. Therefore, UberPOP must be classified as a transport service.
Regarding scenario three, not considering UberPOP an information society service, would not automatically lead to the conclusion that it is thus a transport service, and vice versa. Other scenarios are possible, such as when a service would not charge commission for
intermediating between drivers offering rides and passengers seeking them.118 However, since
UberPOP does ask commission for its intermediation (usually between 20% and 25%), this scenario is implausible. Therefore, this scenario is unlikely to take place.
In scenario four, the AG also analyses if UberPOP’s connecting component could be regarded as an information society service, while UberPOP’s main component would still be
considered a transport service. According to Lougher and Anowicz, UberPOP has to be classified as a transport service. According to the AG, the service of connecting potential passengers and drivers with one another could be regarded as independent of the supply of transport in the strict sense and, therefore, as an information society service. However, this would have no real legal effect, since the connection service has no economic meaning without the supplies of transport.119
118 D. Geradin, ‘Online Intermediation Platforms and Free Trade Principles – Some Reflections on the Uber Preliminary Ruling Case’, CPI 2016, p. 119-133.
119 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015], § 90.
4 Regulatory implications of defining UberPOP’s activities
Defining UberPOP as either an information society service, a transport service, a combination thereof or neither of them, brings several different regulatory implications with it. This chapter will explore the regulatory implications of the four scenarios. The chapter starts with analysing option one in paragraph 4.1, then goes to analysing the definition as a transport service (paragraph 4.2). The third option will be discussed in paragraph 4.3. Finally, paragraph 4.4 will analyse the situation if UberPOP were to be described as neither an information society service nor a transport service.
4.1 UberPOP as an information society service
If UberPOP would be classified as an information society service within the meaning of Directive 98/34, this would mean that UberPOP falls within the scope of both Directives 2000/31 and 2006/123, as well as Articles 49 and 56 TFEU.120 UberPOP could then benefit
from the freedom to provide services lied down in both directives and in Article 56 TFEU. For instance, Article 3(2) of Directive 2000/31 states that: “Member States may not, for reasons falling within the coordinated field, restrict the freedom to provide information society services from another Member State.”
However, Member States may nevertheless adopt measures that restrict the freedom to provide services. According to Article 3(4), those measures have to be: (1) necessary for either reasons of public policy, the protection of public health, public security or the protection of consumers; (2) taken against a given information society service which
prejudices the objectives referred to in point (1) or which presents a serious and grave risk of prejudice to those objectives; (3) proportionate to those objectives.121
The Barcelona Commercial Court No 3 asked with its fourth question whether restrictions in the form of making the service subject to a licence or in the form of an injunction based on the legislation on unfair competition, are valid derogations from Article 3(2) in accordance with Article 3(4) of Directive 2000/31.122 Making UberPOP subject to license requirements
certainly restricts the freedom to provide information society services throughout the European Union. The question is whether these restrictions can be justified under the derogations of Article 3(4) of Directive 2000/31. Geradin argues that, by connecting
120 D. Geradin, ‘Online Intermediation Platforms and Free Trade Principles – Some Reflections on the Uber Preliminary Ruling Case’, CPI 2016, p. 119-133.
121 Article 3(4) Directive 2000/31/EC.
122 Case C-434/15, Request for a preliminary ruling from the Juzgado Mercantil No 3 de Barcelona (Spain) lodged on 7 August 2015 — Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015].
passengers with unsafe drivers or drivers using unsafe cars, Uber could harm both passengers, third-party passengers and pedestrian of the service. This could mean that a measure requiring Uber to comply with restricting safety measures may not constitute an infringement of Article 3(4) of Directive 2000/31.123
Thus, even in UberPOP were to be classified as an information society service, this would not mean that the service would not be subject to national regulation. If their measures meet the conditions specified in Article 3(4) of Directive 2000/31, Member States can regulate UberPOP and other intermediation services as they like.124
4.2 UberPOP as a transport service
If UberPOP were to be regarded as a transport service, the service would be excluded from the scope of Directive 2006/123 and Article 56 TFEU. The service would then be subject to Title VI of the TFEU. Transport falls within the scope of shared competences of the European Union and its Member States, and the competence has not yet been exercised by the European Union. This means that the field of transport lies within the competences of the Member States.
However, this would not give Member States the opportunity to regulate the service as it wishes. The ECJ stated in the Yellow Cab Case125 that national legislation requiring prior
authorization to operate a transport service, restricts the number of service providers. Therefore, such a measure constitutes, in principle, a restriction of freedom of
establishment.126 In Gebhard127 and Hartlauer128, the CJEU clarifies that some legislation
could be justified by overriding reasons of general interest, provided that the legislation is both proportionate and necessary to attain its objective.129 The ECJ then concludes in Yellow
Cab Case that purely economic objectives cannot be classified as an overriding reason in the
public interest justifying a restriction of a fundamental freedom guaranteed by the Treaty.130
In the case of UberPOP, it remains to be seen whether the requiring prior authorization can be justified in the general interest. The Spanish Government invokes traffic management and
123 D. Geradin, ‘Online Intermediation Platforms and Free Trade Principles – Some Reflections on the Uber Preliminary Ruling Case’, CPI 2016, p. 119-133.
124 D. Geradin, For a Facts-Based Analysis of Uber's Activities in the EU: Addressing Some Misconceptions, TILEC Discussion Paper [2017].
125 Case C-338/09, Yellow Cab Verkehrsbetriebs v. Landeshauptmann von Wien, [2010] ECR I- 13927. 126 Supra note 122.
127 Case C-55/94 Gebhard v Consiglio dell’ordine degli avvocati eprocuratori di Milano [1995] ECR I-4165. 128 Case C-169/07, Hartlauer, [2009] ECR I-1721.
129 Supra note 126, § 44. 130 Supra note 124, § 51.
road safety as justifications.131 However, Uber already imposes certain minimum requirements
on its drivers and their vehicles. Moreover, there are no reports found on UberPOP drivers causing road accidents. Therefore, there is no statistical proof stating the necessity of
imposing licensing requirements in order to ensure road safety. Also, it is not hard to imagine that the licensing requirements are actually disguised restrictions on the free movement of services, objectified by the wish to protect the economic interest of incumbent operators. Thus, in my view, imposing licensing requirements on UberPOP should be seen as a purely economic objective that cannot be justified in the public interest.
4.3 UberPOP as neither an information society service nor a transport service
In case UberPOP were to be classified as neither an information society service, nor as a transport service, UberPOP would fall within the scope of Directive 2006/123 and could benefit from the free movement of services.132
In that regard, the Commercial Court No 3 of Barcelona asks whether Article 15 of the Spanish Law on Unfair Competition is contrary with Article 9 of Directive 2006/123. Article 9 states that Member States shall not make access to a service activity or the exercise thereof subject to an authorisation scheme. However, Member States can derogate from this provision if three requirements are met: (1) the authorisation scheme does not discriminate against the provider in question; (2) the need for an authorisation scheme is justified by an overriding reason relating to the public interest; (3) the objective pursued cannot be attained by means of a less restrictive measure, in particular because an a posteriori inspection would take place too late to be genuinely effective.133
Article 15 of the Spanish Law on Unfair Competition concerns the infringement of rules governing competitive activity.134 Since the provision does not hold any substantive
requirements, the underlying issue that is been addressed is whether imposing the licensing requirements required for taxi’s on UberPOP infringes Article 9 of Directive 2006/123.135
First, it should be stated that imposing licensing requirements could be justified by an overriding reason related to the public interest, for instance public safety or consumer protection. Of course, the requirements must be non-discriminatory and proportionate.
131 Opinion of Advocate General Spuznar of 11 May 2017, Case C-434/15 Asociación Profesional Élite Taxi/Uber Systems Spain, S.L. [2015], § 83.
132 Article 16 Directive 2006/123/EC. 133 Article 9 Directive 2006/123/EC.
134 Ley 3/1991 de Competitia Desleal, Article 15. 135 Supra note 132.
