Uber: A Taxi Service Or An App? Analysis Of An Ecj Advocate-General’S View

Lorna Woods, Professor of Internet Law, University of Essex

Case C-434/15 Asociación Profesional Elite Taxi v. Uber Systems Espana SL, Opinion of the Advocate General, xi May 2017

This instance is the commencement earlier the Court of Justice specifically on the sharing economic scheme as well as the extent to which coordination via platform should last treated equally removing unnecessary red-tape, or equally seeking to avoid regulation inward the populace involvement (in the cast of concerns most rider safety) equally good equally permitting unfair competition.  While the Commission seems inward favour of the (unequal) sharing economy, Advocate General Szpunar sees the seat a piffling differently.

FACTS

Castilian constabulary envisaged that taxi firms, as well as carry intermediaries, should concur a licence.  Asociación Profesional Elite Taxi (APET) sought to challenge the utilization Uberpop, an app which allows non-professional private drivers to carry passengers using the drivers’ ain cars, where neither Uber nor the drivers have got the requisite licences.   Passenger users download the app from Uber as well as provide their depository fiscal establishment details to Uber.  On receiving a asking for a car, the app notifies drivers as well as calculates the fare (this latter based on distance but likewise need for taxi services at that time).  The payment is made to Uber, which deducts a pct as well as so pays the balance to the driver.  To utilization the app equally a driver, an private must comply amongst Uber’s terms as well as conditions. APET sought a cease as well as desist monastic tell as well as a prohibition of futurity similar demeanour on the ground of unfair competition.  Uber resisted APET’s claims on the ground that it was non providing transport/taxi services but was rather a digital intermediary. 

QUESTION REFERRED

The national courtroom referred the questions of how to variety out Uber’s services to the Court of Justice. The respond would impact amongst European Union derived legal authorities would last applied to Uber, amongst the corollary that the State’s liberty to impose licensing requirements would correspondingly vary depending on which authorities was held to last applicable.  In essence, the query was whether Uber roughshod inside the provisions of the e-Commerce Directive (Directive 2000/31) equally an data social club service provider, or whether the Services Directive (Directive 2006/123) or the TFEU itself applied inward this context.  Here, at that spot is a distinction betwixt a service full general as well as a service inward the champaign of transportation.

OPINION

The commencement stage of the sentiment comprises some full general remarks most the significance of the ruling as well as the impact of different types of competence on the outcome.  The Advocate General likewise assumed that the respondent inward the instance should last the Dutch society (Uber BV), which operates the app inward the EU, rather than the Castilian company, Uber Spain, which is responsible for advertising.

The Advocate-General so moved on to consider the range of the e-Commerce Directive, specifically the pregnant of ‘information social club services’ equally defined inward Article 2(a) of that Directive yesteryear reference to Article 1(2) of Directive 98/34 (the Directive on notifying novel technical barriers to trade). Under Article 1(2), an data social club must last a service provided for remuneration, at a distance, yesteryear electronic agency as well as at the private asking of a recipient. In the take in of the Advocate-General, the questions of whether at that spot is a service provided for remuneration as well as at private asking appeared elementary [para 27], but questions arose equally to the bear witness of whether the service is provided at a distance yesteryear electronic means.  In the eyes of the Advocate General the work related to the fact that what was inward number was a ‘composite service’ [para 28].

The Advocate-General emphasised that the Definition concerned services “’entirely transmitted, conveyed as well as received yesteryear wire, yesteryear radio, yesteryear optical agency or yesteryear other electromagnetic means’” [para 29, quoting 2nd indent of 2nd subparagraph of Article 1(2), Directive 98/34, emphasis inward Opinion].  So, services non delivered yesteryear electronic agency did non autumn inside the range of the e-Commerce Directive; services which were incidental to such services would likewise non last liberalised yesteryear the e-Commerce Directive. Assuming that they did would undermine the perceived effectiveness of European Union constabulary [para 31]. Thus:

… an interpretation of the notion of data social club services which brings online activities amongst no self-standing economical value inside its range would last ineffective inward terms of the attainment of the objective pursued yesteryear Directive 2000/31. [para 32]

The Advocate General suggested that a composite service would last treated equally an data social club service inward 2 circumstances:

-          where the 2 elements could last seen equally economically independent of i some other they would last treated separately for regulatory purposes – the electronic chemical element probable falling amongst the eCommerce Directive; and

-          where the service  provided was substantially or predominantly provided yesteryear electronic means.

Influenza A virus subtype H5N1 mutual illustration of the commencement instance would last a iii political party province of affairs where an intermediary service provider facilitates a transaction betwixt a user as well as an independent service provider/seller.  While the intermediary provides added value, the trader hither pursues an independent business.  In a 2 political party province of affairs – where the intermediary provider is likewise the provider of a service non provided yesteryear electronic means, the 2 elements cannot last seen equally separable; rather, they ‘form an inseparable whole’ [para 35]. 

In that instance, it volition last necessary to come across if the composite service falls inside the minute category; that is, whether the package falls inside the eCommerce Directive or exterior it. For determining the respond to this minute question, the primal chemical element is where the economical value lies. So where the chief factor is performed online that service should last classified equally an data social club service (assuming the other elements of the bear witness are met); conversely, where it is non so the service does non autumn inside the eCommerce Directive. The Advocate General, citing Ker-Optika (Case C-108/09) suggests that this bear witness would last satisfied inward the instance of online sales (via the seller’s ain website).  Delivery of goods is ‘simply the surgical operation of a contractual obligation’ [para 36]. 

Applying these tests here, the Advocate General noted that Uber provided to a greater extent than than a matching service of passengers to taxi drivers. It sets downwards the essential characteristics of the service to last provided (eg character as well as historic menstruation of vehicle; drivers to have got licences as well as no criminal record), it informs drivers where as well as when at that spot are probable to last a high mass of trips and/or preferential fares, as well as it sets the prices.  Uber maintains indirect command over drivers through its ratings function.  Thus, inward the take in of the Advocate General,

‘… Uber exerts command over all the relevant aspects of an urban carry service ….  (…) Uber thus controls the economically important aspects of the carry service offered through its platform’ [para 51].

 While the Advocate General sought to distinguish this instance from the cases concerning whether drivers are employees of Uber, on the ground of this indirect command the Advocate General concluded that:

 ‘Uber’s activity comprises a unmarried provide of carry inward a vehicle located as well as booked yesteryear agency of the smartphone application as well as this service is provided, from an economical standpoint, [citations omitted] yesteryear Uber or on its behalf’ [para 53]. 

The Advocate General sought to distinguish the activity of Uber from intermediary services on the ground that Uber drivers create non conduct out an independent activity. Instead, their activity exists solely because of the existence of the platform.  By contrast, flying or hotel booking systems are dissever from the independent services operated yesteryear the hotels as well as airlines as well as for whom the websites are exactly i machinery of advertising their services. Furthermore, it is the hotels as well as airlines which command the prices as well as the atmospheric condition on which their services are offered. Finally, a alternative is offered to the user betwixt hotels/airlines. 

In opposition to the Commission’s views on the sharing economy, the Advocate General did non retrieve that the fact that Uber did non ain the cars was determinative. Uber is to a greater extent than than a ‘mere taxi booking application’ [para 64].  Because of the extent of the invention on the carry sector caused yesteryear the way the apps links drivers as well as rider as well as the atmospheric condition on which it does this, ‘it is undoubtedly the provide of carry which is the chief provide as well as which gives the services the economical meaning’ [para 64].  The provide of connective services is ancillary to this.

Having determined that Uber’s services create non autumn inside the eCommerce Directive, the Advocate General considered the Services Directive: Article 2(2)(d) specifies that the Services Directive does non apply to carry services.  The Advocate General confirmed that Uber’s taxi services were carry services inward the context of Article 2(2)(d) Services Directive equally recital 21 refers to ‘urban carry [and] taxis’ [cited para 68].  The service likewise falls inside the exception to the Treaty rules on gratis motility of services (Article 58(1) TFEU) as well as thus bailiwick to the specific carry sector rules inward Article xc TFEU et seq.

The Advocate-General concluded yesteryear considering the seat should Uber’s app last deemed to autumn inside the eCommerce Directive.  He noted that Member United States of America would so last express inward terms of the atmospheric condition that they could apply to such a service; drivers nevertheless would soundless last bailiwick to whatever relevant national regulation. The Advocate General argued that Uber nonetheless could last penalised for unfair contest equally ‘it is responsible non only for the provide whereby passengers as well as drivers are connected amongst i another, but likewise for the activity of those drivers’ [para 86], whether or non the booking app were seen to last dissever from the shipping service or not.  The Advocate General thus proposed that the eCommerce Directive

‘does non foreclose requirements relating to the activity of carry inward the strict feel beingness established inward national constabulary or the imposition of penalties on Uber for failing to comply amongst those requirements, including yesteryear agency of an injunction ordering it to discontinue the service’ [para 88].

Comment

This sentiment volition last grabbing the headline tidings because of the headline fact that – shock, horror- Uber is a taxi company.  The reasoning used is worth a piffling to a greater extent than attention, because our agreement of that reasoning, if the Court of Justice follows the same lines, volition impact whatever wider ramifications for the ‘sharing’ economic scheme to a greater extent than generally.  So spell the Advocate-General starts his sentiment yesteryear suggesting that the bailiwick thing of the instance is ‘narrow’ (para 2), the repercussions are potentially a piffling broader.  A recognition of this fact tin last inferred yesteryear the approach of the Advocate General to the query of range of the eCommerce Directive as well as the insistence that the eCommerce Directive regulates services that are alone delivered yesteryear electronic agency – the emphasis is that of the Advocate General (para 29), amongst the final result that it cannot last said

That whatever trade-related online activity, last it simply incidental, secondary or preparatory inward nature, which is non economically independent is, per se, an data social club service (para 37).

The sentiment re-iterates this betoken when considering the app equally an data social club service (see below). The significance of this is that the eCommerce Directive cannot last used to avoid regulation of the chief service, at to the lowest degree to the extent that such regulation is non a barrier to merchandise unacceptable to European Union constabulary to a greater extent than by as well as large as well as equally exemplified yesteryear the Services Directive, exactly because some seem of the draw of piece of work concern is on-line.  This leads to a minute full general point: the Opinion is noteworthy for the way it manoeuvred the circumstances of the instance around to the twin obstacles to national regulation of the eCommerce Directive as well as the Services Directive, peculiarly given that the Commission, inward its Communication on the Collaborative Economy (COM(2016)356) seem to take in the Services Directive inward particular providing a ground for such services. 

The tests identified yesteryear the Advocate-General volition non seem odd – talking most whether the different elements of a composite service are severable or preponderantly i thing or some other tin last seen elsewhere, for illustration inward the instance of goods as well as services (an illustration of which is given yesteryear Advocate General Szpunar inward his reference to Ker-Optika, para 36), or fifty-fifty questions of competence. 

Influenza A virus subtype H5N1 span of points tin last made here.  The commencement is that inward some of the factors to last taken into draw of piece of work concern human relationship inward determining independence, the Advocate General comes unopen to eliding the query of what is the nature of the service amongst the query of who is providing it. Many of the factors the Advocate General considered reverberate the Commission’s Communication from final year. Of potentially to a greater extent than effect is the impact considering equally a factor the query of whether the service would be without the app.  This tin last seen yesteryear contrasting the seat of Airbnb amongst Uber.  If nosotros expect at control, Uber is caught because of its command over primal aspects such equally access to passengers, as well as cost (detailed inward paras 43-51); on these considerations Airbnb which does non fix cost mightiness non last caught. However, if the bear witness is that ‘the activity exists solely because of the platform’ (para 56), for Airbnb equally for Uber, the respond mightiness good last ‘yes’.  Of course, Uber as well as Airbnb are different inward that carry does non autumn inside the Services Directive but rather is dealt amongst yesteryear specific provisions inside the TFEU.  Nonetheless, the recitals to the Services Directive specify that:

it does non apply to requirements, such equally route traffic rules, rules concerning the evolution or utilization of land, town as well as province planning, edifice standards (Rec 9),

some of which may impact the running of hotels or B&Bs. Further, the directive does non apply to taxation (Article 2(3)), so for example, taxes on curt term lets may last unaffected yesteryear the Services Directive (though dealt amongst nether the TFEU).

Influenza A virus subtype H5N1 farther betoken that is worthy of greenback is the effect of seeing Uber as well as the drivers equally providing dissever services.  The requirement to have got a licence to provide a connective service inward the context of shipping would autumn inside the range of the eCommerce Directive as well as would last caught last the prohibition on authorisations fix out inward Article 2(h)(i); the Advocate General was of the sentiment that is was unlikely that whatever restriction on the electronic seem of the service could last justified yesteryear considerations of populace interest.  The prohibition does not, however, extend to the regulation of carry services - they are non provided yesteryear electronic means.  So the regulation of taxi services remains possible and, equally noted, Uber remains responsible for the drivers’ activities (para 86).  Arguing Uber’s activity equally whole should create goodness from the liberalising principles inward the eCommerce Directive would run the run a jeopardy of undercutting whatever cast of regulation ‘because all traders are currently inward a seat to offering services yesteryear electronic means….’ (para 87).  Could a similar declaration last position forrard inward other sectors of the sharing economy?  In principle, yes, but presumably only where the platform has exerted Uber-like command over the actual provision of the services.

Even when the Grand Chamber Court of Justice has handed downwards its ruling, this volition non last the terminate of the Uber saga.  Currently pending earlier the Court is a reference from French Republic concerning the imposition of penalties on Uber for running an unlicensed taxi service: Case C-320/16 Criminal Proceedings against Uber France, which raises the query of whether French Republic should have got notified its rules equally a technical regulation nether Directive 98/34.

Barnard & Peers: chapter 14

Photo credit: boing boing

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