Uber: transport services, not e-commerce? | In Principle

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Uber: transport services, not e-commerce?

According to the advocate general’s opinions in C-434/15 Elite Taxi and C-320/16 Uber France, Uber does not provide information society services, but local transport services which may be regulated by EU member states.

It has been more than a year since we signalled that the Court of Justice of the European Union would need to resolve the legal classification of the services provided by Uber. We predicted then that a ruling from the court would come by mid-2016. That did not happen. It was not until May and July 2017 that Advocate General Maciej Szpunar submitted his opinions to the Court of Justice in cases concerning Uber. Opinions from advocates general present a proposed legal resolution of the case. They are not binding on the Court of Justice, but most cases are ultimately decided in line with the advocate general’s proposal.

Opinion in Asociación Profesional Elite Taxi v Uber Systems Spain SL (Case C-434/15)

In this case the request for a preliminary ruling concerns whether the activity conducted by Uber is covered by the freedom to provide services in the EU as an information society service, or is a local transport service which can be regulated by the member states.

E-Commerce Directive (2000/31/EC)

An information society service is defined in the directive as “any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.” Such a service is “entirely transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means.”

The advocate general points out that there are some composite services that include elements which are not transmitted electronically. In his view, where a service has both electronic and non-electronic elements, its ultimate character is determined by whether these elements are “economically independent.” But if these elements form “an inseparable whole,” he asserts that “it is necessary to identify the main component of the supply envisaged, that is to say, the component which gives it meaning in economic terms.”

Using the example of online sales, where all the essential components of the transaction are performed by electronic means, and the delivery of the goods purchased is simply the performance of a contractual obligation, the online sale is an information society service.

With respect to Uber, the advocate general stresses that Uber drivers offer passengers a transport service “for which they are paid an amount which far exceeds the mere reimbursement of expenses incurred,” and thus it cannot be regarded as a ride-sharing platform in the sense of the “sharing economy.” Uber matches supply (which it has created) and demand on its platform, defines the fundamental features and organises the functioning of the service. It is Uber that establishes the conditions for performance of the service and sets the price, and thus exerts control over all essential elements of the transport.

For this reason, in the advocate general’s opinion, Uber’s activity is a transport service, where the activity of the drivers within the platform created by Uber can exist only through its intermediation. This is the difference between the Uber platform and platforms for reserving hotel rooms or purchasing airline tickets, as the activity of the hotels and airlines is independent of the reservation service.

While the Uber concept is undoubtedly innovative, in the advocate general’s view the innovation pertains to the field of urban transport. The fundamental service provided is transport, and that is what gives the service its economic meaning. Consequently, the Uber service is not an information society service.

With respect to Uber’s liability, the advocate general states that Uber organises and administers a system of urban transport on demand, and thus is not merely an intermediary between passengers and drivers. For this reason, even if the matching service were regarded as a service independent of the transport service, provided by electronic means, it cannot be argued that under the directive Uber’s activity must be entirely liberalised. The directive does not prohibit the establishment of national requirements concerning transport activity, and thus in the advocate general’s view Uber could be punished for failing to comply with such requirements, even by ordering it to discontinue the service.

However, he stresses that the need to ensure the effectiveness of regulations governing the performance of strictly transport services cannot justify a blanket requirement to hold a licence to provide intermediation services. But in his view this issue is legally irrelevant because the service of matching passengers and drivers has no economic meaning separate from transport services, and these can be subject to various requirements of national law.

Services Directive (2006/123/EU)

The advocate general observes that because Uber’s activity is an urban transport service for purposes of the Services Directive, not an information society service, this activity is excluded from the operation of the Services Directive. Transport services are covered by an exception from the freedom to provide services set forth in Art. 58 TFEU, and in the absence of EU regulations are subject to national regulations.

Opinion in Uber France SAS (Case C-320/16)

The request for a preliminary ruling in this case involves whether national regulations prohibiting a system matching operators of transport services with passengers in violation of national regulations governing transport services should have been notified to the European Commission under the EU’s technical notification rules.

Technical Standards and Regulations Directive (98/34/EC, superseded by Directive 2015/1535/EU)

This directive requires the member states to notify the European Commission of proposed national regulations involving information society services and technical standards, and other requirements or rules affecting services (known as “rules on services”). If such regulations are enacted without notification, they are unenforceable against individuals.

In his opinion in this case, the advocate general cites his earlier opinion in Elite Taxi to the effect that the composite service offered by Uber is not an information society service but lies within the field of transport. He then points out that the aim of the national regulation here, which only incidentally affects information society services, is to prohibit and penalise the organisation of a system for putting customers in touch with persons engaging in the carriage of passengers in contravention of the rules governing such transport activities. The French law in question is aimed at ensuring the effectiveness of regulations governing transport services which are not covered by the Technical Standards and Regulations Directive.

As the advocate general further observes, “If every national provision that prohibited or punished intermediation in illegal activities had to be regarded as a technical regulation merely because the intermediation most likely takes place by electronic means, then a great number of internal rules in the Member States, written and unwritten, would have to be notified as technical regulations. That would lead to an unwarranted extension of the obligation to notify, without that really contributing to the attainment of the objectives of the notification procedure, the purpose of which is to prevent the adoption by the Member States of measures that are incompatible with the internal market and to enable economic operators to make more of the advantages inherent in the internal market.”

Summary of advocate general’s opinions

The advocate general concludes that the service provided by Uber is a composite of a service performed by electronic means (matching passengers with drivers) and a service not performed by electronic means (transport), in which the main component giving the service its economic meaning is transport. Thus the Uber service is not an information society service, but an urban transport service, which can be regulated by the member states.

In line with the advocate general’s opinions, because the member states have the right to enact regulations governing the rules for provision of urban transport services, they also have the right to enact regulations ensuring the effectiveness of those regulations. Even if these regulations incidentally affect information society services, they do not constitute technical regulations (rules on services) and thus are not subject to notification under the Technical Standards and Regulations Directive.

Moreover, as EU law does not prohibit the member states from establishing national requirements governing urban transport activity, in the advocate general’s opinion there is nothing preventing Uber from being punished for failure to comply with such requirements.

Agnieszka Kraińska, EU Law practice, Wardyński & Partners