Uber may face stricter regulation by Member States after EU’s highest court rules it is a transport service

Judgment in Case C-434/15, Asociación Profesional Elite Taxi v. Uber Systems Spain SL

In 2014, a professional taxi drivers’ association based in Barcelona brought an action before the local Commercial Court. The association requested the court to declare that Uber’s practices in Spain constitute misleading trade practices. The claimant pointed that neither Uber Systems Spain nor the non-professional drivers providing transport services via the application, were granted licenses for providing taxi services.
The Barcelona court referred the matter to the Court of Justice of the EU (“CJEU”) for a preliminary ruling, asking the CJEU to clarify whether that kind of services provided by Uber using non professional drivers (which are different from other Uber options where drivers do have a license similar to car-rental chauffeurs) can be classified as transport services, information society services or both.
On 20 December 2017, the CJEU ruled that Uber should be considered as a transport company.
The CJEU affirmed that an intermediation service that enables the transfer, by means of a smartphone application, of information concerning the booking of a transport service between the passenger and a non-professional driver could be classified as an “information society service (…) normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.”
However, the CJEU found that the service provided by Uber does not simply constitute an intermediation service. The CJEU highlighted that in situations where passengers are transported by non-professional drivers using their own vehicles, the provider of that intermediation service simultaneously offers urban transport services. The CJEU further took into account Uber’s decisive influence over the conditions under which that service is provided by such drivers, such as the imposition of a maximum fare, as well as the company’s control over drivers’ conduct. On the basis of these elements, the CJEU concluded that the intermediation service in question forms an integral part of an overall service whose main component is a transport service.
As a result of the CJEU’s ruling, Uber may be subject to stricter national regulation and licensing in the 28 EU Member States as a taxi operator. Furthermore, Uber’s service must be excluded from the scope of the freedom to provide services in general as well as from the directive on services in the internal market and the directive on electronic commerce. Consequently, it is for the Member States to determine the conditions under which such services are to be provided in conformity with the Lisbon treaty.
Uber maintained that the CJEU’s ruling has a limited impact odecisive influence” over the conditions under which drivers provide their services, may have an impact beyond the strict terms of the ruling itself: it may question Uber drivers’ self-employment status, as such influence suggests that Uber drivers are in fact workers entitled to the national minimum wage or sick pay and that they may also be taxed on an employment basis. Consequently, Uber drivers’ worker status may imply that fares will increase. It remains to be seen to what extent the CJEU’s ruling may have impact on other digital platform providers and innovative business models challenging the status quo which may also be forced to be classified as traditional companies.