Uber gains key support ahead of EU Court hearing

By Jorge Valero | EurActiv.com

Uber's CEO Travis Kalanick has visited Brussels frequently over the last months, last time in November. In the picture, with Commissioner for Innovation, Carlos Moedas, on 23 May.

A majority of EU governments are expected tomorrow (29 November) to back – at least partly – the ride-hailing firm’s claim of being a digital platform, opening the way for a lighter regulatory oversight of the American-based company than if it was considered like a normal transport firm.

France, Spain and Ireland meanwhile will argue that the startup must meet transport service regulations, EurActiv has learned.

The EU Court of Justice will hold a hearing after a judge in Barcelona referred the case in July 2015.

The Spanish judge asked whether the firm should be considered as a transport service provider or a digital platform.

A local taxi drivers’ association (Asociación Profesional Élite Taxi) argued that Uber represented unfair competition, claiming it was a transport service company that did not comply with the same regulations, in particular in terms of chauffeurs’ licenses.

But Uber argues it merely offers a digital platform for self-employed drivers, and therefore should fall under the e-commerce and information services directives.

In this case, the startup should function seamlessly across Europe without any national obstacle or local restrictions.

High-profile case

The EU Court’s plenary session (Grand Chamber), made of 15 judges, will hear the opinion of at least a dozen of parties, proof that the case is high profile.

This will be the first time EU judges give their view on the disruptive sharing economy.

An opinion by the Advocate General is expected during the first quarter of 2017. The verdict could come in the second half of next year.

The ruling will contribute to harmonise national laws, given the numerous restrictions imposed  on Uber by local and national authorities across Europe.

Moreover, it could have an impact on how authorities deal with other sharing economy players in other fields.

Seven member states, the European Commission and the European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland) will take the floor on Tuesday.

According to sources close to the case, a majority of national governments planning to attend the hearing will support Uber’s position, at least partially.

The Netherlands, which is expected to be part of this group, put forward a paper during its semester at the EU helm calling for “an innovative and innovation-friendly regulatory approach” to sharing economy firms.

Estonia has also enthusiastically embraced Uber. The country set up a system that automatically sends drivers’ income data to the tax office, addressing one of the main flaws of Uber’s model.

On the opposite camp, Spain, France and Ireland will argue that the California-based company should be considered a transport company, and therefore fulfill the same kind of regulations.

Control matters

The Commission is expected to recall its position, laid out in its Communication on the sharing economy, unveiled last June.

The document offered criteria to determine whether a sharing economy firm provides the underlying service or not.

For the executive, the key issue is to determine the level of control and influence the platform exercises over its service providers – the drivers in the case of Uber. Who fixes the price and other conditions, or who owns the assets could determine the level of control, according to the Commission.

The taxi drivers’ association, supported by the Spanish government, insists that Uber is a transport service provider, on the grounds that chauffeurs have no flexibility.

But the company will challenge this opinion, saying it does not request any exclusivity and that drivers are free to determine their own timetable.

Uber representatives noted that there is an “increasing understanding of what the company is,” including in Barcelona.

They explained that three recent cases in the Catalonian city labelled the company as a digital platform, and the city hall decided not to object.

Sources from the Spanish regulator said they were not aware of these cases.

More to come

This is not the only legal challenge Uber faces in Europe.

The EU Court of Justice is in the process of assessing a second case on Uber, referred by France.

French authorities have been among the most restrictive in Europe towards the startup. The situation could change significantly once the Commission decides on the complaint submitted by Uber against national laws in France.

But a decision is not expected until after the French elections in Spring 2017. The French government is indeed wary of the protests that could follow its decision.

Meanwhile, the ride-hailing firm recently lost a case in a London Employment Tribunal. Drivers won the right to be considered as workers of the company, instead of self-employed.

The decision is expected to bring additional rights for them. The company said it would appeal against the ruling, which could also impact how Uber chauffeurs are considered across Europe.

Background

Gross revenue in the EU from collaborative platforms and providers was estimated to be €28 billion in 2015. Revenues in the EU in five key sectors almost doubled compared with the previous year and are set to continue expanding robustly.

Growth has been strong since 2013 and accelerated in 2015 as large platforms invested significantly in expanding their European operations. Going forward, some experts estimate that the collaborative economy could add €160-572 billion to the EU economy, says the European Commission.

A Eurobarometer opinion poll found that 52% of EU citizens are aware of the services offered by the collaborative economy and 17 % have used such services at least once.