Elite Taxi and Uber France : do Member States have free rein to prohibit and criminalise ridesharing activities?

By Pieter van Cleynenbreugel

Long gone are the days when a taxi was the only means of private transport in return for payment to be obtained in our cities. The ridesharing smartphone application provider Uber has shaken up the way in which people book, offer and conceive private rides. One of the most far-reaching and therefore controversial Uber applications is UberPOP. That application enables non-professional individuals (in contrast with UberX, which relies on professional – and often licensed – drivers) to act as remunerated drivers, transporting other private individuals from point A to point B. As UberPOP drivers generally are non-professional drivers making ancillary revenue out of their ridesharing activities, they do not have a taxi or other transport license and are not employed by Uber. That fact has encouraged regulators strictly to limit or even to prohibit UberPOP activities for safety and consumer protection reasons.

A prohibition thus issued in Barcelona gave rise to a first ruling by the Court of Justice on the matter in the Elite Taxi judgment (C-434/15) rendered last December 2017. In some Member States, such as France, the offering of unlicensed transportation activities has even been subject to criminal law sanctions, which led to the Uber France judgment (C-320/16) rendered on 10 April 2018. In both judgments, Uber argued that the national regulations in place were incompatible with EU law and more particularly with the provisions of the e-commerce (Directive 2000/31) and services (Directive 2006/123) Directives. The Court flatly ruled out that possibility, considering Uber to offer services in the field of transport not actually governed by EU secondary legislation.

Uber offers a service in the field of transport

The common defence line of Uber against Member State-issued prohibitions or criminal sanctions in both cases had been that it does not engage in the offering of transportation services subjected to regulatory licensing requirements itself. As a smartphone application, Uber only intermediates between potential drivers (service providers) and their clients (service recipients). It enables a driver and a client to get in touch, it applies a more or less transparent pricing scheme that allows to determine the costs of the ridesharing service and offers a quality review mechanism so that clients can evaluate the service offered by their independent and non-professional chauffeur. In doing so, Uber argues, it offers essentially a so-called information society service, the offering of which is made possible in the European Union by means of Article 4 of the e-Commerce Directive. According to that provision, Member States may not subject the provider of information society services to a preliminary authorisation scheme. Uber would therefore not need an authorisation to do business in those EU Member States. Maybe its non-professional drivers would need one, but as they are not employees of Uber, they would be responsible for that matter themselves and Uber itself does not require them to have such a licence prior to using the platform…

In both Elite Taxi and Uber France and in accordance with the Advocate General’s Opinion in that first case (discussed previously on this blog), the Court of Justice rejected this line of defence, confirming that Uber itself, through its UberPOP application, offers more than simple intermediation. As the Court summarised, intermediation offered by Uber is

‘inherently linked to the offer by that company of non-public urban transport services, in view of the fact that, in the first place, that company provided an application without which those drivers would not have been led to provide transport services, and the persons who wished to make an urban journey would not have used the services provided by those drivers and, in the second place, that company exercised decisive influence over the conditions under which services were provided by those drivers, inter alia by determining the maximum fare, by collecting that fare from the customer before paying part of it to the non-professional driver of the vehicle, and by exercising a certain control over the quality of the vehicles, the drivers and their conduct, which could, in some circumstances, result in their exclusion’ (Uber France, para 21).

In other words, given that Uber has created a market for a new service for which there was previously neither supply nor demand on the one hand and that it exercises decisive control over the conditions of exercise of those services, it does more than simply linking chauffeurs and clients. As a result, the Court found that the service offered by Uber in offering ridesharing applications cannot consist of intermediation alone – it only exists because of the underlying physical act of moving persons from one place to another by the non-professional chauffeur. This led the Court to conclude that the UberPOP service offered by Uber was a ‘service in the field of transport’ (Elite Taxi, para 41).

Elite Taxi: Member States can continue to regulate services in the field of transport

As a service in the field of transport, Member States are left with a significant discretion to regulate such services. Services in the field of transport are neither covered by the 2006 Services Directive (Art. 2(2)(d)) nor by Article 56 TFEU, which guarantees the freedom to provide services in the EU internal market. Article 58 TFEU in that regard confirms that services in the field of transport are governed by the Treaty title on Transport.

Per Article 91(1) TFEU, the EU has to adopt secondary legislation to ensure the provision urban non-public transport services in that context. As the Union has yet not acted in this regard, the Court of Justice had no trouble finding that Member States remained responsible (for now) for the authorisation and regulation of transport services on their territory (Elite Taxi, para 47). As a result, Member States could continue to prohibit UberPOP, without EU law offering a means to set aside those prohibitions.

Uber France: criminal law provisions relating to transport intermediation activities do not need to be notified to the European Commission

To the extent that Member States may indeed regulate Uber activities as transport services, questions also arise as to what extent such regulations need to be notified to or approved by the European Commission. That issue constituted the core of the Uber France case. In the realm of information society services, Article 8 of (the in the meantime repealed) Technical Standards Directive 98/34 (no longer in force, yet currently replaced by Directive 2015/1535 containing similar requirements) requires Member States immediately to communicate to the Commission any draft technical regulation. Technical regulation in that regard is defined as

‘technical specifications and other requirements or rules on services, including the relevant administrative provisions, the observance of which is compulsory, de jure or de facto, in the case of marketing, provision of a service, establishment of a service operator or use in a Member State or a major part thereof, as well as laws, regulations or administrative provisions of Member States […] prohibiting the manufacture, importation, marketing or use of a product or prohibiting the provision or use of a service, or establishment as a service provider’ (Article 1(11) Directive 98/34).

To the extent that such regulations are not notified to the Commission, Member States cannot invoke and enforce them against services providers on their territory (as confirmed in C-194/94, CIA Security International).

A French provision imposing criminal sanctions on unlicensed transport services had targeted Uber’s UberPOP activities in that respect. France had not notified that provision to the European Commission, resulting in a claim by Uber that this provision was not enforceable vis-à-vis the intermediation services it offers in the field of transport through its UberPOP application. According to Uber, the rule in place was a technical regulation in accordance with the abovementioned definition, which had not been notified to the Commission. The Court had to answer to the question whether the fact that the service in the field of transport also covered in part an intermediation service was sufficient to bring the French criminal law rules within the scope of the Technical Standards Directive. In other words, a question arising in this case was whether the intermediation element underlying Uber services would still bring it into the scope of the notification obligation in the Technical Standards Directive.

Confirming the Elite Taxi reasoning that Uber’s intermediation service forms part of a more holistic service in the field of transport, the Court again had no difficulty whatsoever in confirming that such services in the field of transport are not information society services covered by Directive 98/34, yet only constitute transport services. As a result, such rules are not subject to the prior notification obligation to the European Commission (Uber France, para 26). France can therefore continue to apply its criminal law provisions without having notified them to the Commission first. Once again, Uber could not use European Union law to escape from a Member State’s regulatory requirements in this regard. The Court also repeated that such a service clearly falls outside the scope of the 2006 Services Directive (Uber France, para 23).

Lessons from the Court’s judgments

Three main lessons can be taken away from the Court’s Uber judgments.

First, both judgments demonstrate the Court is not willing to extend the EU’s information society services to services that use online intermediation features but also offer more than simple intermediation. In that respect, the Court seems to have introduced – and confirmed – two criteria that allow to determine when an online platform offers more than a mere intermediation service: the creation of a new market and the exercise of decisive influence over the conditions of a service offered. It can be inferred from both cases that any other type of application through which a business creates a new supply and demand for services that would not be offered without that application and exercises a decisive influence over the conditions of that service is considered a service going beyond mere intermediation. Although the Court did not say so explicitly, it would seem that other Uber applications such as UberX or UberSelect or UberXL would also qualify as services in the field of transport on the basis of those criteria. More generally, it is not unlikely that the criteria posited by the Court in those judgments will be used in the future to determine to what extent other ‘collaborative economy’ platforms such as AirBnB or Blablacar also offer services beyond mere online intermediation. It therefore remains to be seen to what extent the Court will consider those conditions as general criteria to determine the legal status of different collaborative economy platforms.

Second, the Court confirms the ‘status aparte’ that transport has within the framework of the Treaties and the EU internal market. Absent explicit instruments of EU secondary legislation, Member States remain responsible for its regulation – and potential criminalisation – in the absence of EU secondary legislation on the matter. It is clear from Uber France that regulations adopted in the field of information society services cannot simply be applied by analogy to services in the field of transport also incorporating some online intermediation elements. Specific EU rules would be necessary in that respect. From that point of view, it could also be argued that the Court seems to have given a clear signal to the EU institutions to take more streamlined legislative initiatives on the regulation of transport services. In the absence of such initiatives, Member States will remain competent to regulate Uber’s ridesharing activities as they please.

Third, in light of both cases’ outcomes, it would nevertheless be wrong to assume that, as a consequence of those judgments, Uber cannot benefit from or be regulated by European Union law. Quite on the contrary, the Court confirmed only that the e-Commerce Directive, the Services Directive and the Technical Standards Directive do not apply to services offered by the UberPOP application. In so stating, the Court implicitly seems to invite the European Commission and other EU institutions to take a more developed legislative approach in this regard, proposing harmonised standards for private ridesharing transport services. It remains to be seen whether the Commission – in the spirit of its digital single market ambitions – will indeed take up the Court’s invitation handed out in both judgments…

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