European Union: EU Court Of Justice Holds That Uber Is Transport Services Company

Last Updated: 14 February 2018
Article by Koen T’Syen

On 20 December 2017, the Grand Chamber of the Court of Justice of the European Union (the "ECJ") held that Uber's UberPOP ridesharing service is a "service in the field of transport" within the meaning of Article 58(1) of the Treaty on the Functioning of the European Union ("TFEU") (ECJ, 20 December 2017, Case C-434/15, Asociación Profesional élite Taxi v. Uber Systems Spain SL).

The ECJ delivered its judgment in response to a request for a preliminary ruling from a Barcelona Commercial Court in a dispute between Asociación Profesional élite Taxi ("Elite Taxi"), a professional taxi drivers' association in Barcelona, and Uber Systems Spain SL ("Uber"), a smartphone and technological platform interface and software application provider acting, for profit, as an intermediary between the owner of a vehicle and persons who wish to make an urban journey by car. Elite Taxi sought a declaration from the Barcelona Commercial Court that Uber had offered unlicensed taxi services without complying with legal licensing requirements and the competition rules. It further claimed that Uber should cease its alleged unfair conduct and be prohibited from engaging in such an activity in the future.

The Barcelona Commercial Court sought guidance from the ECJ on whether Uber's service should be regarded as a "transport service", an "electronic intermediary service" or an "information society service". Depending on the classification, Uber's UberPOP service would either: (i) be subject to the EU Member States' national regulations on transport services; or (ii) benefit from the EU's fundamental freedom to provide services across EU Member States subject only to the rules of its 'home' EU Member State, in accordance with Directive 2000/31/EC of 8 June 2000 on specific legal aspects of information society services, in particular electronic commerce, in the Internal Market (the "E-commerce Directive") and Directive 2006/123/EC of 12 December 2006 on services in the internal market (the "Services Directive").

The E-commerce Directive prohibits EU Member States from restricting the freedom to provide information society services from another EU Member State. Article 2(a) of the Directive defines "information society services" as services normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services. The Services Directive, in turn, prohibits EU Member States from making access to (or the exercise of) a service activity subject to an authorisation scheme unless the criteria of non-discrimination, necessity and proportionality are satisfied. However, services in the field of transport, including urban transport and taxis, are expressly excluded from the scope of the Services Directive. The classification of Uber's services was therefore key.

In its judgment, the ECJ considered the extent to which Uber acts as an intermediary between drivers and passengers. It first held that, in principle, an intermediation service which enables the transfer, by means of a smartphone application, of information concerning the booking of a transport service between the passenger and the non-professional driver who will carry out the transport service using his or her own vehicle, satisfies the criteria for classification as an "information society service" within the meaning of the E-commerce Directive.

However, in the ECJ's view, Uber's commercial offering consists of more than an intermediary service. It noted that Uber is involved in the selection of the non-professional drivers and provides them with the application required to connect with service users. Moreover, Uber also exercises a decisive influence over the conditions under which the drivers can provide their service, such as (i) determining a maximum fare; (ii) receiving the fare from the passenger; (iii) subsequently forwarding the fare to the driver; and (iv) exercising a degree of control over the quality of the vehicle and the conduct of the driver.

According to the ECJ, Uber's activities should therefore be regarded as intermediation services forming an integral part of an overall service, the main component of which is a transport service. Accordingly, Uber offers a "service in the field of transport" which falls outside the scope of the Services Directive.

As the Services Directive implements Article 56 TFEU on the free movement of services, the ECJ considered that the intermediation services provided by Uber are not covered by Article 56 TFEU but, instead, by Article 58(1) TFEU which relates specifically to the freedom to provide services in the field of transport. This Article 58(1) provides that the "[f]reedom to provide services in the field of transport shall be governed by the provisions of the Title relating to transport", i.e., Articles 90 through 100 TFEU.

The ECJ continued by noting that the European Parliament and the Council of the European Union have not yet adopted any common rules based on Article 91(1) TFEU on non-public urban transport services and services that are inherently linked to those services, such as the intermediation service at issue in the main proceedings. Consequently, it is for the EU Member States to regulate the conditions under which Uber can provide its intermediation services.

The ECJ's judgment is a set-back for Uber in that it creates additional regulatory challenges for the company. Uber will indeed have to comply with the national rules of each EU Member State on transport services and/or on intermediation services in the field of transport.

The judgment is likely to have a significant impact on the pending national court proceedings against Uber in countries such as Belgium. For instance, in December 2017, the pre-trial division of the Brussels Court of First Instance (Raadkamer/Chambre du Conseil) referred Uber to the Brussels Criminal Court for having illegally operated the UberPOP service in Belgium in 2014 and 2015. The referral came about even though the Public Prosecutor had advised against it. Uber announced that it has appealed the decision of the pre-trial division to the indictment division of the Brussels Court of Appeal (Kamer van Inbeschuldigingstelling/Chambre des mises en accusation). It will be interesting to see whether the Public Prosecutor will reconsider his decision not to file charges against Uber in the light of the ECJ's judgment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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