Uber faces regulation in Europe as transport company

Uber should be regulated as a transport company and be subject to the same rules as normal taxis, according to a non-binding opinion by the Advocate General at the EU’s top court.

The opinion, stating that the US ride-hailing app “must be classified as a ‘service in the field of transport’”, would deal a major blow to Uber if followed with a final judgment by the European Court of Justice later this year.

The company had argued that it was providing “Information Society services”, a classification subject to looser rules in the EU. But this was dismissed, in an opinion that will reverberate among digital companies that offer “peer-to-peer” services in sectors such as accommodation and transport.

The court’s adviser argued that since Uber imposes conditions on drivers, guides them on where to go to pick up passengers and determines fares, it “cannot be regarded as a mere intermediary” between drivers and the app’s users.

“The service of connecting passengers and drivers with one another by means of the smartphone application is a secondary component” behind taking passengers to their destination, according to an ECJ statement.

Although such opinions are not binding on — and are sometimes ignored by — the court, the case raises the tricky question of how regulators should treat companies such as Uber, Airbnb and Skype, which offer rides, accommodation and communications despite not owning taxis, hotel rooms or telephone lines.

In the short term, the ECJ case has the potential to add to Uber’s European woes where it has faced an extremely tough regulatory ride. Uber’s introduction was met with a mixture of riots, fines and even the arrest of senior executives in some cities, while the app was broadly welcomed in others, such as London.

Uber played down the opinion. “Being considered a transportation company would not change the way we are regulated in most EU countries as that is already the situation today,” said an Uber spokesperson. “It will, however, undermine the much needed reform of outdated laws which prevent millions of Europeans from accessing a reliable ride at the tap of a button.”

In recent years, Uber has attempted to abide by local rules, after initially ignoring them. For instance, after initially facing fines of up to €10,000 per driver in Brussels, the company now operates a legal, regulated service in the city. It now says that it abides by local laws and works with independent, licensed minicab professionals so it would not have to change dramatically how it operates.

The company has faced stiff opposition from local taxi firms in most European cities it has entered. The current case was brought by Asociación Profesional Elite Taxi, a taxi driver association in Barcelona, which sought an injunction against the US group from a local judge.

In Brussels, however, the European Commission is pushing for member states to use a light touch with the car-hailing app and other similar services. One commissioner likened trying to ban Uber to “fighting with print in medieval times”. The EU’s executive arm has tried to reduce the regulatory differences between EU countries when it comes to digital services.

Uber also warned that this decision could be detrimental to the establishment of the digital single market, causing fragmentation of different apps across various member countries.

James Waterworth, vice-president at CCIA, a lobbying group for the technology industry, criticised the opinion. “As an app, you should set up in one country and be able to offer services in France, Netherlands etc without going through a special regulatory regime. This whole thing exists as a fundamental pillar of single market,” he said. “It’s a very negative signal for Europe’s digital single market, making it much harder to have cross-border internet businesses.”