Published: Fri, May 12, 2017
Markets | By Noel Gibbs

Uber handed big blow in Europe after latest legal setback

Uber handed big blow in Europe after latest legal setback

Ride-hailing app Uber is providing transportation services, an adviser to the top European Union court said on Thursday, dealing a blow to the United States start-up which has argued it is merely a digital enabler.

The case was brought by Barcelona taxi drivers who argued that UberPOP engaged in unfair competition by using unlicensed drivers and the ECJ's ruling will bind the referring court in Barcelona, which will then hand down the decision.

Uber claims it is a service provider, connecting riders with freelance drivers directly and much more cheaply than traditional cab companies. Szpunar said in his non-binding opinion that Uber's smartphone app is "a secondary component" to its business. National courts have banned Uber services in other European cities.

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In short: Uber is a transport company, and needs to follow local laws on how other taxi and transportation firms operate - which are often far stricter than those it now follows.

Uber, which allows passengers to summon a ride through an app on their smartphones, expanded into Europe five years ago but has been challenged in the courts because it is not bound by the same strict licensing and safety rules as some competitors.

It may, however, have an impact in European Union countries where Uber still operates its unlicensed service UberPOP, namely Estonia, Poland, Czech Republic and Finland, should UberPOP be challenged there.

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The opinion represents a bloody nose but not a full knockout for Uber in its continuing fight in Europe, a region still crucial to the company despite rapid expansion in emerging markets like India. This statement simply means Uber is not an aggregator of transportation services but a transport company itself.

Regulators: For years before any of the recent controversies arose, Uber had been battling regulators and taxi drivers in numerous 70 countries in which it operates today.

"Uber can not be regarded as a mere intermediary between drivers and passengers", said the ECJ. There the AG deemed that US-EU data arrangements met European privacy standards, only for the court to disagree. Two Uber executives fell afoul of that law previous year, and were fined. In addition, in the context of the composite service offered by the Uber platform, it is undoubtedly transport (namely the service not provided by electronic means) which is the main supply and which gives the service meaning in economic terms.

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The ECJ said case-law had established that Article 20 "precludes national measures, including decisions refusing a right of residence to the family members of an European Union citizen".

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