CJEU agrees with the AG in the Uber follow-up case - Star Taxi App

Last week the Court of Justice delivered its judgment in another case highly relevant to the platform economy - C-62/19 Star Taxi App. The English version of the judgment is not available at the time of this writing, yet the analysis of other language versions shows that the Court largely followed the opinion of the Advocate General Szpunar, on which we reported earlier this year (see AG opinion in Star Taxi App...). Like in several other judgments on online platforms analysed on this blog - from Uber Spain and Uber France to Airbnb Ireland - the focus remained on the classification of services provided by platform operators and its regulatory implications. The Court continued to rely on the analytical framework developed in the Uber cases, but - similarly to the Airbnb ruling - applied it more favourably to the platform provider. The judgment confirms that the classification of services of platform operators as activities falling outside of the scope of Directive 2000/31/EC on electronic commerce is not to be made too promptly. Moreover, the judgment addressed several other aspects of the EU regulatory framework - in a way which was not as favourable to the platform providers as they may have hoped.

Facts of the case and the questions referred

As we recounted in our previous post, the case involved a provider of a mobile application connecting drivers and passengers in urban transport. The business model of Star Taxi App was, however, not identical to the Uber platform. Firstly, the provider did not automatically select two parties for a ride, but rather displayed a list of drivers available for a journey, from whom the passenger was free to choose a party. Secondly, the fare was not set by and collected through the app, but was paid directly to the driver. Thirdly, only taxi drivers authorised and licensed to provide taxi services were allowed on the platform and no additional steps were taken to control the quality of the vehicles and drivers. Finally, unlike Uber, Star Taxi App was a Romanian platform, operating on the Romanian market.

The operation of the platform was considered to be in violation of applicable national rules, most notably as regards prior authorisation. The provider contested the sanctions imposed on him, arguing that the relevant norms were contrary to the EU law. Against this background, the Regional Court in Bucharest decided to stay the proceedings and ask the Court of Justice for an interpretation of the notions of "information society services" under Directive 2000/31/EC and "technical regulations" under Directive 2015/1535 on the provision of information in the field of technical regulations. Moreover, the reference provided the Court with an opportunity to clarify specific norms on freedom of establishment, contained in Directive 2000/31/EC (principle excluding prior authorisation) and Directive 2006/123/EC on services (conditions for establishing authorisation schemes and for granting authorisations).

Judgment of the Court

Finding 1: Star Taxi App provides information society services

Like the AG, the Court found that services provided Star Taxi App fulfil the criteria of "information society services", to which Directive 2000/31/EC applies (para. 42-48), and cannot be seen as "inherently linked" to the underlying transport services. Key to the latter finding was the fact that Star Taxi App did not create a new market for non-professional drivers, but was limited to licensed taxi drivers, i.e. a market for services which existed before (para. 52), and did not organise the general functioning of underlying transport services, as it did not select the drivers, set or charge prices or control vehicles or drivers (para. 53). Consequently, unlike in Uber cases, classification as "information society services" remained available.

Finding 2: Notification requirements under Directive 2015/1535 do not apply

The Court then reversed the order of the questions referred and moved to the assessment of notification requirements under Directive 2015/1535. Like the AG, the Court concluded that the Romanian requirements imposed on operators of taxi "dispatching" services did not constitue technical regulations as they were not specifically aimed at information society services. Whether or not this finding remains in line with the Court's previous case law can be a matter of debate. To recall, the Court was not equally generous to the national regulator in VG Media, where it found that the German copyright rules (introducing publisher rights) were aimed, at least in part, at regulating information society services (the use of snippets on search engines). In Star Taxi App, the Court was satisfied with the fact that "taxi dispatching" have long been defined more broadly and referred to the activity consisting in receiving customer bookings by telephone "or other means" and forwarding them to a taxi driver. The fact that more recent local rules in Bucharest explicitly mentioned "IT applications" among those "other means" was deemed irrelevant. To support this conclusion the Court observed that the analysed requirements, for example to obtain a two-way radio, applied equally to all types of dispatching services (para. 65). The latter argument seems rather shaky, considering that the Court later (rightly) argues that such a requirement, applied to the providers of information society services, could, in fact, be contrary to Directive 2006/123/EC. An alternative reading of Directive 2015/1535 could, however, be difficult to reconcile with the subsequent interpretation of Article 4(2) of Directive 2000/31/EC, which was likely a consideration in this part of judgment.

Finding 3: Article 4 of Directive 2000/31/EC does not apply to the scheme at hand, but Articles 9 and 10 of Directice 2006/123/EC do

The last part of the judgment concerns the applicability of the principle excluding prior authorisation in Article 4(1) of Directive 2000/31/EC to the case at hand. Similarly to the AG, the Court found that the analysed scheme was not covered by this provision and instead fell under the exception set out in the subsequent paragraph. To recall, pursuant to Article 4(2) of Directive 2000/31/EC, the principle excluding prior authorisations for information society services remains without prejudice to authorisation schemes which are not specifically and exclusively targeted at such services. Like the AG, the Court observed that a mere clarification (extension?) of the scope of pre-existing rules to dispatching services relying on IT applications does not consistute an authorisation scheme which is specifically and exclusively targeted at such services (paras. 81-82). Accordingly, a conflict between Directives 2000/31/EC and 2006/123/EC did not arise and provisions of the latter were deemed applicable.

The Court then moved to the interpretation of Articles 9 and 10 of Directive 2006/123/EC on freedom of establishment, referring numerously to its recent judgment in Cali Apartments. Like in the Cali case, the Court underlined that a separate and consecutive assessments must be made of, firstly, whether the very principle of establishing that scheme is justified, and, secondly, the criteria for granting the authorisations provided for by that scheme (para. 87). Since the information provided by the referring court in this regard was not sufficient (e.g. so as to assess if the scheme could be justified by reasons of consumer protection), the Court limited itself only to brief observations regarding the criteria apparent from the file. Most notably, it shared the view expressed by the AG that an obligation, imposed on service providers, to comply with technical requirements which are not appropriate for the service in question and thus generate unjustified burdens and costs for service providers could not be deemed compatible with Article 10(2) of Directive 2006/123/EC (para. 90). This could be the case for the requirement to obtain a two-way radio, which was nonetheless for the referring court to verify (paras. 91-92).

Concluding thoughts

Overall, the judgment in Star Taxi App is a reasonable ruling, seeking to strike a balance between the internal market goals and the public interest goals pursued by national regulators. One cannot fail to note, however, that the Court has taken a long way to arrive at this outcome. As apparent from the Star Taxi case, the EU rules at hand provide for significant safety vaults, which Members States can rely upon to regulate the provision of information society services in the public interest. The principle excluding prior authorisation in Article 4(1) of Directive 2000/31/EC does not apply to authorisation schemes which are not specifically and exclusively targeted at information society services and notification requirements in Directive 2015/1535 do not apply to rules which are not specifically aimed at this kind of services. Also the country of origin principle, which is laid down in Article 3(1) of Directive 2000/31/EC and was analysed in the Airbnb Ireland case, is not without limitaitons. Admittedly, the development of the platform economy has pushed some of these norms to its boundaries and a case could be made, for example, for making Article 4(1) of Directive 2000/31/EC less categorical. This, however, is a task for the EU legislature and a potential subject for the Digital Services Act. For the time being, the judgment in Star Taxi App shows, together with Airbnb Ireland, that classification of services of platform operators as activities falling outside of the scope of Directive 2000/31/EC should not be made too lightly and that EU free movement rules are to be reckoned with.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.

AG opinion in Star Taxi App and the limits of the principle excluding prior authorisation: was Uber Spain really necessary?

Last week brought a very interesting opinion of the Advocate General Szpunar in case C-62/19 Star Taxi App. The case constitutes a follow-up to a range of preliminary rulings on the platform economy, most notably the judgments in the two Uber cases (see our comments, respectively, on Uber Spain and Uber France) and in Airbnb Ireland, as well as the pending case Cali Apartments. It is worth noting that it was also AG Szpunar who successfully advised the Court in the first three of them, while on the fourth pending case, in which AG Bobek delivered the opinion, the Court is about to rule later this month.

Facts of the case

Similarly to Uber references, case C-62/19 Star Taxi App involved a provider of a mobile application connecting drivers and passengers in urban transport. Furthermore, the doubts raised equally concerned the legal qualification of the service provider (as a provider of information society services or not) as well as the scope of Member States' regulatory discretion concerned. More specifically, in the case at hand the question was whether the provider of Star Taxi App could be subjected to the Romanian requirements imposed on operators of taxi 'dispatching' services, including the requirement to obtain prior authorisation.

At this stage, it is necessary to note that the business model of Star Taxi App was not merely a copy of the (in)famous Uber platform. Like Uber, the application helped passengers to establish contact with providers of urban transport services. However, the provider did not automatically select two parties for a ride, but rather displayed a list of drivers available for a journey, from whom the passenger was free to choose a party. Secondly, the application provider did not set the fare, which was rather paid directly to the driver. Finally, only taxi drivers authorised and licensed to provide taxi services were allowed on the platform and no additional steps were taken to control the quality of the vehicles and their drivers or the drivers' conduct.

Not unlike the Uber France case, the provider of Star Taxi App, operating without authorisation, was eventually fined for having infringed the applicable Romanian norms. The provider appealed, arguing that the legal provisions applied to it were contrary to the EU law. Against this background, the Regional Court in Bucharest decided to stay the proceedings and refer a number of questions to the Court of Justice.

Opinion of the AG 

The questions referred concerned, firstly, the notion of the information society service, secondly, the scope of regulatory discretion of the Member States under the E-Commerce Directive and the Services Directive and, thirdly, the notification requirements laid down in Directive 2015/1535.

Finding 1: Star Taxi App provides information society services

The Advocate General began his response to the first question by reitering the notion of information society service defined in Article 2(a) of the E-Commerce Directive by reference to Article 1(1)(b) of Directive 2015/1535. To recall, an information society service is "any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services". According to the AG, the service consisting in putting taxi passengers directly in touch, via an electronic application, with taxi drivers, such as the one considered in the main proceedings, fell under that definition. Most notably, the AG did not consider the business model of Star Taxi App to be "inherently linked" to the underlying transport services, as it did in the Uber cases. In his view, the service was merely an adjunct to a pre-existing and organised taxi transport service (considering it was offered to licensed drivers only), while its provider did not exercise control or decisive influence over the conditions under which transport services were provided by the taxi drivers (paras. 45, 49). Hence, unlike in the case of Uber, the E-Commerce Directive should be considered applicable to the analysed services.

Finding 2: National rules are not precluded by the principle excluding prior authorisation in the E-Commerce Directive

The key part of the opinion in Star Taxi App is linked to the second question, concerning the interpretation of the principle excluding prior authorisation in the E-Commerce Directive. To recall, pursuant to its Article 4(1), Member States shall ensure that the taking up and pursuit of the activity of an information society service provider may not be made subject to prior authorisation or any other requirement having equivalent effect. Most importantly for the present case, the subsequent paragraph specifies that the principle mentioned above "shall be without prejudice to authorisation schemes which are not specifically and exclusively targeted at information society services". Focusing on the latter, AG Szpunar argued that a national provision, such as the one in the case at hand, which extends the requirement to obtain prior authorisation - with which providers of economically equivalent services already have to comply (cf. para. 74) - to the providers of information society services does not constitute an authorisation scheme specifically and exclusively targeted at providers of the second category of services. In order words, providers of information society services can, in such case, be subject to an authorisation scheme.

The arguments brought by the AG in support of this reasoning appear broadly convincing. According to the AG, while the EU legislature's aim in adopting the E-Commerce Directive was to encourage the development of information society services, its intention was not to enable economic operators to evade legal obligations solely because they operate 'online' (para. 25). The rationale for Article 4(2) of the E-Commerce Directive can thus be linked to the prevention of unequal treatment between information society services and similar services which do not fall within that concept. Indeed, with the growth of the digital economy, providers of information society services may enter markets in which 'traditional' service providers had previously played a central role. Following the AG, legislative or administrative action, which makes providers of such services subject to existing rules, does not amount to the creation of a new authorisation scheme specifically and exclusively targeting those services, but rather constitutes an adjustment of the existing scheme to take account of new circumstances (para. 69). 

While this generally seems well-founded, the focus of the AG on the extension of already existing rules is not entirely clear. In my view, such an emphasis should simply be linked to the circumstances of the case. Specifically, the fact that the analysed Romanian provisions were extended to cover information society services makes it potentially more difficult for the national legislator to argue that its action was not "specifically and exclusively" targeted at information society services. AG's focus on this context is thus meant to show that, even in those circumstances, conditions of Article 4(2) of the E-Commerce Directive can be fulfilled. The temporal/technical aspect (extension of already existing rules) is not crucial to the interpretation, however. Also newly adopted rules, targeted at providers of information society services and other services equivalent in economic terms, can potentially fall under Article 4(2). Seen through this lens, one can wonder whether the complex reasoning on the notion of information society service, initiated by the AG in Uber Spain opinion, was indeed necessary?

Finding 3: Also Services Directive applies to the case at hand

Having analysed the E-Commerce Directive, the Adovocate General moved to the discussion of other harmonised provisions, most notably of Directive 2006/123/EC on services in the internal market. Most notably, the AG found that the Services Directive also applies to the case at hand. According to the AG, the relation between the two directives is defined by the principle of lex specialis derogat legi generali, laid down in Article 3(1) of Services Directive. Pursuant to this provision, in the event of a conflict, the provisions of specific acts of EU law governing access to and the exercise of services in specific sectors take precedence over those of Directive 2006/123/EC. As argued by the AG, in the case at hand a conflict of this kind did not arise. Consequently, authorisation schemes, introduced in accordance with Article 4(2) of the E-Commerce Directive, should comply with the rules laid down in Articles 9 and 10 of the Services Directive.

The subsequent analysis of AG Szpunar essentially falls in line with the recent opinion of AG Bobek in Cali Apartments. In particular, a distinction is made between the benchmark for evaluating the need for establishing an authorisation scheme in the first place (Article 9) and more specific conditions of such a scheme (Article 10). According to AG Szpunar, the preliminary reference did not contain sufficient information to give extensive guidance on the two provisions in the analysed context. It is worth highlighting, however, that, in view of the AG, the requirement of consumer protection cannot be invoked as the valid objective of the scheme, as it is already satisfied by the obligations imposed on drivers (para. 97). To what extent such a broad-brush conclusion is indeed justified can be a subject of debate. By contrast, observation made in relation to the following provision, according to which an authorisation scheme is not based on criteria justified by an overriding reason relating to the public interest when the grant of authorisation is subject to requirements that are technologically unsuited to the applicant's intended service (para. 101), appears to be well-founded.

Finding 4: Notification requirements under Directive 2015/1535 do not apply

The last part of the opinion involved the interpretation of Directive 2015/1535 laying down a procedure for the provision of information in the field of technical regulations and of rules on information society services. The key question raised in this context was whether the national provisions at hand constituted technical regulation. Somewhat surprisingly, the AG did not refer in this part of the judgment to his previous argument concerning the consistent case law finding that provisions on authorisation schemes do not constitute technical regulations (cf. para. 72). The AG may thus himself recognize the weakness of this reasoning in relation to the rules on services (cf. recital 18 of Directive 98/48/EC, which introduced the notion). Still, after a rather brief reasoning, the AG similarly concludes that provisions at issue did not constitue technical regulations. Considering the rather expansive interpretation of the notification requirements in the prior case law, e.g. in VG Media and Airbnb Ireland, one can wonder whether this part of the opinion will indeed find support of the Court.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.

Unlike Uber, Airbnb provides information society services, AG says

Last Tuesday Advocate-General Szpunar delivered his opinion in case C-390/18 Airbnb Ireland. The case does not directly relate to consumer law, but remains highly relevant to consumer protection. Most notably, it provides an opportunity for the AG and the Court to refine the criteria for distinguishing different types of services provided in the platform economy and, consequently, the scope of Member States' regulatory discretion.

Airbnb Ireland is a direct follow-up to the two earlier Uber cases, both of which we have reported on extensively on this blog (see eg CJEU gives Member States a green light to regulate Uber, Nihil novi from the CJEU in Uber France). To recall, the Court of Justice found, back then, that services provided by Uber – an operator of a popular ride-hailing app – did not qualify as information society services, but rather constituted services in the field of transport. This meant, among others, that Uber could not rely on the freedom of movement established in Directive 2000/31/EC on electronic commerce. Or, in other words, that Member States enjoyed a wider margin of discretion when it comes to regulating Uber and similar service providers.

Setting the scene

The questions asked in C-390/18 Airbnb Ireland were very similar to those asked in C-434/15 Uber Spain. Essentially, the controversy was whether the provisions of French law, requiring a person who engages in the mediation and management of real property to hold a professional license (among other requirements), could be applied to a service provider, established in another Member State, who enables hosts to be connected with guests via an online platform. To reply to this question it needed to be established, as a first step, whether services provided by Airbnb qualified as information society services within the meaning of Directive 2000/31/EC. Contrary to the Uber case, Advocate-General Szpunar responded to this question in the affirmative.

It is worth highlighting that it was also AG Szpunar who advised the Court in Uber cases. Szpunar’s finding that the business model of Airbnb falls within the scope of the E-Commerce Directive does not contradict his earlier argumentation (which was largely followed by the Court). Rather he elaborates on the previously established framework and applies it to a new factual setting.

Key points of the opinion 

What I particularly like about AG's opinion is the attempt to structure the assessment of composite services under free movement law. Services of this kind – provided partially by electronic means and partially not – without doubt form an intrinsic part of the platform economy. In particular, the Advocate-General tries to elaborate on the criteria set forth in the previous cases: C-108/09 Ker Optika  and the aforementioned Uber cases (C-434/15 Uber Spain and C-320/16 Uber France).

Essentially, the AG argues, there is one major question to be asked with respect to composite services: whether or not services provided by electronic means are inseparably linked with services 'having material content'. Both types of services are not inseparably linked when the former do not lose their economic interest and continue to be independent of the latter (and, so it seems, vice versa, cf. paras. 46 and 59). If it is clear that services are not inseparably linked, then the component provided by electronic means falls under Directive 2000/31/EC, while the other component does not. When both services are inseparably linked Directive 2000/31/EC does not apply. However, some services may prima facie appear to be separable, but still require an additional assessment to make sure this is indeed the case.

It is in this second group of cases when the Uber case law kicks in. As the AG recalls in para. 49 of the opinion, the Court concluded in Uber that the company, in addition to an intermediation service consisting in connecting drivers with passengers through an app, simultaneously offered urban transport services, which it rendered accessible, in particular, through software tools … and whose general operation it organised. According to the Advocate-General, in doing so, the Court developed two criteria for establishing inseparability of composite services. These relate to the fact that the service provider, firstly, offers services having material content (eg transport services) and, secondly, exercises decisive influence on the conditions under which such services are provided.

Expressed in this way, the two criteria may not seem logically connected. First, it is required that the platform provider himself offers services 'having material content' and then, additionally, that he exerts a decisive influence on the conditions under which such services are provided (by himself?). Further parts of the Airbnb opinion, however, explain this in a more convincing way. Here are some of the most relevant takeaways:

• The criterion of 'offering services having material content' essentially means creating a new offer. It was fulfilled in Uber because, arguably, non-professional drivers would not be led to provide transport services and passengers would not use the services provided by those drivers without the relevant application (para. 51).
• The fulfillment of that criterion, in any case, is only an indication that a service provided by electronic means is inseparably linked with a services having material content (being a subject of the new offer; para. 65). Most importantly, the fact that it is not fulfilled (i.e. that no fundamentally new offer is created) does not yet mean that services provided by electronic means are separable from services having material content (and therefore fall under E-Commerce Directive).
• Thus, overall, the second criterion - decisive influence over the conditions of the supply of services having material content - is (nomen omen) decisive for assessing the nature of services provided by an operator of online platform (para. 67). This, in turn, should be assessed by looking at the key parameters of underlying services, which may vary from market to market. In urban transport such parameters included price, availability, quality and safety. In short-term accommodation rental, elements related to location and standard of accommodation appear to be most relevant from AG's perspective. Price can also play a role, although not as important as in the urban transport market (para. 71).

Following a more detailed examination, the Advocate-General concluded that Airbnb did not exert decisive influence over the conditions of the supply of short-term accommodation services. Consequently, these services could be separated from services provided electronically by Airbnb. A similar conclusion was reached with respect to additional services provided by Airbnb, such as photography, insurance and guarantee, which – according to the AG – were only ancillary to the intermediation service provided by electronic means (para. 82).

Concluding thought

All in all, in view of the AG, a service consisting in connecting, via an electronic platform, potential guests with hosts offering short-term accommodation, in a situation where the provider of that service does not exercise control over the essential procedures of the provision of those services, constitutes an information society service within the meaning of Directive 2000/31/EC. This does not mean that no additional requirements, related in particular to consumer protection, can be imposed on a provider of such services by the Member State other than the Member State of service provider's establishment. The relevant restrictions, however, must comply with substantive and procedural criteria laid down in Article 3(4) of E-Commerce Directive. So, at least, the Advocate-General – the judgment of the Court still lies ahead.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.

Nihil novi from the CJEU in Uber France

In a judgment delivered yesterday the Court of Justice once again looked at the legal environment of Uber’s business model. Similarly to its earlier ruling (see our post CJEU gives Member States a green light to regulate Uber), the Court classified the services provided by Uber not as information society services, but rather as services in the field of transport and denied the applicability of the European framework on services liberalisation to the analysed context. 

Setting the scene

The background of Uber France was analogous to Uber Spain. Both cases referred to the UberPOP business model, i.e. the one in which the smartphone app provided by Uber Technologies Inc. is used to connect passengers with non-professional drivers (the situation is different in a yet another pending case concerning Uber Black). The differences were subtle: in Uber Spain, the case referred to the civil proceedings brought against Uber by a taxi drivers’ association based on general rules on unfair competition. By contrast, Uber France dealt with a private prosecution and a civil action brought against Uber by a specific taxi driver based on a newly introduced provision of French criminal law. On both occassions the provider of the contested smarthphone app sought to rely on EU law to protect its freedom to provide information society services across EU. Both times - in vain.

The legal dilemma in Uber France

The more specific question in the commented case was whether the aforesaid provision of French law - which prohibited and penalised the organisation of a system for putting customers in touch with persons who engage in the carriage of passengers in breach of applicable market access requirements - constituted "technical regulation" within the meaning of Directive 98/34/EC as amended by Directive 98/48/EC (later replaced by Directive 2015/1535). Relying on such an interpretation, Uber argued that the provision could not be enforced against it because it had not been notified to the European Commission.

Indeed, Article 8(1) of Directive 98/34/EC, as amended, required Member States to immediately communicate to the Commission any draft technical regulation including any "rules on services". Article 1(5) defined a rule on services as "requirement of a general nature relating to the taking-up and pursuit of [information society] service activities ..., in particular provisions concerning the service provider, the services and the recipient of services, excluding any rules which are not specifically aimed at [information society] services". The directive did not elaborate on the consequences of a failure to notify; however, according to the settled case law of the Court, such a failure renders the adopted technical regulation inapplicable and therefore unenforceable against individuals (see paras. 35-39 of Advocate-General's opinion).

Against this background the national court decided to stay the proceedings and ask the Court of Justice for an interpretation of Directive 98/34/EC, as amended.

Judgment of the Court

The judgment in Uber France does not come as a big surprise - indeed, the Court decided to follow its earlier line of reasoning as well as the argumentation of AG Szpunar (see also our post The Uber saga continues) and refused to provide the defendant with a helpful hand. The Court, once again, focused on the classification od services provided by Uber and found them to fall outside the scope of Directive 98/34/EC, as amended, and Directive 2006/123 on services in the internal market. Consequently, to the extent the national provision applied to services of this kind, the provision itself fell outside the scope of both liberalisation directives.

In this short entry I will not argue either in favour or against the classification made by the Court - the issue is by no means black-and-white and continues to divide the academic community. Instead, I will focus on the quality of legal reasoning in Uber France, of which, I believe, one could have expected more.

Comment

The questions referred by the national court in the commented case revolve around the nuanced terminology used in Directive 98/34/EC, as amended, particulary the notion of a "rule on services". One problematic element of this term - the quality of not being "specifically aimed" at information society services - was already highlighted before. In the subsequent paragraph Article 1(5) provides for further interpretative elements, which the referring court seemed to consider relevant.

The Court of Justice, however, did not elaborate on any of these elements. It limited itself to rejecting the qualification of services provided by Uber as information society services, holding that the intermediation service provided by that company was "inherently linked" to the offer transport services and thus constituted a service in the field of transport. In doing so, it relied on two criteria: the fact that the drivers and passengers would not have been led to provide or use the transport services without the Uber app and - the criterion which I personally find more convincing - the fact that Uber exercised "decisive influence" over the conditions under which the relevant transport services were provided (para. 21). The Court went on to recall that services provided by Uber also fell outside the scope of Directive 2006/123 on services in the internal market, which does not apply to transport. Because the judgment is essentially limited to these insights it does not bring anything new beyond what we already know from Uber Spain.

The Court's self-restraint may be frustrating to the reader, who may be tempted to look for more clues that the judgment actually provides. What, in my view, does not follow from Uber France is that an existence of a business model which falls under the national provision while not qualifying as an information society service automatically disqualifies such a provision as being "specifically aimed" at information society services. Assessment of the detailed wording of Article 1(5) of Directive 98/34/EC, as amended, including references to the statement of reasons of national provisions as well as to an implicit or incidental effect of such provisions on information society services can still be relevant. But does this make any difference for the procedural situation of Uber? The judgment in Uber France does not really tell.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.

CJEU gives Member States a green light to regulate Uber

Just yesterday the Court of Justice delivered its judgment in one of the two high-profile cases brought before it with respect to the European operations of the US-based digital multinational Uber. The ruling in C‑434/15 Asociación Profesional Elite Taxi (or Uber Spain) comes as a serious blow to the company, which has continuously insisted to act merely as a provider of an online intermediation service. The Court has, however, largely followed the earlier opinion of the Advocate-General Szpunar (see our posts on both opinions here and here) and classified the activities of Uber as "services in the field of transport".

Why is this relevant?

Due to its socio-economic importance - both at the national level and from the internal market perspective - as well as specific features - particularly with respect to the (former) public or quasi-public transport networks - transport sector has traditionally been given a special treatment under the EU Treaties. For the similar reasons Member States have long been reluctant to open their national transport markets to liberalisation. As a matter of fact, it required an action brought by the Parliament against the Council to confirm the positive obligation of the latter to extend the freedom to provide services to that sector (case C-13/83 Parliament v. Council). This has led to an intensification of the legislative efforts aimed to remove the barriers to cross-border provision of different transport services - air, road, rail and water - and at the same time reaffirmed the specificity of the path taken in that area, resulting inter alia in the exclusion of "services in the field of transport" from the scope of Services Directive.

In the case at hand the specificity of the transport sector meets with another special area of the EU law - that related to the provision of the so-called "information society services". This domain, associated mainly with online activities, has been subject to a separate legal scheme - the E-Commerce Directive. 

The question thus appeared whether the activity of Uber - that is the provision of a paid service, by means of a smartphone application, consisting of connecting non-professional drivers using their own vehicles with persons wishing to make urban journeys - should be qualified as a service in the field of transport, an information society service, neither or both. Should the services in question fall under the scope of either Services or E-Commerce Directive, the liberalisation regime established in those acts would kick in, meaning that Member States would only be allowed to restrict their provision if specific conditions set out in those directives were fulfilled.

Judgment of the CJEU

The Court opted for an interpretation which is least favourable to Uber and leaves the widest margin of discretion to the Member States. Its reasoning appears to be largely based on the AG opinion, even though no direct references to that document are made. The following points are worth highlighting:

• The intermediation service consisting of connecting non-professional drivers with the passengers by means of a smartphone application is, in principle, a separate service from the underlying transport service and, again in principle, meets the criteria for classification as an "information society service" (paras. 34-35).
• However, the concrete service provided by Uber is more than an intermediation service. In the specific case at hand, the service of intermediation is rather an integral part of an overall service whose main component is a transport service (paras. 38, 40).
• This is because, as explained in paragraph 39, firstly, the intermediation service is "based on the selection of non-professional drivers using their own vehicle, to whom the company provides an application without which (i) those drivers would not be led to provide transport services and (ii) persons who wish to make an urban journey would not use the services provided by those drivers" and, secondly, Uber exercises "decisive influence" over the conditions under which that service is provided by the drivers (infuences prices, processes payments, engages in quality control).

Consequently, services provided by the company cannot be classified as information society services, but rather belong to services in the field of transport. This means that the activities of Uber fall outside the scope of the E-Commerce and Services Directives as well as Article 56 of the Treaty on the Functioning of the European Union. They are, by contrast, covered by Article 58(1) TFEU and further provisions applicable to the area of transport. This is of limited help to Uber as no common rules coverning the type of services provided within its business model (i.e. non-public urban transport) currently exist at the EU level. Member States, therefore, enjoy a wide margin of discretion when it comes to regulating the conditions under which services of that type can be provided. 

Concluding thought

The judgment is a significant defeat for Uber, which should probably brace itself for the upcoming ruling in the parallel French case. Its implications for other businesses belonging to the so-called "platform economy" may, nevertheless, be less far reaching than it can seem at first sight. After all, it is the specificity of the transport sector that left the services provided by the company outside the scope of both directives. Additionally, the reference to a "decisive influence", while not legally uncontroversial, suggests that it is only in fairly specific circumstances that an online service may fall outside the scope of the information society framework. Negative consequences of the judgment thus appear to be largely Uber-specific - at least for the time being. Or, as its critics might say, what goes around comes around.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.

Tube back in business? Uber loses its license in London

Transport for London (TfL) decided not to renew the licence that Uber holds for operating in London. Uber has now one month to appeal, during which time (and the appeal procedure) they may continue to conduct business in London. If the appeal is unsuccessful, however, this may cause thousands of Uber drivers to lose their extra income and Londoners to have to switch back to more expensive black cabs, overcrowded public transport or investing in hiking shoes.

The decision not to renew the license is based on "public safety and security" concerns, meaning Uber apparently not doing its best in background checks for its drivers and not reporting criminal offences. Uber denies these accusations, claiming that their practices are no different from those of black cabs. Is it then just a matter of restricting access to innovative services, sustaining the old-fashioned options? This will be undoubtedly followed as the case continues. Read more e.g. here: Uber Loses Its License to Operate in London.

The Uber saga continues

Roughly two months ago we commented on the opinion of Advocate-General Szpunar in case C-434/15 Uber Spain. His conclusion that the popular ride-hailing platform should not be considered as an information society service, but rather as a transport service was very bad news for Uber. We also wrote that the same AG was currently drafting an opinion in a related case, C-320/16 Uber France, which left the provider of the (in)famous transport app with little grounds for optimism. The opinion was eventually published this Tuesday and, indeed, comes as no surprise.

Background of the case

The case deals with a specific provision of the French transport code, introduced in 2014. It prohibited and penalised the organisation of a system for putting customers in touch with persons who engage in the carriage of passengers in breach of applicable market access requirements. The provision was aimed as a new weapon for national authorities and private parties against providers of services such as UberPOP (part of the ride-hailing business model involving non-licensed private drivers). Soon after it came into force, the provision was put to test in the first proceedings.

Uber naturally fought back. It argued, among others, that the national provision invoked against it constituted a technical regulation within the meaning of Article 1(11) Directive 98/34/EC, as amended, and was therefore covered by the notification requirement laid down in Article 8(1) of that directive. According to the defendant, since no such communication had been made, the provision relied upon in the proceedings should be deemed inapplicable and hence unenforceable.

Two heavy blows from Advocate-General

"UberPOP not an information society service"

Advocate-General Szpunar was not convinced. He began the assessment by recalling his earlier opinion in Uber Spain, in particular the proposed guidelines as to how "composite services" (i.e. services consisting of a component provided by electronic means and a component not provided by such means) should be approached. What is more, he used the opportunity to make two additional points in support of his claim. First, he distinguished the type of activities pursued by Uber from the situation considered by the CJEU in case C-339/15 Vanderborght (see also our earlier blog post on that matter here). Furthermore, he drew a distinction between the case at hand and the legal relationship arising from a franchise contract. The AG concluded by reiterating his earlier view that services provided by Uber should not be classified as information society services, but rather as services in the field of transport.

"Either way, national provision at issue not a technical regulation"

The Advocate-General did not stop here, however. He went on to argue that the question of whether the contested provision of French law constituted a technical regulation could be resolved irrespectively of the classification of the UberPOP service. And, not surprisingly, also that line of reasoning was not very helpful to Uber.

The assessment focused on the wording of Article 1(5) of Directive 98/34/EC, as amended (on a side note, the act was recently repealed and replaced by Directive 2015/1535). The analysed provision defined "rules on services" as requirements of a general nature relating to the taking-up and pursuit of the activities of information society service providers, excluding any rules which are not specifically aimed at those services. It also clarified that "a rule shall not be considered to be specifically aimed at information society services if it affects such services only in an implicit or incidental manner".

The analysis started well for Uber. The Advocate-General agreed with the defendant that the contested national provision was "principally directed at systems for connecting the two parties by electronic means", thus rejecting arguments of the French government to the contrary. However, he went on to argue that - since the prohibition in question was limited to the organisation of a system for putting customers in touch with persons providing transport services illegally - the impact of that prohibition on information society services was merely incidental. 

In one of the most illustrative parts of the opinion the AG submitted: 

"If every national provision that prohibited or punished intermediation in illegal activities had to be regarded as a technical regulation merely because the intermediation most likely takes place by electronic means, then a great number of internal rules in the Member States, written and unwritten, would have to be notified as technical regulations. That would lead to an unwarranted extension of the obligation to notify without that really contributing to the attainment of the objectives of the notification procedure, the purpose of which is to prevent the adoption by the Member States of measures that are incompatible with the internal market and to enable economic operators to make more of the advantages inherent in the internal market. Instead of that, an excessive notification obligation, with the penalty of regulations that have not been notified being inapplicable, would facilitate circumvention of the law and engender legal uncertainty, including in relationships between individuals." (para. 31)

Concluding remark

The commented opinion deals with a delicate interface of regulation and innovation and is bound to attract mixed responses. One may wonder, for instance, how national provisions like the one at issue should be assessed in the light of Article 15 of Directive 2000/31/EC on electronic commerce and whether some sort of notification mechanism would not be desired to ensure compliance with this norm. The question would, of course, be devoid of meaning if the Court were to follow the AG's understanding of the nature of Uber's activity in the first place. In this respect the Advocate-General appears to share the view that the company, which he classifies as a transport company, should be distinguished from the "genuine sharing economy". Last but not least, it is worth noting that some of the criteria referred to by the AG in support of this claim overlap with the indicative benchmarks formulated by the Commission in its collaborative economy communication (particularly references to the level of control or influence exerted by the platform provider). Quite ironically, however, the Commission itself had reportedly been pleading - at least in Uber Spain - against the proposed line of reasoning. This shows that the matter remains highly controversial and its eventual resolution is far from clear. The doubts should be allayed by the end of this year.

* The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.