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  • Public law
  • 09-10-2017

The Dutch Trade and Industry Appeals Tribunal [College van Beroep voor het bedrijfsleven, “CBb”] rendered a ruling on 21 September 2017 on the enforcement action taken by the Dutch Minister of Infrastructure and the Environment (I&M) against the UberPOP and UberX services offered via the Uber transport app. The app puts consumers in touch with Uber-selected taxi operators for transport by limousine (UberLUX), luxury car (UberBlack), private individuals with their own car (UberPOP), and taxi (UberX). In 2014, the courts put a stop to UberPOP because that service was held to be contrary to Section 76(1) of the Dutch Passenger Transport Act 2000 (Wp2000). That provision prohibits carrying out taxi transport without a licence. According to the court, UberPOP drivers carry out passenger transport by car against payment without holding a taxi or entrepreneur’s permit. After the Minister of I&M had imposed several penalties for non-compliance on Uber and Uber actually forfeited the amounts concerned because of for repeated violations, Uber B.V. and its sole shareholder Uber International B.V. gave up providing this service in November 2015. According to the CBb, that must remain the case. However, the UberX service must be clearly distinguished from UberPOP and is permitted to continue.

Prohibition of UberPOP definitively upheld
With this ruling, the CBb has put an end to the UberPOP taxi service whereby private individuals could offer taxi rides via the Uber app without a licence and using their own car. Contrary to what Uber argued in the case, this was to be classified as taxi transport (and not as carpooling) because it is was an economic activity with which money was earned. Section 76(1) of the Wp2000 concerns taxi transport and was thus being contravened.

Uber’s UberPOP transport service was consequently intended to contravene the law, even though it was private individuals who provided the actual transport. Uber plays an essential role in this, including by actively concerning itself with supply and demand and collecting a fixed percentage of the fare paid by the customer. The CBb thus found that the company was an accessory to the contraventions committed by the private drivers. The CBb therefore also rejected the ground for appeal in which Uber disputed this close cooperation with the drivers concerned.

There might have been a way for Uber to avoid enforcement if there had been “a specific prospect of legalisation”. According to the CBb, there was no such prospect of legalisation as a basis for refraining from enforcement: the entrepreneur’s permit is not set to disappear and that is not altered by the fact that there is perhaps the prospect of the previous professional competence requirement for licence holders being allowed to lapse.
The CBb’s conclusion was that the Minister of I&M had been right to impose penalties for non-compliance so as to ensure that Uber ceased providing UberPOP. And because Uber continued to do so, the subsequently forfeited penalties of EUR 10,000, EUR 300,000, and EUR 50,000 were also justified.

UberX is a different story
However, the UberX service, which can also be booked via the app, is in fact legal. This service makes use of drivers who do hold a taxi licence and a car that complies with the applicable rules. Because no cooperation with private drivers without a taxi licence is sought, UberX is a different service to UberPOP and, according to the CBb, nothing is wrong with UberX.

The Minister of I&M had, however, imposed sanctions for offering UberX. According to the CBb, that was therefore not justifiable. The non-compliance penalty of EUR 650,000 collected from UberX for the alleged cooperation between drivers and taxi companies via a prohibited lease structure was therefore incorrect. The CBb set aside the decision imposing it. The UberX service, whereby passengers can book a private trip for up to four persons, will continue to be offered.

Current requests for a preliminary ruling regarding Uber
The Dutch issues are also interesting in the light of the European developments involving Uber.

After taxi unions in Madrid and Barcelona dragged the Spanish company Uber System Spain into court in order to have UberPOP banned, the Spanish court referred the case to the European Court of Justice (ECJ) in July 2015. Fifteen ECJ judges are currently investigating whether the service should be viewed as a taxi company – in which case it is engaging in unfair competition by evading the rules for the taxi sector – or as an online service provider that combines supply and demand and therefore does not need to comply with the taxi legislation.

The ECJ’s ruling will be important for the future of the Uber company throughout Europe, and there is great interest in this matter, as is clear from the anger and resentment among Uber’s competitors.

In its ruling, the CBb explicitly states that it sees no reason to agree to Uber’s request for the hearing to be postponed until the ECJ has decided on the requests for a preliminary ruling and takes over the matter itself. Before the Netherlands, Germany had already prohibited UberPOP. If the ECJ decides that Uber is an online platform, then it falls within the scope of the free movement of services and Dutch licensing obligations will need to be scrapped as being unlawful. Moreover, it will then be a great deal easier to offer services such as UberPOP.

However, it is certainly not clear that Uber will be classified as an online platform that is not required to hold a licence. On 11 May 2017, Advocate General Szpunar advised the ECJ to classify Uber as a transport service. He considers that the company does not meet the conditions for an information service. After all, (i) the electronic part of the service is not independent of the non-electronic part because the drivers’ activities cannot be separated from those of Uber. Moreover, the service is not (ii) largely provided by electronic means given that the emphasis at Uber is on the transport of passengers. Since in the case of classification as a transport service, the free movement of services is not called into question, European law will basically not prevent Uber’s services from being subject to the authorisation requirement. If the ECJ follows the Advocate General’s opinion, governments will be able to subject Uber to the same legal requirements as conventional taxi companies. That will be a big relief for many market parties.

Consequences for other service providers in the “sharing economy”
Incidentally, it can be expected that if the ECJ does not follow the Advocate General’s opinion, and Uber gets away with not having to comply with the specific rules for transport providers, this will have consequences for other companies that offer platform services within the “sharing economy”. Companies like Airbnb will therefore at least try to evade any responsibility to ensure compliance with specific rules. In the case of Airbnb, for example, that includes the fire safety regulations for the overnight accommodation for which they mediate. Whether that is a desirable development is highly questionable.

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