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08/12/2016

Taxi drivers look for allies in the Commission against Uber

Transport

Taxi drivers look for allies in the Commission against Uber

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As Uber continues to expand, taxi drivers are looking for allies inside the European Commission before the executive takes its position on the legal challenges posed by the ride-hailing service, and the so-called sharing economy as a whole.

The EU executive is currently examining whether Uber should be regulated as a traditional service provider or as a digital platform, a decision which could have far-reaching consequences for the California-based company.

The International Road Transport Union (IRU), which counts several national taxi drivers associations among its members, will meet with the cabinet of Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen on 16 September.

>>Read: Uber lobbyists take on EU critics

Pierre Steenberghen, the Secretary General of the Belgian GTL taxi drivers’ union, told EurActiv that Uber is putting the EU’s social model “in danger”.

Commission wants social policy and tax into the debate

Thyssen’s Directorate-General for Employment and Social Affairs is not directly involved in the ongoing analysis of the sharing economy. To date, the dossier has been dealt with by DG Transport, DG Justice, DG Connect and DG Growth.

However, the cabinet of the European Commission President, Jean-Claude Juncker, agrees that the Belgian Commissioner should take part in the preparatory work to strengthen the social dimension of the debate, an EU source said.

The meeting will take place the same day that hundreds of taxi drivers from Belgium and France are expected to protest in Brussels roads against Uber. This will be the second time that the Belgian taxis block the streets in six months. Meanwhile, a recent protest in Lisbon and other Portuguese cities against the company brought together 3,000 taxis, according to the organisers. 

Steenberghen, from the Belgian taxi union, acknowledged that most of the Commissioners involved in the discussion could see Uber as an “example” of the new economy that Europe aims for. But in light of the relevance of this case, he hopes that the Commission will try to have a balanced debate. “There will be a struggle inside the Commission, and I hope they will reach a consensus because it is an important discussion for the issue of the sharing economy as a whole”.

>>Read: Uber Chief: ‘Uber and Europe is definitely a conversation worth having’

A Commission spokesperson said, “we want to allow the development of these services but in a balanced way, taking into account consumer protection, tax and labour issues”.

Mark MacGann, Uber’s head of public policy for Europe, lamented that EU member states were blocking the company’s development based on “old-fashion” rules, instead of having one single market for digital services. He called on the Commission to come forward with an EU-wide solution to address national barriers.   

Public consultation

The Commission’s opinion will affect other sectors disrupted by the collaborative economy, including accommodation, affected by Airbnb, or food, the area of business of Feastly.

The Commission is currently fully involved in a fact-finding mission to see how to address these new businesses. The institution will include some questions referring to the sharing economy in its upcoming consultation on online platforms to be announced on 24 September. Moreover, the EU executive will launch a study in the coming weeks to analyse the markets for taxis and hire cars with driver services in member states.

Meanwhile, the Commission will unveil a new Internal Market Strategy next month, where it will clarify what existing rules are applying to the sharing economy and whether there are some regulatory gaps to fill.

Pending court case

However, the Commission’s final conclusion will be shaped by the EU Court of Justice, which is currently examining a case referred by a Spanish judge. European sources say the Commission will wait for the court ruling before adopting its final position.

The first hearing is expected to take place before the end of the year, while the verdict could arrive toward the end of 2016. An opinion from the general advocate is also expected due to the relevance of the case.

>>Read: Spanish judge asks EU top court for Uber ruling

Meanwhile, consumer organisations welcomed these new forms of doing business. But “this does not mean that we should accept any change, like new companies that fail to meet their fiscal obligations or the labour laws”, commented Bernardo Hernández, a senior member of the Board of Consumers in Spain.

Hernández, who was also the rapporteur of the European Economic and Social Committee (EECS) on the sharing economy, underlined that Uber is a very good example of how complex the debate is as “it affects a very closed sector to competence and innovation”. He noted that in countries like Spain, Uber’s arrival has led to taxi drivers adaptation and the creation of their own apps.

“Evolution will continue, otherwise taxis as we know them today will become a residual sector,” he said.

Uber is also anticipating the move and has recently launched a new service (UberX) under which the drivers must have the required private-hire license and commercial insurance.  Steenberghen affirmed that UberX could be accepted as long as the same rules are applied to everyone. In his opinion, UberX is not a ride-hailing service, but a limousine service. Otherwise, “the problem is that you have two ways of organising a service”, he warned.

“Taxi drivers are right when they point out that there cannot be some burdens for some people and not for the others,” ernández said referring to the taxi licenses. “What would you do with taxi drivers that paid for a license? It is not as simple as being in favour or against Uber. This is a very complex issue,” he concluded.

Background

Uber, the world's most valuable venture-backed start-up, with a valuation of $40 billion, is facing increasing legal challenges across Europe, where local taxi drivers have taken to both the streets and courts to fight it.

It has been criticised worldwide over how it pays drivers, charges passengers and ensures their safety. Taxi companies argue it competes unfairly because it does not have to pay their steep license fees and bypasses local laws.

To date, Uber has been hit by court injunctions in Belgium, France, Germany, the Netherlands and Spain.

Uber has already filed two complaints against a French law it says favors regular taxi companies at its expense.

Regulation of taxi services is the competence of member states, the European Commission said, but it would assess the complaints in light of the principles of proportionality, non-discrimination and freedom of establishment.

>> Read: Uber files complaints against German and Spanish bans

Despite the legal barriers, Uber has continued attracting investors. Recently, the company attracted 1.2 billion dollar to strengthen its position in China.

A report drafted by PwC for the European Commission in 2013 underlined that rules for business-to-business (B2B) or business-to-consumer (B2C) transactions are not always applicable to consumer-to-consumer (C2C) markets. The report made several recommendations for what is now referred to as the "sharing economy". These include:

  • Tailored tenders aimed at addressing the restriction those companies face and stimulating innovation within C2C start-ups;
  • Facilitating the creation of minimum safety and quality standards for peer-to-peer markets;
  • Making it attractive for employees to receive company shares, and receive dividends for instance in the form of tax exemptions or reduced taxes on salaries.

Timeline

  • 16 Sept.: Taxi drivers protest in Brussels.
  • 24 Sept.: European Commission to launch public consultation on online platforms.
  • End of Sept.: Commission study on the markets for taxis and hire cars with driver services.
  • Oct.: Commission to present new Internal Market Strategy.
  • End of 2016: EU Court of Justice expected to issue ruling on Uber.

Further Reading

Collaborative Consumption Opinion Paper of the European Economic and Social Committee: http://www.eesc.europa.eu/?i=portal.en.int-opinions.25754

PwC report on sharing economy: http://ec.europa.eu/enterprise/policies/innovation/policy/business-innovation-observatory/files/case-studies/12-she-accessibility-based-business-models-for-peer-to-peer-markets_en.pdf