Smartphone apps for taxi services provided by the American company Uber are now banned in Germany, following a district court ruling in Frankfurt that has traditional cab drivers celebrating. EurActiv Germany reports.
After months of protests throughout Germany, taxi drivers have won a victory against their start-up competitor, Uber, in a Frankfurt district court.
But the ruling does not seem to have affected the American company, which offers a popular smartphone app arranging cheaper, private alternatives to taxis in many US and European cities.
"Uber will continue its operations and will offer Uberpop ridesharing services via its app throughout Germany," the company said in a statement on Tuesday (2 September).
“You cannot put the brakes on progress,” said Michel Doermer, a spokesman for Uber in Frankfurt.
Last week, Frankfurt's district court issued a temporary injunction prohibiting Uber from conducting passenger transport throughout Germany.
The decision, released on Tuesday, said taxi services arranged by Uber, are a violation of Germany's Passenger Transportation Act (Personenbeförderungsgesetz).
Judges explained that drivers providing the service for Uber do not have a licence for passenger transportation, which requires certain conditions such as a health exam.
As opposed to traditional taxi companies, Uber does not have a fleet of drivers. Instead, the service offers lower costs by directly connecting private drivers with passengers using a smartphone app.
Drivers operate at their own expense and Uber receives a 20% share of the price for its services. The remaining 80% goes to the driver
The Frankfurt court said the company should be considered "a participant in any respective violation committed by the driver", the ruling concluded. This means the start-up could have to pay a penalty of up to €250,000 for each violation.
Uber said it would challenge the ruling and exploit all possibilities for appeal. Until then, the company said it would continue to offer its transportation services throughout Germany.
Germany is one of the fastest growing markets in Europe for the company, with business growing fivefold so far this year.
A victory for Taxi Deutschland
Last week’s decision has raised hopes among taxi drivers in Germany, who feared massive losses because of Uber’s competition.
The American company cashes in on the profits without any investment, explained the Frankfurt-based taxi consortium Taxi Deutschland.
The group, which represents taxi centres throughout Germany, was the primary complainant in the district court case, arguing that the new app was a violation of the Passenger Transportation Act.
Drivers are not inspected and are not necessarily insured to carry passengers, Taxi Deutschland complained, calling the service a danger to passengers. Lost tax income for the state is another issue the group indicated.
"This kind of 'locust-shareconomy' creates equal losses for the state, society and employees," said Dieter Schlenker, the head of Taxi Deutschland.
Federal politicians call for legislative reform
"Companies who pay wages and taxes in accordance with the law should not be undermined by others who do not do any of this," said Kirsten Lühmann, transportation policy spokesman for the Social Democratic (SPD) faction in the Bundestag.
If there are signs that the current legal basis does not suffice to prevent something like this, legislators must take action, she emphasised.
Meanwhile Ulrich Lange, transport spokesman for the centre-right faction in the Bundestag, said at this point regional transportation ministers are needed: "The local authorities cannot be left alone to deal with Uber's claims, while the courts go back and forth to clear up disputed legal questions", he said.
The German Transportation Ministry stated that no changes have been planned regarding passenger transport requirements. Existing provisions adequately protect the security of taxi services, the ministry said.
Uber says it is currently active in more than 45 countries. In the United States, alone, the service is available in more than 100 cities.
In Europe the company is present in metropolitan areas like Berlin, Frankfurt, Munich and Hamburg as well as Brussels, London, Milan and Vienna. Others are expected to follow.
EU Commission: Uber "is here to stay"
European Commissioner Neelie Kroes said she was "outraged" about countries trying to ban Uber. In response to the Brussels court decision in April this year, she said it was only about "protecting a taxi cartel".
Uber with its "modern and open services" was "100% welcome in Brussels and everywhere else", the Commissioner stated.
"The time has come for taxi drivers, regulators and Uber heads to sit down and talk. Nobody is saying that its drivers should not pay taxes and respect consumer protection regulations, but banning Uber does not give them an opportunity to do things well", Kroes said.
The Commissioner called for a reform of taxi systems across in order to compete with the new actors in the field. "Digital innovations like taxi apps are here to stay. We need to work with them, not against them."
Europe-wide protests ineffective?
In recent months, taxi drivers across Europe have been protesting against Uber's business model. But their efforts may have been counterproductive. Uber claims it has benefited from the protests, gaining popularity from its critics.
"We are working round the clock", the company's European director Pierre-Dimitri Gore-Coty told Bloomberg TV.
The taxi replacement app is among the hottest new start-ups in Silicon Valley. Financial experts estimate the San Francisco-based company's worth at around $18 billion. Uber is financially supported by giants like Google and Goldman Sachs.
Last week, Uber said it was experiencing "huge demand" for its services in German cities including Berlin, Frankfurt and Hamburg, and that it planned to expand into Cologne and Stuttgart by the end of this year.
Hamburg had also issued an injunction against Uber, but the administrative court overturned the measure for formal reasons. The transportation authority - like the complainants in the civil case concluded last week - argued that Uber drivers often do not possess a licence for passenger transportation.
Berlin used the same argument to attack Uber, but the company has appealed a ruling against it, and continues to operate pending a final verdict.
In its counter argument, the American company explained that it does not arrange professional drivers but, rather, private individuals who do not require a special passenger transportation licence.
Uber has been confronted with legal opposition in many countries, but usually came out of proceedings unscathed.