Spanish competition regulator pushes for sharing economy – despite court cases

Spain´s CNMC has taken Madrid and Canary Islands to court due to their restrictive measures against AirBnB-type services. [Open Grid Scheduler/Flickr]

The National Authority for Markets and Competition in Madrid is set to publish a groundbreaking report calling for eliminating unjustified barriers against services such as Uber and Airbnb, EURACTIV has learned.

Spain is one of the most important cases in the debate of the collaborative economy, experts and EU officials agree. The country has not only caught media attention by banning Uber and severely limiting Airbnb, but it is also the only country in Europe where other popular services like Blablacar are being examined by judges.

Moreover, the EU Court of Justice is currently looking into whether Uber is a ‘tech’ platform or a service provider, in a case referred by a Spanish judge.

This obstructive approach showed by the judges and regional and local authorities is seen as unjustified, CNMC officials told EURACTIV. 

In their view, the public authorities’ regulatory intervention is justified in case of a market failure. However, the modern technologies help to mitigate most of the market failures which justified past regulations.

When it comes to the taxi services and the accommodation sector, the lack of proper information about what car to hail or where to sleep justified protective regulation for taxis and hotels. However, geo-localization, mobile technologies, peer-to-peer reviews and numerous apps allow consumers to better know who their driver will be or to rate accommodations more accurately than with the star system.

Against a backdrop of growing interest worldwide among the regulators on this issue, the CNMC is concluding a report to be published by the end of this year. It will examine the concept of the sharing economy, in particular the transport and accommodation sectors, and it will offer guidelines for potential new markets for the future.

The CNMC report will be the first comprehensive study to be published by a national authority on the sharing economy and is highly-anticipated by EU and national officials. The body is in close contact with the European Commission and with the US’s Federal Trade Commission, which is also preparing a report on this issue.

The CNMC officials said that not only are some of the restrictive measures taken against innovative service providers in Spain unnecessary, but that some of the past regulations should also be reviewed.

The bottom line is to see whether there are more efficient ways of assigning untapped resources held by users, following the principles of efficient economic regulation.

Meanwhile, some of the most controversial issues involved in the sharing economy debate, such as tax compliance and social security provisions, may not require specific legislation. Instead, the CNMC officials pointed out that the public administration should adapt to the new economic players to facilitate the procedures.

>>Read: ‘Uberisation’ of economies pinching state tax revenues

In addition, the same sources pointed out that this new economy could require more substantial changes. One of the ideas being considered for the report is to make social security contributions per hours worked.

However, taxi drivers warned that services like Uber are putting the EU’s social model “in danger”, as the newcomers do not fulfill the same criteria that the old service providers.

>>Read: Taxi drivers look for allies in the Commission against Uber

In order to prepare the report, the Spanish competition authority launched a public consultation one year ago, asking about the principles of the sharing economy, market affects and regulatory principles. Its steps have been followed after by other regulators.

Under the spotlight

Its pro-sharing economy position has pushed the CNMC to take Spanish regions (Canary Islands and Madrid) and cities (Cordoba and Malaga) to court due to restrictive regulations on the new service providers.

The institution, set up in 2013 in the midst of the financial crisis by merging all the sector regulators, has been under the spotlight as the agglomeration of regulators goes against the dominant approach in Europe and the OECD countries. Indeed, Spain’s Supreme Court questioned last July its legal foundations and has referred the case to the EU Court of Justice.

CNMC sources argue that its multi-sectorial nature has been crucial to run a proper analysis of the collaborative economy. National authorities tend to analyse it from a competition perspective when it is not an issue of monopolies or antitrust, they argue.

The European Commission is also looking into this issue from a multidimensional point of view, with various consultations ongoing on consumer aspects of the sharing economy (DG Justice), markets for taxis and hired cars with driver services and ridesharing (DG Move), and the sharing-economy platforms (DG Connect and DG Growth).

The executive’s top officials welcomed the arrival of this ‘new economy’. “It would be very sad if Europe was the only continent which denied new business models and this would lead to bad situations in terms of jobs and economic growth,” Jyrki Katainen, Commission Vice-President for Jobs, Growth and Investment said in October, during the presentation of the new Internal Market Strategy.

>>Read: Brussels announces crackdown on single market offenders

As part of this strategy, the European Commission is identifying regulatory gaps within the existing directives and will issue guidelines next year to help member states implement EU law in this field.

“We need to have a common approach for these new businesses” which are seen as opening new opportunities for the European economy, argued the Commissioner for the Single Market, El?bieta Bie?kowska.

As part of the Internal Market Strategy, the European Commission is examining the lack of clarity as to which rules should apply to providers, online platforms, and users of shared services. This lack of clarity may constitute barriers both for business and for consumers.

The executive considers that this lack of clarity comes from rules that may be well-established, but may not fit the nature of services provided by the collaborative economy. Users face issues related to trust, safety, data privacy and insurance against certain risks. What happens in case of an accident? Are they insured in case of an accident?

When looking at possible regulatory issues, we need to find the right balance between:

  • Facilitating innovative services;
  • Protecting consumers; and
  • Ensuring a level playing field between different business models.

End of 2015: Spain´s National Authority for Markets and Competition publishes report on sharing economy.

Second half of 2016: EU Court of Justice announces its verdict on Uber case.


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