Ride-sharing startup Uber has had a difficult year and it could get a whole lot worse.
On Wednesday this week, the European Court of Justice, will rule on whether Uber is a digital company or a transportation one. This decision will affect the way the company is legislated across the whole of Europe.
Go deeper with GlobalData
What is the Uber ECJ case about?
A case was originally brought against Uber by an association of taxi drivers in Barcelona in 2014. The complaint related to UberPool, a former option in the Uber app which allowed unlicensed drivers to bid for rides in the app.
The complainants said Uber was unfair competition as it wasn’t subject to the normal rules and regulations that taxi operators are.
What will it mean if the Uber ECJ decision says it is a transport company?
So far, Uber has always argued that it is merely a digital platform which acts as an intermediary between drivers and customers.
This has also been one of the ways it has maintained that it is not an employer, merely an agent for its drivers. Uber has used this to get away without treating its drivers as official workers, meaning they don’t receive a guaranteed minimum wage or holiday pay. However, this changed recently.
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By GlobalDataBack to the ECJ ruling. Under EU law, online services, like Uber’s status at the moment, are protected from undue restrictions and regulations.
However, transport services are not. These are regulated at national and local level.
Therefore, if it’s officially laid down in a ruling that Uber is a transport service, it will be subject to different rules and regulations than before. For instance, earlier this year Transport for London (TfL) revoked Uber’s license over concerns about its approach to DBS checks, as well as in its reporting of serious criminal offences committed by drivers.
“TfL has concluded that Uber London Limited is not fit and proper to hold a private hire operator license,” the regulator said.
If it is decided Uber is a transportation company, hopefully, issues such as may be less likely to happen. Uber would have a responsibility to ensure its drivers are properly trained and take more care of them.
Peter Woodhouse, transport and employment lawyer at law firm Stone King, told Verdict that a transport ruling could take Uber services off the roads.
“Uber will need to have a transport license to work, whether that’s a hackney taxi license or a public service vehicle (PSV) license,” he said.
He says Uber is effectively unregulated now but this would fundamentally change. The firm would need to provide more training to its drivers, create stable operations base and operational centres in the cities where it functions.
This would be expensive and change the way the current Uber model functions.
“It would be the end of this certain iteration of Uber,” said Woodhouse.
Earlier rulings say Uber is a transport company
Earlier this year, an advocate general at the ECJ, Maciej Szpunar, said that Uber is a transport firm and needs a license to operate. This was following the consideration of the Barcelona case.
Szpunar said Uber operated within the realm of transport, rather than digital services.
“Uber thus can be required to obtain the necessary licenses and authorisations under national law,” he said.
However, just because Szpunar made this decision, that doesn’t mean the ECJ will uphold it.
What is Uber saying about it?
Uber said in a statement:
“Any ruling will not change things in most EU countries where we already operate under transportation law. However, millions of Europeans are still prevented from using apps like ours. As our new chief executive has said, it is appropriate to regulate services such as Uber. We want to partner with cities to ensure everyone can get a reliable ride at the tap of a button.”
The ruling from the ECJ will provide clarity for discussions Uber has with local regulators going forward. Uber has been forced to withdraw in markets across Europe, such as Denmark, Germany, and Spain.
A ruling could provide a framework whereby Uber and local regulators could work together to straighten out the issues that have forced it to withdraw from markets.
With all the problems Uber has faced this year, something needs to change.
