Case C-434/15, Asociación Profesional Élite Taxi – Uber’s new software destroys the old order of labour

Traditionally, people wanting to be driven from A to B could hail a cab on the street. Subsequently, cabs could be hailed by telephoning for one. Now it is possible to use a smartphone to organise an ‘electronic hail’. However, if the smartphone uses Uber’s software, then the car that comes to pick them up will not be a licensed taxi. The question is: can Uber’s new software destroy the old order of labour that governs the life of a taxi-driver, a legal order characterised by the state-licensing of taxi cabs?

Uber is an American company. It has developed some computer programs that can be used on people’s smartphones. These programs function to enable any smartphone user who wants to be driven from A to B, to call for a car. In effect, the programs organise an ‘electronic hail’.

However, Uber’s software also sets the price that will be paid for the trip. And since Uber already has the credit card details of the owner of the smartphone, Uber’s software ensures it will get paid. The software also ensures that the driver will also receive some money.

Uber’s new technology clearly has the potential to radically change the commercial and legal relations that already exist between people in the taxi industry. But its true potential for change lies in the fact that when Uber’s software sends out the ‘electronic hail’ to Uber-using car-drivers who are able to take the person from A to B, those car-drivers do not possess the requisite licence to a drive taxi or provide taxi services.

It is this lack of a taxi licence, which is often expensive, that has sparked commercial unrest in the Spanish city of Barcelona.

In 2014, when there was an attempt to introduce Uber’s new technology into the city, Barcelona’s licensed taxi-drivers association – the Asociación Profesional Élite Taxi – promptly went off to the local court and asked the judge to declare that Uber Systems was trading in breach of Spanish unfair competition law. It also asked him to issue an injunction to stop the use of Uber’s software (and its international digital-platform) in Spain. It also put in a claim for damages.

The judge at the Barcelona Commercial Court was faced with a delicate problem, which he could not resolve because it was not clear to him how EU law should be interpreted.

In essence, Uber is denying that it provides a transport service. Instead, it admits to supplying smartphone users with a ‘user interface’, in other words, a computer program. As such, Uber says it is providing an e-commerce, information society service, as per the EU’s Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations (OJ [1998] L204/37). That being so, they provide an information society service protected by the EU principle of freedom of establishment, and accordingly they need no ‘authorisation’ for their business.

That interpretation of EU law is rejected by Barcelona’s licensed taxi drivers. They claim that Uber is, in essence, providing a transport service.

Either way, the judge was left facing several legal difficulties. If Uber is said to be supplying a transport service, then that service will not fall within the scope of the EU ‘services in the internal market’ Directive 2006/123/EC (OJ [2006] L376/36).

This is because the scope of that Directive is set out in Article 2:

1. This Directive shall apply to services supplied by providers established in a Member State.

2. This Directive shall not apply to the following activities:
…(b) financial services, such as banking, credit, insurance and re-insurance, occupational or personal pensions, securities, investment funds, payment and investment advice, including the services listed in Annex I to Directive 2006/48/EC;

(c) electronic communications services and networks, and associated facilities and services, with respect to matters covered by Directives 2002/19/EC, 2002/20/EC, 2002/21/EC, 2002/22/EC and 2002/58/EC;

(d) services in the field of transport, including port services, falling within the scope of Title V of the Treaty;

Hence, it is clear that the Directive does not appear to apply to financial services, electronic communications services, or transport. Furthermore, Recital 21 of the Directive states quite clearly that “Transport services, including urban transport, taxis and ambulances as well as port services, should be excluded from the scope of this Directive.” As such, if Uber’s software means that it is providing urban transport for a commercial purpose, then the Directive does not apply. But what then?

The judge decided he was going to make a preliminary reference to the CJEU. He proposed to ask a couple of questions. He thought that the first question should relate to the correct interpretation of the ‘transport service’ exception in Article 2(2)(b) of the Directive. He wondered whether it applied to a company that was facilitating urban transport with the aid of information technology.

If the answer to that question would be no, then there was a further issue, namely, whether Uber’s alleged breach of Spain’s unfair competition law was contrary to Article 9 of the Directive, which governs ‘authorisation schemes’, and the freedom of establishment. He could not resolve that issue either.

The judge was fortified in his belief on the need to make a preliminary reference. He was aware that other Spanish courts had already been struggling to interpret the ‘transport’ exception to the Directive, in situations where the EU principle of establishment and freedom to provide services might nevertheless still apply. Those Spanish courts had gone on to make preliminary references and those were now being dealt with by the CJEU under the rubric of Case C‑168/14, Grupo Itevelesa.

Accordingly, Judge Fernández Seijo decided to make a preliminary reference to the CJEU.

Questions Referred
The Curia website has yet to publish the official translation of the questions asked by the court in Barcelona.

Besides the Spanish cases being dealt with under the rubric of Case C‑168/14, Grupo Itevelesa, the transport exception to the Directive is also at stake in a Dutch case that is now before the CJEU; see further, Case C-340/14, Trijber – the Treaty is more than an incoming tide, it is even in the canals.

The privileges accorded to London’s black-cab taxi-drivers were also recently discussed by the CJEU in Case C-518/13, Eventech – driving a minicab through the rules governing bus lanes.

Update – 12 October 2015
Another preliminary reference involving Uber has been made from a Belgian court. The case is docketed as Case C-526/15, Uber Belgium.

Update – 31 October 2015
For further details of the Uber Belgium reference; see, Case C-526/15, Uber Belgium – facilitating a mobility service not a taxi service.

Update – 4 November 2015
According to the EU’s Official Journal (OJ C363/18), the questions in the Spanish reference read:

1. Inasmuch as Article 2(2)(d) of Directive 2006/123/EC […] of the European Parliament and of the Council of 12 December 2006 on services in the internal market excludes transport activities from the scope of that directive, must the activity carried out for profit by the defendant, consisting of acting as an intermediary between the owner of a vehicle and a person who needs to make a journey within a city, by managing the IT resources — in the words of the defendant, ‘intelligent telephone and technological platform’ interface and software application — which enable them to connect with one another, be considered to be merely a transport service or must it be considered to be an electronic intermediary service or an information society service, as defined by Article 1(2) of Directive 98/34/EC […] of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations and of rules on Information Society services?

2. Within the identification of the legal nature of that activity, can it be considered to be … in part an information society service, and, if so, ought the electronic intermediary service to benefit from the principle of freedom to provide services as guaranteed in the Community legislation — Article 56 TFEU and Directives 2006/123/EC and … 2000/31/EC […]?

3. If the service provided by UBER SYSTEMS SPAIN, S.L. were not to be considered to be a transport service and were therefore considered to fall within the cases covered by Directive 2006/123, the question arising is whether Article 15 of the Law on Unfair competition — concerning the infringement of rules governing competitive activity — is contrary to Directive 2006/123, specifically Article 9 on freedom of establishment and authorisation schemes, when the reference to national laws or legal provisions is made without taking into account the fact that the scheme for obtaining licences, authorisations and permits may not be in any way restrictive or disproportionate, that is, it may not unreasonably impede the principle of freedom of establishment.

4. If it is confirmed that Directive 2000/31/EC is applicable to the service provided by UBER SYSTEMS SPAIN, S.L., the question arising is whether restrictions in one Member State [regarding] the freedom to provide the electronic intermediary service from another Member State, in the form of making the service subject to an authorisation or a licence, or in the form of an injunction prohibiting provision of the electronic intermediary service based on the application of the national legislation on unfair competition, are valid measures that constitute derogations from paragraph 2 in accordance with Article 3(4) of Directive 2000/31/EC.

Update – 16 August 2016
The ‘transport exception’, features in another preliminary reference involving Uber but this time it originates in the French courts; see further, Case C-526/15, Uber Belgium – facilitating a mobility service not a taxi service.