Advocate General’s Opinion on Uber’s Claim to be an Information Society Services Provider

May 10, 2017

 The Advocate
General’s Opinion in Case C-434/15 Asociación Profesional Elite Taxi v Uber
Systems Spain, SL
has now been published. His conclusion is that Uber
cannot claim the benefit of the principle of the freedom to provide services
guaranteed by EU law for information society services.

As most readers will know, Uber is an electronic platform
which makes it possible, using a smartphone equipped with the Uber application
(‘the App’), to order urban transport services in the cities where Uber has a
presence. The App recognises the location of the user and finds available
drivers who are nearby. When a driver accepts a trip, the App notifies the user
of such acceptance and displays the driver’s profile together with an estimated
fare to the destination indicated by the user. Once the trip has been
completed, the fare is automatically charged to the bank card which the user is
required to enter when signing up to the App. The App also contains a ratings
function, enabling drivers to be rated by passengers and vice versa. Average
scores falling below a given threshold may result in exclusion from the
platform. In the case of the service going by the name UberPop, nonprofessional
private drivers transport passengers using their own vehicles.

In 2014 the Asociación Profesional Elite Taxi (‘Elite
Taxi’), a professional organisation representing taxi drivers in the city of
Barcelona (Spain), brought an action before the Juzgado de lo Mercantil n° 3 de
Barcelona (Commercial Court No 3, Barcelona) asking the court, inter alia, to
impose penalties on the Spanish company Uber Systems Spain SL (‘Uber Spain’), a
company that belongs to a group managing the Uber platform, for engaging in
unfair competition towards Elite Taxi’s drivers. In particular, Elite Taxi
maintained that Uber Spain is not entitled to provide the UberPop service in
the city of Barcelona. Neither Uber Spain nor the owners or drivers of the
vehicles concerned have the licences and authorisations required under the city
of Barcelona’s regulations on taxi services.

Since it considered that an interpretation of several
provisions of EU law was necessary to enable it to give a decision in the case
before it, the Juzgado de lo Mercantil n° 3 de Barcelona decided to refer a
number of questions to the Court of Justice concerning the classification of
Uber’s activity in light of EU law and the conclusions which must be drawn from
that classification.

In his Opinion, Advocate General Maciej Szpunar starts by
explaining that it must essentially be determined whether the services offered
by the Uber platform benefit, as ‘information society services’ from the
principle of the freedom to provide services or whether its services fall
within the field of transport,  which is
regulated by the law of the Member States. In the first case, the licences and
authorisations required by the city of Barcelona’s regulations concerning the
operation of Uber could be incompatible with the principle of the freedom to
provide services, whilst, in the second case, the Member States would in
principle be free to regulate Uber’s activity.

The Advocate General takes the view that, although it is for
the national court to determine and assess the facts, the service in question
is a composite service, since part of it is provided by electronic means while
the other part, by definition, is not. A composite service may fall within the
concept of ‘information society service’ where (1) the supply which is not made
by electronic means is economically independent of the service which is
provided by that means (as is the case, for example, of intermediation platforms
for purchasing flights or making hotel bookings) or (2) the provider supplies
the whole service (that is, both the part provided by electronic means and the
part provided by other means) or exercises decisive influence over the
conditions under which the latter part is provided, so that the two services
form an inseparable whole, a proviso being that the main component (or indeed
all essential elements of the transaction) is supplied by electronic means (as
is the case, for example, of the online sale of goods).

According to the Advocate General, the service offered by
Uber does not meet either of those two conditions. In that regard, the Advocate
General observes that the drivers who work on the Uber platform do not pursue
an autonomous activity that is independent of the platform. On the contrary,
that activity exists solely because of the platform, without which it would
have no sense. The Advocate General also points out that Uber controls the
economically important aspects of the urban transport service offered through
its platform. Indeed, Uber (i) imposes conditions which drivers must fulfil in
order to take up and pursue the activity; (ii) financially rewards drivers who
accumulate a large number of trips and informs them of where and when they can rely
on there being a high volume of trips and/or advantageous fares (which thus
enables Uber to tailor its supply to fluctuations in demand without exerting
any formal constraints over drivers); (iii) exerts control, albeit indirect,
over the quality of drivers’ work, which may even result in the exclusion of
drivers from the platform; and (iv) effectively determines the price of the
service. All those features mean that Uber cannot be regarded as a mere
intermediary between drivers and passengers. In addition, in the context of the
composite service offered by the Uber platform, it is undoubtedly transport
(namely the service not provided by electronic means) which is the main supply
and which gives the service meaning in economic terms.

The Advocate General concludes that, in relation to the
supply of transport, the supply whereby passengers and drivers are connected
with one another by electronic means is neither self-standing nor the main
supply. Consequently, the service offered by Uber cannot be classified as an
‘information society service’. Instead, the service amounts to the organisation
and management of a comprehensive system for on-demand urban transport.

Moreover, Uber does not offer a ride-sharing service, since
the destination is selected by the passenger and the driver is paid an amount
which far exceeds the mere reimbursement of costs incurred. Taking account of
the fact that the supply of transport constitutes, from an economic
perspective, the main component, whilst the service of connecting passengers
and drivers with one another by means of the smartphone application is a
secondary component, the Advocate General proposes that the Court’s answer
should be that the service offered by the Uber platform must be classified as a
‘service in the field of transport’.

It follows from that interpretation that Uber’s activity is
not governed by the principle of the freedom to provide services in the context
of ‘information society services’ and that it is thus subject to the conditions
under which non-resident carriers may operate transport services within the
Member States (in this case, possession of the licences and authorisations
required by the city of Barcelona’s regulations).

The full Opinion can be read here.

If you are interested in contributing an article to SCL
please read these guidelines: