UberPOP and EU Internal Market Law

Abstract: To share belongings between friends is a common phenomenon. However, sharing as a business trend or even an economic system, in which unfamiliar individuals share assets and skills via online platforms, usually for a fee, is a newer phenomenon. The economic system is generally called “the sharing economy” or “collaborative consumption”. Characteristic for companies involved within the sharing economy are that they increase consumer value. This is made by making a perfect match between a consumer with certain skills or resources with another consumer in need of that skill or resource, at the right time and against reasonable transaction costs. Traditional third parties in a business transaction, such as taxi companies, are no longer needed since individuals buy directly from each other. The new third parties are now online platforms which generally reduce transaction costs for consumers. This is exactly what company Uber enables its users to do with its ridesharing service “UberX/UberPOP”. UberPOP, the term most frequently used in this paper, pairs car owners (drivers) with other persons (passengers) online. Any person with no criminal past and a modern car with four doors can become a driver and is compensated by Uber for driving other Uber users. The concept is similar to regular taxis but it differs by being fully dependent on digital features, such as GPS and Internet, and by using drivers without taxi licenses. Unfortunately, the Californian company Uber and its European subsidiaries, are unable to provide the UberPOP service in many EU Member States. The scepticism is based in the fact that UberPOP is similar to a taxi service, but it does not follow national laws on taxis. UberPOP drivers are regular persons and many European taxi drivers have invested time and money to obtain a taxi licence. They refuse to lose their jobs because of a newcomer who exploit legal loopholes. The actual issue is the uncertainty of what type of service UberPOP is under EU law. This master thesis is meant to provide an answer on that. The investigation will cover the nature of the UberPOP service under EU law and whether it is illegal in the EU with regards taken to principles such as free movement of services, anti-discrimination and proportionality. The principles will be discussed in combination with pending ECJ rulings regarding what sort of service UberPOP is. The investigation is desirous, since it is currently uncertain whether UberPOP is a transport service or a digital intermediary service. If the ECJ considers UberPOP as a digital intermediary service, Uber can rely on the principle of free movement of services and Member States cannot easily restrict UberPOP. On the other hand, if UberPOP is considered as a transport service, Member States decide how to regulate it. The reason for this is that transport services are excluded from the scope of the Services Directive. The judgement will have a universal impact on sharing companies competing, by digital means, in the transport sector. These are called Transport Network Companies (TNCs) in California, United States. TNCs are exclusively regulated in California and they are allowed to operate under certain conditions. For instance, they must have a zero-tolerance policy on drugs and they must have strict safety and insurance policies. The majority of EU: s Member States, except Estonia, have no rules for TNCs. However, a briefing sent to the EU Parliament clearly states numerous advantages brought to the EU economy by TNCs, such as increased consumer welfare. That report, written by Azevedo, F. & Maciejewski, also observed the issue on whether TNCs provide transport services or digital services. Hopefully, the preliminary ruling (discussed in section five) and upcoming reports regarding the sharing economy, will give answers. First then, responsible EU institutions will consider the need for further legislative measures.