ECJ 20 December 2017, case C-434/15 (Uber Spain), Employment status

Summary

The overall degree of control which the Uber platform exercises over the workforce does not suggest that it acts merely as an intermediary. The services Uber provides fall within the field of transport within the meaning of EU law and not under the freedom to provide services. It is therefore for the Member States to regulate the conditions under which such services are to be provided in conformity with the general rules of the TFEU.

Facts

Under Spanish law, taxi firms and transport intermediaries must obtain a special licence to perform car-hire services. Neither the Uber drivers operating in Barcelona, nor Uber Spain itself, possessed such a licence. On the grounds of violation of the law, the Asociación Profesional Élite Taxi (‘Élite Taxi’) sought a cease and desist order and demanded the prohibition of future similar behaviour on the basis of unfair competition. Uber argued that it does not provide transport or taxi services but is merely a digital intermediary facilitating the process of matching passengers wishing to make an urban journey with nearby drivers by means of a smartphone application.

Legal framework

The case lies along the line between services and transport. The former is harmonised at EU level and thus subject to EU law, whereas the latter remains within the competence of Member States, at least for the time being. Essentially, platforms operating under the freedom to provide services enjoy this freedom with no obstacles.

National proceedings

Élite Taxi is a professional organisation representing taxi drivers in the municipality of Barcelona. In 2014 it brought an action to the Commercial Court in Barcelona seeking an order against Uber Spain for failure to comply with the obligation to obtain prior authorisation and a licence to perform car-hire services. The Commercial Court confirmed that the necessary licences and authorisations had not been obtained by Uber Spain or its drivers. Uber Spain denied having infringing transport law and maintained that it was a company established and governed by Dutch law, Uber BV. Therefore, the applicant’s claims should be brought against that company. According to Uber Spain, it was only responsible for advertising on behalf of Uber BV. The Court in Barcelona requested, however, a preliminary ruling concerning the legal classification of the service, on the basis that if Uber’s activities were covered by the directive on services in the internal market or the directive on electronic commerce, it would not be in breach of competition law.

Questions put to the ECJ

Must Article 56 TFEU, read together with Article 58(1) TFEU, as well as Article 2(2)(d) of Directive 2006/123 and Article 1(2) of Directive 98/34, to which Article 2(a) of Directive 2000/31 refers, be interpreted as meaning that an intermediation service such as that at issue in the main proceedings, the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, is to be classified as a ‘service in the field of transport’ within the meaning of Article 58(1) TFEU and, therefore, excluded from the scope of Article 56 TFEU, Directive 2006/123 and Directive 2000/31, or whether, by contrast, the service is covered by Article 56 TFEU, Directive 2006/123 and Directive 2000/31?

ECJ’s findings

At the outset, the ECJ noted that the intermediation service delivered by Uber was focused on the selection of non-professional drivers making use of their own vehicles who are provided with the Uber app. Following the AG’s opinion, the ECJ ruled that the services Uber offers fall under the ambit of transport and are therefore subject to the national law of the Member States.The ECJ essentially stated that Uber does something more than just provide the technical services in a form of an app, as the control that Uber exercises goes beyond intermediation. The ECJ found that Uber’s intermediation service is separate from a transport service that physically moves passengers from one place to another. Each of the services could be linked in theory to different EU law provisions. Therefore, at first sight, the matching service meets the requirements for classification as an ‘information society’ service. Pure taxi services, on the other hand, are classified as services in the field of transport. But the ECJ notes that Uber’s services are more than facilitation of demand by means of an app. Uber retains the right to influence the conditions under which drivers perform their activities. Not only does Uber set the maximum fare using an algorithm through the app, but it also charges passengers directly before paying drivers their part of the fare after deducing its commission. It also exercises a certain degree of control over the quality of vehicles and the drivers and their conduct, which might in some cases result in their exclusion from the platform. Overall, the ECJ found that Uber must be classified as providing a transport service, meaning that it did not fall with the scope of freedom to provide services but was subject to the rules relating to transport, pursuant to Article 58(1) TFEU. However, under current EU law, transport is regulated by individual Member States.

Ruling

Article 56 TFEU, read together with Article 58(1) TFEU, as well 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, and 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, as amended by Directive 98/48/EC of the European Parliament and of Council of 20 July 1998, to which Article 2(a) of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) refers, must be interpreted as meaning that an intermediation service such as that at issue in the main proceedings, the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and, accordingly, must be classified as ‘a service in the field of transport’ within the meaning of Article 58(1) TFEU. Consequently, such a service must be excluded from the scope of Article 56 TFEU, Directive 2006/123 and Directive 2000/31.

Commentary