Wednesday

17th Oct 2018

Magazine

Share you in court

  • The crucial question is whether Uber should be classified as a cross-border information service or as a local taxi service. (Photo: dierk schaefer)

In February, representatives from the ride-sharing service BlaBlaCar were waiting apprehensively in a Spanish courtroom.

The service, which has been called an "electronic hitchhiking app", allows drivers to bring guests along with them so they can 'bla bla' during their journeys.

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  • BlaBlaCar says hitch-hiking is not new and that its app does not turn drivers into profit-driven competitors for public transport. (Photo: Marco Fieber)

The company was sued by Confebus, the Spanish confederation for bus transport, for allegedly operating illegally as a transport service that could put coaches out of business.

But the Spanish judge ruled that BlaBlaCar is not guilty of unfair competition because it is subject to the EU commerce directive rather than Spanish transport rules and, notably, is not a transportation service.

It was only the latest in a series of rulings involving sharing economy companies.

Dozens of court challenges are pending in Germany in response to Berlin's ultra-strict restrictions on accommodation rental site Airbnb. Similarly, a case is pending at the European Court of Justice (ECJ) on whether the ride-sharing app Uber is a taxi company or an information company.

An advocate-general for the court is expected to deliver an opinion on Thursday (11 May). The EU's court often follows the advocate-general's advice.

Four years ago, the battle for these new companies was a commercial one. Could they prove their viability? Which ones would emerge as the dominant provider? Now, with entrenched providers fighting back and governments unsure of how to proceed, the battle has moved from the streets to the courts.

BlaBla or bus?

The BlaBlaCar case is typical of the legal situation. Entrenched transportation businesses are suspicious of a service, that started as social networking for people to share car costs, morphing into a profit-making venture used by professionals.

The company disputes that this is the case. "For us, sharing a car is something that has always been done," says BlaBlaCar public policy manager Elia Ferrer Travé. "Now because of the technology people can do it more easily. But it doesn't make sense to accuse that person of delivering transportation services."

She says BlaBlaCar, which is now present in 22 countries, 14 of them in the EU, has safeguards in place to make sure it is not being used by professionals. Drivers can only charge 50 percent more than a price suggested by BlaBla, and cannot carry more than four passengers.

Confebus said the drivers are profiting and, as a result, bus ridership has gone down by around 20 percent. However, the judge ruled that other factors caused the decrease in bus usage, and that any drivers making a profit from ride-sharing were an "exceptional" case.

Uber in Luxembourg

The BlaBlaCar case is easier to resolve because the company tells its users that making a profit should not be their prime motive.

But what about those services that are for financial gain?

Even though it still calls itself a "ride-sharing app", Uber is clearly an electronic platform for users to provide a taxi-like service for profit.

In 2015, a Spanish judge deferred a challenge to a ban on the Uberpop service, which allows drivers without a taxi license to sell rides, to the ECJ. After two years the court has yet to deliver a ruling.

The crucial question is whether Uber, registered in the Netherlands, should be classified as a cross-border information service or as a local taxi service. The ECJ ruling could settle the legal question across Europe.

"So far the cases are trending favourably toward the collaborative economy companies as a whole," says Luc Delany from the collaborative economy forum EUCoLab.

"I think it's helpful to refer to the ECJ, but it would be preferable if the national courts felt able to interpret for themselves," he added.

Delany says that existing EU legislation, such as the services directive and rules on distance selling, should be enough to resolve these cases.

"EU regulation is helpful at the moment and we don't need anything new. What we need is consistent application of European legislation."

Berlin's Airbnb ban

The legal challenges are not only in the transport sector. Home-sharing site Airbnb is facing increasing restrictions around the world. One of the strictest measures took effect in Berlin last year.

The company's name is short for 'airbed and breakfast' - the original idea was that a traveller could meet new people and save money by staying on someone's air mattress or couch. But the site has increasingly been used by professionals who rent out their unoccupied houses or apartments.

Stephan von Kassel, the mayor of the central Berlin district of Mitte, has launched a crusade against Airbnb.

He believes that 80% of offerings in his district are holiday apartments in which nobody permanently lives. Worse, he believes that a large proportion are rented for many months, which is driving up prices in the city's rental market.

This began to change last May, when Berlin effectively banned short-stay holiday apartments.

Landlords can only rent out up to 50 percent of their home while they are there with the guest. Entire homes can only be rented by acquiring special permits, which have been near-impossible to get. Violators then risk a €100,000 fine.

There are a number of court challenges against the city for unreasonable refusals to grant permits.

But one year on, people are still renting on the site because they have not seen any enforcement. Mayor von Kassel says this is unwise.

"The process takes one to two years … in a year or so, we will likely have 20 to 30 convictions," he told the website CityLab.

Airbnb says that restrictions like these penalise all users for the activities of a few.

"We're a platform which has different kinds of hosts," says Bernard D'heygere, a public affairs manager with the company.

He added that "The vast majority are regular people, but there are also some professionals. We completely agree that professionals should abide by different rules than an occasional customer."

Amsterdam and London have recently followed suit and put restrictions on Airbnb rentals.

But unlike Berlin, these cities worked with Airbnb to develop the rules. Amsterdam will enforce a limit of 60 days for Airbnb stays, and will be working with the company to collect tourist taxes.

The company will continue to fight the ban in Berlin and find a solution for the city.

Airbnb has pointed to a report issued last year by Germany's Monopolies Commission, which suggested thresholds to differentiate between professional operators and private occasional users.

"We're engaged in over 200 jurisdictions right now," said D'heygere, while adding that "Court battles are a last resort, it's not something we're trying to actively engage in."

This story was originally published in EUobserver's 2017 Business in Europe Magazine.

Click here to read previous editions of our Business in Europe magazine.

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Uber says national regulations are often outdated, but taxi drivers still see the app as unfair competition.

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Sharing economy: Lobbyists educate EU officials

The European Collaborative Economy Forum, a trade association, has recently started doing advocacy work, while Uber increased its spending on EU lobbying significantly.

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