Tuesday

26th Mar 2019

Opinion

It's time to ditch EU anti-Uber business rules

  • Uber will be able to dodge those draconian occupational regulations beloved by the taxi industry if the ECJ rules that the company is a digital service (Photo: drpavloff)

It has been a challenging year for Uber in Europe. So far the company has seen its flagship services banned, offices raided and top executives heading to trial. Worse, Uber has also faced a number of bizarre regulatory proposals such as a mandatory five-minute wait, which, of course, is fundamentally antithetical to its modus operandi.

Is there a way out of this mess?

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

Enter the European Court of Justice. Referring a case on Uber to the EU’s highest court, a Barcelona judge has triggered the process that might potentially end Uber’s Europe woes. The ECJ will now have to decide whether Uber is a transport company ("mere transport activity") or a digital service ("an electronic intermediation or information society service").

While it may seem like a false dilemma (anyone vaguely familiar with Uber will know that it is both a transport company and a digital service), that distinction will spell the future of the Silicon Valley firm in Europe—if declared a transport company, Uber will be subject to the rigid national regulations on transport; if declared a digital service, on the other hand, favourable EU digital market rules will apply.

Will the ECJ ruling solve the regulatory ambiguity? One would hope so. But there is a frustrating challenge: in their legal interpretation of Uber, the court is confined to the current framework of regulations that does not quite capture the eclectic essence of innovation and therefore puts the sharing companies in an awkward position with the regulators.

"Outdated rules—such as return to garage regulations or minimum price and duration—are being used across the EU to squash competition, which would benefit consumers and help stimulate jobs," said Uber’s former top lobbyist Mark McGann. He is not alone in that view.

Describing the EU market as "insufficiently innovation-friendly", the European Commission considers "outdated regulations and procedures" as an obstacle to innovation in Europe. But it seems as if the commission shies away from hinting at any specific regulation standing in the way of innovation.

Perhaps the mother of all those outdated regulations, and the source of Uber’s greatest worries in Europe, is occupational licensing. Put simply, it is a form of government-mandated permission to work in a particular field. When a particular profession is licensed, aspiring workers need to jump over a number of entry barriers to earn the licence.

To understand how ridiculously outdated occupational licensing laws can be, just consider London’s licensing regulations for taxi drivers. If you want to become black-cab driver in London, you will have to spend some serious time training for the infamous Knowledge of London test which covers London’s 25,000 streets, 20,000 landmarks and 320 basic routes, not to mention the total application costs coming to ‎£900. Now compare this to Uber’s low-barrier recruitment method, which the taxi drivers accuse of imposing unfair competition in the sector.

In Europe, there are 5,500 professions that require a licence to practise (‘regulated professions’ in the eurojargon). While the effects of occupational licensing on the labour market have been well-studied in the United States, it is so remarkably neglected in Europe that a recent UK government-commissioned study found no substantial European research to cite in its literature review.

As the usual policy justification goes, the purpose of occupational licensing is about public safety and consumer protection. But the research suggests this is a suspect claim.

Only two of 12 reviewed studies in a White House paper on occupational licensing find a positive link between stricter licensing and better safety. Most research findings show that the net impact of those regulations is negative – nine out of 11 reviewed studies show that occupational licences drive up the consumer prices.

There is one particular reason why the industries insist on stricter enforcement of occupational licensing rules. As Paul J Larkin Jr argues in Harvard Journal of Law & Public Policy: "The effect of licensing is to create a cartel that supplies its members with economic rents on an ongoing basis because entry restrictions operate like a 'hidden subsidy' to licensees."

Uber will be able to dodge those draconian occupational regulations beloved by the taxi industry if the ECJ rules that the company is a digital service. Given past experience, however, it would be naively optimistic to assume that European taxi drivers will bow to such a ruling. Competition from Uber is still a competition, regardless of Uber’s declared legal status.

That is exactly why focusing on the ECJ ruling and the legal distinction matters less than shifting our attention to the European public policy’s elephant in the room. If the European Commission is serious about targeting outdated regulations, then occupational licensing is the right target. It is not just the future of Uber at stake here, but the future of innovation and entrepreneurship in Europe.

Ekin Genç is affiliated with the Ankara-based Freedom Research Association and currently based in Washington, D.C. through a policy fellowship. His previous writings were published in Bloomberg Businessweek in Turkey.

Magazine

EU cities try their own 'Ubers'

As some places struggle to deal with the impact of firms like Uber and Airbnb, other cities are embracing the change and seeking to learn.

Focus

Uber: Goodbye Denmark, but not farewell

Ride-sharing service Uber has announced it will shut down activities in Denmark in protest over a new law introducing the same requirements for Uber as for other taxi services.

Europe before the elections - heading back to the past?

Ahead of the European Parliament election in May, the bloc is ideologically split between authoritarians seeking to reduce its sway, and those seeking a moderate track. In essence, voters have to decide if they want to move forwards or backwards.

News in Brief

  1. EU tables plan for joint approach to 5G security
  2. MEPs agree to scrap summer time clock changes by 2021
  3. European Parliament votes on reform of copyright
  4. New French-German parliament meets for first time
  5. EU parliament reduces polling ahead of elections
  6. UK parliament votes to take control of Brexit process
  7. EU publishes no-deal Brexit contingency plans
  8. EU urges Israel and Gaza to re-establish calm

Italy should capitalise on Brexit

Now that the UK is leaving, Italy can, and should, step up. It is the third largest country and economy in the EU. Spain and Poland follow, but they are significantly smaller economically and population-wise.

The Magnitsky Act - and its name

It is disappointing that so many MEPs in the Socialist and Green group caved in to Russian interests, in fear of challenging a plutocratic regime, by saying 'no' to naming the Magnitsky legislation by its rightful name: Magnitsky.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. EU lawmakers pass contentious copyright law
  2. France takes Chinese billions despite EU concerns
  3. Europe before the elections - heading back to the past?
  4. Romania presidency shatters EU line on Jerusalem
  5. The Spitzen process - a coup that was never accepted
  6. Russia and money laundering in Europe
  7. Italy takes China's new Silk Road to the heart of Europe
  8. What EU leaders agreed on climate - and what they mean

Stakeholders' Highlights

  1. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  2. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  3. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  4. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  5. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  6. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  7. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  8. Nordic Council of MinistersSeminar on disability and user involvement
  9. Nordic Council of MinistersInternational appetite for Nordic food policies
  10. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  11. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  12. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”

Join EUobserver

Support quality EU news

Join us