Regulation

EU’s Highest Court Rules Uber A Taxi Service

Compounding what might be charitably described as an epic run of bad luck, Uber has lost a major battle in the European Union’s highest court, which has ruled that the ride-sharing service is, for all intents and purposes, a taxi service that must comply with all the rules that traditionally govern taxi associations.

The European Court of Justice (ECJ) specifically ruled Uber is a transportation company. Uber had argued that it was, in fact, an online platform that matches passengers with drivers.

Compliance could be costly for Uber, which could see its expansion in the region curtailed as it grapples with licensing fees and employee benefits costs. Because — under the new paradigm — Uber drivers are, legally speaking, hired chauffeurs, not independent contractors pulling jobs off of Uber’s platform.

Uber will feel the ruling most acutely — but the ruling will likely have an effect on the “gig economy” as a whole. Regulators worldwide have been somewhat unclear about how to treat platform businesses like Uber which tap a regular or semi-regular worker pool, but does not classify those workers as employees.

“It’s normal that authorities don’t know what to do — they can’t just issue regulations anytime somebody claims to operate a new business model,” said Valerio De Stefano, a law professor at the University of Leuven in Belgium. “The litigation will lead authorities to better understand what is the reality of the work in the platform economy.”

The ECJ case was brought by a taxi group based in Barcelona, Spain that had argued that Uber’s relative freedom from regulatory oversight gave them an unfair competitive advantage. The court largely agreed with that assessment, finding that Uber “must be regarded as being inherently linked to a transport service.”

The 28 member countries in the European bloc will have to regulate “the conditions under which such services are to be provided,” the court added.

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