Legal Conclusions on the Operation of Internet Platforms

OPINION OF ADVOCATE GENERAL SZPUNAR

delivered on 11 May 2017 (1)

Case C‑434/15

Asociación Profesional Elite Taxi

v

Uber Systems Spain SL

(Reference for a preliminary ruling — Services in the internal market — Passenger transport — Use of IT tools and a smartphone application — Unfair competition — Requirement for authorisation)

https://curia.europa.eu/juris/document/document.jsf?text=&docid=190593&pageIndex=0&doclang=en&mode=lst&dir=&occ=first&part=1&cid=27803693

Introduction

(Request for a preliminary ruling from the Juzgado de lo Mercantil No 3 de Barcelona (Commercial Court No 3 of Barcelona, Spain))

1. Although the development of new technologies is, in general, a source of controversy, Uber is a case apart. Its method of operating generates criticisms and questions, but also hopes and new expectations. In the legal field alone, the way Uber works has thrown up questions concerning competition law, consumer protection and employment law, among others. From an economic and social standpoint, the term ‘uberisation’ has even emerged. This request for a preliminary ruling therefore presents the Court with a highly politicised issue that has received a great deal of media attention.
2. The subject matter of this case is, however, much narrower. The interpretation that the Court has been asked to provide must serve only to ascertain where Uber stands in terms of EU law, in order to determine whether, and to what extent, its functioning falls within the scope of EU law. The main issue is therefore whether possible rules on how Uber operates are subject to the requirements of EU law, in the first place those relating to the freedom to provide services, or whether they fall within the scope of the shared competence of the European Union and the Member States in the field of local transport, a competence which has not yet been exercised at EU level. Legal context European Union law
3. Article 1(2) of Directive 98/34/EC (2) provides:

‘For the purposes of this Directive, the following meanings shall apply: …

2. “service”, any Information Society service, that is to say, any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.

For the purposes of this definition:

– “at a distance” means that the service is provided without the parties being simultaneously present,

– “by electronic means” means that the service is sent initially and received at its destination by means of electronic equipment for the processing (including digital compression) and storage of data, and entirely transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means,

– “at the individual request of a recipient of services” means that the service is provided through the transmission of data on individual request.

An indicative list of services not covered by this definition is set out in Annex V.

…’

4. Article 2(a) and (h) of Directive 2000/31/EC (3) provides:

‘For the purpose of this Directive, the following terms shall bear the following meanings:

(a) “information society services”: services within the meaning of Article 1(2) of [Directive 98/34];

…

(h) “coordinated field”: requirements laid down in Member States’ legal systems applicable to information society service providers or information society services, regardless of whether they are of a general nature or specifically designed for them.

(i) The coordinated field concerns requirements with which the service provider has to comply in respect of:

– the taking up of the activity of an information society service, such as requirements concerning qualifications, authorisation or notification,

– the pursuit of the activity of an information society service, such as requirements concerning the behaviour of the service provider, requirements regarding the quality or content of the service including those applicable to advertising and contracts, or requirements concerning the liability of the service provider;

(ii) The coordinated field does not cover requirements such as:

…

– requirements applicable to services not provided by electronic means.’

5. Article 3(1), (2) and (4) of Directive 2000/31 provides:

‘1. Each Member State shall ensure that the information society services provided by a service provider established on its territory comply with the national provisions applicable in the Member State in question which fall within the coordinated field.

2. Member States may not, for reasons falling within the coordinated field, restrict the freedom to provide information society services from another Member State.

…

4. Member States may take measures to derogate from paragraph 2 in respect of a given information society service if the following conditions are fulfilled:

(a) the measures shall be:

(i) necessary for one of the following reasons:

– public policy, in particular the prevention, investigation, detection and prosecution of criminal offences, including the protection of minors and the fight against any incitement to hatred on grounds of race, sex, religion or nationality, and violations of human dignity concerning individual persons,

– the protection of public health,

– public security, including the safeguarding of national security and defence,

– the protection of consumers, including investors;

(ii) taken against a given information society service which prejudices the objectives referred to in point (i) or which presents a serious and grave risk of prejudice to those objectives;

(iii) proportionate to those objectives;

(b) before taking the measures in question and without prejudice to court proceedings, including preliminary proceedings and acts carried out in the framework of a criminal investigation, the Member State has:

– asked the Member State referred to in paragraph 1 to take measures and the latter did not take such measures, or they were inadequate,

– notified the Commission and the Member State referred to in paragraph 1 of its intention to take such measures.

…’

6. Under Article 2(2)(d) of Directive 2006/123/EC: (4)

‘This Directive shall not apply to the following activities:

…

(d) services in the field of transport, including port services, falling within the scope of Title V of the Treaty;

…’

7. The first sentence of Article 3(1) of that directive provides:

‘If the provisions of this Directive conflict with a provision of another Community act governing specific aspects of access to or exercise of a service activity in specific sectors or for specific professions, the provision of the other Community act shall prevail and shall apply to those specific sectors or professions.’

Spanish law

8. There is some confusion surrounding the description provided by the referring court, the parties to the main proceedings and the Spanish Government of the applicable national legal framework. I will set out the key features below, as they result from both the order for reference and the various written observations submitted in the course of these proceedings.
9. First, so far as concerns national rules on transport, Article 99(1) of Ley 16/1987 de Ordenación de los Transportes Terrestres (Law 16/1987 on the organisation of land transport) of 30 July 1987 provides that an authorisation for public passenger transport must be obtained in order to carry out transport of that nature as well as any intermediary activity in the conclusion of such contracts. Nonetheless, the defendant in the main proceedings states that Ley 9/2013 por la que se modifica la Ley 16/1987 y la Ley 21/2003, de 7 de julio, de Seguridad Aérea (Law 9/2013 amending Law 16/1987 and Law 21/2003 of 7 July 2003 on air safety) of 4 July 2013 abolished the requirement to hold a specific licence in order to provide intermediary passenger transport services. However, it is not clear whether this reform was implemented across Spain as a whole.
10. At regional and local level, domestic legislation is supplemented, as regards taxi services, by various regulations adopted by the autonomous community of Catalonia and the metropolitan area of Barcelona, including the Reglamento Metropolitano del Taxi (Regulation on taxi services in the metropolitan area of Barcelona), adopted by the Consell Metropolitá de l’Entitat Metropolitana de Transport de Barcelona (Governing Board of the transport management body for the metropolitan area of Barcelona), of 22 July 2004, which requires platforms such as that at issue in the main proceedings to have the necessary licences and administrative authorisations in order to pursue their activity.
11. Lastly, Ley 3/1991 de Competencia Desleal (Law 3/1991 on unfair competition) of 10 January 1991 defines as unfair competition, in Article 4, professional conduct contrary to the rules of good faith, in Article 5, misleading practices and, in Article 15, infringements of the rules governing competitive activity conferring a competitive advantage in the market. Facts, the main proceedings and the questions referred for a preliminary ruling The Uber application
12. Uber is the name of an electronic platform (5) developed by Uber Technologies Inc., a company having its principal place of business in San Francisco (United States). In the European Union, the Uber platform is managed by Uber BV, a company governed by Netherlands law and a subsidiary of Uber Technologies.
13. With the aid of a smartphone equipped with the Uber application, the platform allows users to order urban transport services in the cities covered by it. The application recognises the location of the user and finds available drivers who are nearby. When a driver accepts a trip, the application notifies the user of such acceptance and displays the driver’s profile together with an estimated fare to the destination indicated by the user. Once the trip has been completed, the fare is automatically charged to the bank card which the user is required to enter when signing up to the application. The application also contains a ratings function, enabling drivers to be rated by passengers and passengers to be rated by drivers. Average scores falling below a given threshold may result in exclusion from the platform.
14. The transport services offered by the Uber platform are divided into different categories depending on the quality of the drivers and the type of vehicle. According to information supplied by the defendant in the main proceedings, at issue in those proceedings is a service by the name of UberPop, whereby non-professional private drivers transport passengers using their own vehicles.
15. The fare scale is drawn up by the operator of the platform based on the distance and duration of the trip. It varies according to the level of demand at any given time, so that the fare may, during peak times, exceed the basic fare several times over. The fare is calculated by the application and charged automatically by the platform operator, who withholds a proportion in respect of its fee, usually between 20% and 25%, and pays the remainder to the driver. The main proceedings
16. Asociación Profesional Elite Taxi (‘Elite Taxi’) is a professional organisation representing taxi drivers in the city of Barcelona (Spain). On 29 October 2014, Elite Taxi brought an action before the Juzgado de lo Mercantil No 3 de Barcelona (Commercial Court No 3 of Barcelona, Spain) asking the court, inter alia, to make an order against Uber Systems Spain SL (‘Uber Spain’), a company governed by Spanish law; to declare that its activities, which allegedly infringe the legislation in force and amount to misleading practices, are acts of unfair competition; to order it to cease its unfair conduct consisting of supporting other companies in the group by providing on-demand booking services by means of mobile devices and the internet, when that is directly or indirectly linked to use of the digital platform Uber in Spain; and to prohibit it from engaging in such activities in the future. According to the referring Court’s findings, neither Uber Spain nor the owners or drivers of the vehicles concerned have the licences and authorisations required under the Regulation on taxi services in the metropolitan area of Barcelona.
17. Uber Spain denies having committed any infringement of transport legislation. It argues that it is the company governed by Netherlands law, Uber BV, which operates the Uber application in the European Union, including in Spain, and that the applicant’s claims should therefore be directed at that company. Uber Spain claims that it performs only advertising duties on behalf of Uber BV. It repeated those assertions in its observations in this case.
18. Since this concerns a question of fact, it is for the referring court to decide which of the two companies mentioned above should be the addressee of a possible injunction. I have nonetheless assumed that the company Uber BV operates the Uber application in the European Union. (6) This is the premiss — which is not without consequences from the perspective of EU law — on which my analysis will be based. In this Opinion, I shall use the term ‘Uber’ to refer to the electronic booking platform as well as its operator.
19. I should also point out that, as regards the subject matter of the main proceedings, there is no question here of blocking the Uber application on smartphones or otherwise rendering it unusable. No order or any other measure to that effect has been applied for. In the main proceedings, the only point in issue is the possibility of Uber providing the UberPop service in the city of Barcelona by means of that application. Questions referred for a preliminary ruling and procedure before the Court
20. As the Juzgado Mercantil No 3 de Barcelona (Commercial Court No 3 of Barcelona) considered that an interpretation of several provisions of EU law was required in order to enable it to give a decision in the case pending before it, it decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Inasmuch as Article 2(2)(d) of [Directive 2006/123] excludes transport activities from the scope of that directive, must the activity carried out for profit by the defendant, consisting of acting as an intermediary between the owner of a vehicle and a person who needs to make a journey within a city, by managing the IT resources — in the words of the defendant, “smartphone and technological platform” interface and software application — which enable them to connect with one another, be considered to be merely a transport service or must it be considered to be an electronic intermediary service or an information society service, as defined by Article 1(2) of [Directive 98/34]?

(2) Within the identification of the legal nature of that activity, can it be considered to be … in part an information society service, and, if so, ought the electronic intermediary service to benefit from the principle of freedom to provide services as guaranteed in [EU] legislation — Article 56 TFEU and Directives [2006/123] and … [2000/31]?

(3) If the service provided by [Uber Spain] were not to be considered to be a transport service and were therefore considered to fall within the cases covered by Directive 2006/123, is Article 15 of the Law on Unfair competition — concerning the infringement of rules governing competitive activity — contrary to Directive 2006/123, specifically Article 9 on freedom of establishment and authorisation schemes, when the reference to national laws or legal provisions is made without taking into account the fact that the scheme for obtaining licences, authorisations and permits may not be in any way restrictive or disproportionate, that is, it may not unreasonably impede the principle of freedom of establishment?

(4) If it is confirmed that Directive [2000/31] is applicable to the service provided by [Uber Spain], are restrictions in one Member State regarding the freedom to provide the electronic intermediary service from another Member State, in the form of making the service subject to an authorisation or a licence, or in the form of an injunction prohibiting provision of the electronic intermediary service based on the application of the national legislation on unfair competition, valid measures that constitute derogations from Article 3(2) of Directive [2000/31] in accordance with Article 3(4) thereof?’

21. The request for a preliminary ruling was received at the Court on 7 August 2015. Written observations were lodged by the parties to the main proceedings, the Spanish, Finnish, French and Greek Governments, Ireland, the Netherlands and Polish Governments, the European Commission and the European Free Trade Association (EFTA) Surveillance Authority. With the exception of the Greek Government, those interested parties, together with the Estonian Government, were represented at the hearing held on 29 November 2016. Analysis
22. The national court refers four questions for a preliminary ruling: the first two concern the classification of Uber’s activity in the light of Directives 2000/31 and 2006/123 as well as the FEU Treaty, while the second two concern the conclusions which must, if necessary, be drawn from that classification. The classification of Uber’s activity
23. By its first two questions, the national court essentially enquires whether Uber’s activity falls within the scope of Directives 2006/123 and 2000/31 as well as the provisions of the FEU Treaty on the freedom to provide services.
24. In order to reply to these questions, it is necessary, in the first place, to analyse that activity in the light of the system laid down by Directive 2000/31 and the definition of ‘information society service’ set out in Article 1(2) of Directive 98/34, a definition to which Article 2(a) of Directive 2000/31 refers.
25. In the second place, it will be necessary to determine whether that activity is a transport service or service in the field of transport for the purposes of Article 58(1) TFEU and Article 2(2)(d) of Directive 2006/123. The free movement of services in the field of transport is achieved within the framework of the common transport policy (7) and those services are therefore excluded from the scope of Directive 2006/123 pursuant to the abovementioned provision. Uber’s activity in the light of Directive 2000/31
26. In order to assess whether Uber’s activity falls within the scope of Directive 2000/31, reference should be made to the definition of information society services set out in Article 2(a) of that directive. The definition refers to Article 1(2) of Directive 98/34.
27. Under that latter provision, an information society service is a service provided for remuneration, at a distance, by electronic means and at the individual request of a recipient. The test as to whether a service is for remuneration and is provided upon individual request does not appear to be problematic. However, the same cannot be said of the test as to whether a service is provided at a distance by electronic means.
28. As briefly explained in the section dealing with the facts of the main proceedings, Uber essentially makes it possible to locate a driver, with the aid of a smartphone application, and connect him with a potential passenger for the purpose of supplying urban transport on demand. We are therefore dealing with a composite service, since part of it is provided by electronic means while the other part, by definition, is not. The question is whether such a service falls within the scope of Directive 2000/31.

– Composite services under Directive 2000/31

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