In its decision of May 18, 2017 (case reference: I ZR 3/16), the Federal Court of Justice ruled in favor of a ban on the smartphone app “Uber Black”. The First Civil Senate, which is responsible for competition law among other things, has therefore referred questions to the ECJ for a preliminary ruling. The latter is to decide whether the European freedom to provide services precludes the German regulations in question.
However, the decision relates to an application that is currently no longer provided by Uber on the German market.
Uber as an alternative to cabs
Uber is a company based in the Netherlands. In the past, it offered a platform for arranging rides in some German cities. The smartphone app was designed in such a way that private drivers could be brought together with passengers and could travel through the city together. It was therefore more or less comparable to a cab service. Uber used an algorithm to set the price and processed cashless payments via the app.
However, the “Uber Black” service differs from the cheaper “Uber Pop” – which was also banned in Germany – in many ways. Unlike “Uber Pop”, “Uber Black” did not offer rides from private individuals, but from licensed rental car drivers in predominantly black rented limousines.
Uber Black violates the Passenger Transportation Act
On February 9, 2015, the Berlin Regional Court upheld the action against Uber Black and deemed the use of the app to be a breach of competition law (case no.: 101 O 125/14). The appeal before the Court of Appeal was unsuccessful (judgment of 11.12.2015, Ref.: 5 U 31/15). The appeal decision of the BGH now depends on the interpretation of EU law.
However, in the opinion of the BGH, the use of the app already violated Section 49 Para. 4 sentence 2 PBefG. According to these provisions, rental cars may only carry out orders that have previously been received at the company’s registered office. With normal cabs, on the other hand, it is possible to place ride orders directly at the vehicle. In the case of the “Uber Black” app, however, the order was placed directly with the driver without having to go via the company’s registered office. It is irrelevant whether the order is placed directly with the driver by the passengers themselves or – as is usual with Uber – via the app on the smartphone.
Uber as a transportation service provider
However, it was questionable for the BGH whether EU law provisions preclude a ban on “Uber Black”. Concerns already arise from the Union’s provisions on the freedom to provide services because these provisions do not apply to transport services. The ECJ now has to decide to what extent the arrangement of rides in its specific form constitutes a transport service and is therefore subject to the freedom to provide services.
According to the BGH, Uber is doing more than just arranging rides. The reason for this is that the payments are made via the company, Uber itself places the advertisements and organizes the entire process. It remains to be seen whether the ECJ will agree with this view.
However, should the ECJ deny the existence of a transport service, the question arises as to whether it may be justified on grounds of public policy (Art. 16 of Directive 2006/123/EC on services in the internal market) to prohibit the app in order to maintain the competitiveness and functionality of cab transport.
Uber Pop already before the courts and the ECJ in Spain
The “Uber Pop” service also encountered headwinds in Spain. The proceedings against Uber before the ECJ are still ongoing. However, an expert has already argued that Uber is indeed a transport service provider whose conduct must be controlled. Despite the electronic assistance of the app, Uber predominantly provides so-called driving services and must therefore acquire licenses and permits like cab companies.
However, it is very likely that the ECJ will follow the recommendations of the experts. This heralds a defeat for the service provider Uber in both Spain and Germany.