On December 20, the CJEU delivered its long-anticipated judgment in the Uber case. This follows the application, submitted on 16 October 2015, and Advocate General Szpunar’s opinion delivered on 11 May 2017. The anticipation which surrounds the case arises from the potential it may have on disruptive business models that rely on electronic commerce.
The dispute arises from an action before Spanish courts by a Barcelona taxi association seeking a declaration that Uber Spain violates Spanish competition laws. In order to answer that question, it was necessary to determine whether Uber needed prior administrative authorisation which, in turn, required that it be determined whether Uber services were transport services, information society services or a combination of both. It is the latter question that got referred to CJEU. If Uber is an information society service (which was Uber’s argument in the main proceedings), it would not require authorisation. If, on the other hand, it is a transport service (the taxi association’s argument), it would be subject to the same authorisation as regular taxi associations.
Both the AG’s Opinion and the judgment take the view that services which Uber provides are a combination of transport and electronic commerce, and the bulk of the subsequent analysis concentrates on determining how that affects Uber’s services.
Advocate General Szpunar points out in his opinion (paragraph 64) that “within the context of this service, it is undoubtedly the supply of transport which is the main supply and which gives the service economic meaning”. Furthermore, he says that the connection part of the service is merely preparatory and meant to enable the transport part (p. 65). Crucially, since it is “neither self-standing, nor the main supply, in relation to the supply of transport”, it cannot be considered to be an information society service (ISS), within the meaning of the E-Commerce Directive. Paragraph 87 of the Opinion suggests that E-Commerce Directive is explicit in only covering information society service activities while not suggesting that a classification of an activity as being an ISS can, in and of itself, render other parts of the service meaningless. The Directive, in other words, says nothing about whether transport or any other laws also apply to the service. The central issue, the AG suggests, is whether the provider of the service exerts control over the key conditions governing the supply of transport. Where this is not the case, there may be talk of a service being an ISS. But, where this is the case, the connection part of the service does not turn a transport service into an ISS one. In AG’s view, the e-commerce component cannot stamp its spirit on the non-electronic part it depends on.
The Court’s final judgment follows the spirit of AG Szpunar’s opinion, although it uses a somewhat different reasoning. It notes (paragraph 32) that transport and intermediation are different services:
In that regard, it should be noted that an intermediation service consisting of connecting a non-professional driver using his or her own vehicle with a person who wishes to make an urban journey is, in principle, a separate service from a transport service consisting of the physical act of moving persons or goods from one place to another by means of a vehicle. It should be added that each of those services, taken separately, can be linked to different directives or provisions of the FEU Treaty on the freedom to provide services, as contemplated by the referring court. (emphasis added)
The Court is essentially saying that two components of a service may each be subject to different rules. While intermediation is an ISS, “non-public urban transport” is a transport service. Having that in mind, however, the Court concludes (p. 40) that “intermediation service must thus be regarded as forming an integral part of an overall service whose main component is a transport service and, accordingly, must be classified not as ‘an information society service”. The intermediation service too is a service in the field of transport. Similar to AG, the Court thinks that it is the dominant transport component which subsumes the electronic intermediation component.
Although the Court does not spell it out, the main criterion must be the separability of the two services. This is also apparent in the Court’s press release on the judgment, which concentrates on whether the services are “inherently linked”. In the Court view, services which are not inherently linked may be treated separately. If services are inherently linked, i.e. it is not possible for them to be supplied separately, it is necessary to look for the economically dominant one. In Uber’s case, the whole point of the service is for the electronic connection to facilitate the ultimate goal – transport. The electronic component would be meaningless on its own. This echoes paragraph 31 of AG’s opinion:
It would be pointless only to liberalise a secondary aspect of a composite supply if that supply could not be freely made on account of rules falling outside the scope of the provisions of Directive 2000/31.
The service in point, Uber, would have no self-standing economic value without the transport component which, in turn, is regulated elsewhere. The answer must therefore be that composite supply services depend on all relevant legislation and not only on the electronic commerce laws. The fact that they are also electronic commerce services does not take them outside the scope of transport laws.
The judgment offers guidance on what is to be considered a composite service:
In the case of composite services, namely services comprising electronic and non-electronic elements, a service may be regarded as entirely transmitted by electronic means, in the first place, when the supply which is not made by electronic means is economically independent of the service which is provided by that means.
For a service to fall entirely into the ISS category, the non-electronic component must be independent of the electronic one. The present framework leaves the determination of how non-electronic components of composite services are to be regulated to national laws (p. 47 of the judgment) in all cases which are not directly harmonised.
In conclusion, the Uber case recognises several categories of services:
- non-composite electronic commerce services (e.g. taxi directories), subject to E-Commerce laws only
- non-composite transport services (e.g. regular taxi services), subject to transport laws only
- composite services with economically dependent components (e.g. Uber), subject to transport laws (or other dominant non-electronic component)
- composite services with economically independent non-electronic component (e.g. airline ticket portals), which are subject to E-Commerce laws
It is difficult to disagree with the Court’s logic. This is for a simple reason: a service whose main non-electronic component is otherwise regulated, should not be able to escape such regulation by introducing an e-commerce aspect. To hold otherwise would mean that medical, financial or tourism services would be able to circumvent regulation by having an innovative electronic component. Contrary to the view that CJEU misunderstands the innovative and disruptive aspects of Uber, the Court simply believes that the innovative component in the service may be located in either of the two parts of the composite service. In Uber’s case, this is both in the electronic and the transport components.