This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.
Daily, millions of users participate in some sort of collaborative economy, a new economic model consisting in sharing underutilised assets or providing services with small economic value, and which is based on the internet and on new technology platforms. The increasingly frequent use of mobile applications along with the idea of collaborative economy has caused a revolution in the transport sector. Olswang Madrid Senior Associate Sofía Fontanals describes how the Uber and Blablacar cases are developing in Spain...
Uber
Uber is an international company that, through its app, provides its customers a transport network that connects passengers with drivers of vehicles registered in its online application, and keeps a percentage of the trip fare. The company manages pick-ups and transfers of passengers gathered in dozens of cities around the world. Rates depend on each city but are usually cheaper than a traditional taxi.
In the past few years, not only different groups of taxi-drivers in many cities have confronted Uber, but also regulators around the world have attempted to curb its operations. In fact, the company has been forced to close its platform and cease trading operations in countries like France, Germany, Italy, Spain, Holland, Belgium, etc. The complaints are essentially based on the existence of unfair competition, the provision of services without a license and, in general, on different conflicts with national laws.
In Spain, the Madrid Taxi Association has sued Uber for unfair competition, in particular, for allegedly operating without the administrative authorizations required in this sector. On 09.12.2014 a judge ordered the precautionary suspension of the company’s activity in Spain, as well as the blocking of the company’s transactions by telecom operators and payment processing providers.
The court’s provisional measures decision[1], which was adopted before the Madrid Taxi Association filed the principal claim and without prior hearing of Uber, is mainly based on the following reasoning:
- The measure must be adopted as expeditiously as possible considering the existence of signs of unlawful conducts that, if proven, would constitute unfair competition to the taxi industry.
- The adoption of the measure is appropriate as, otherwise, its effectiveness of the measure would be jeopardized. It seeks to provisionally stop an immediate damage and avoid the risk that the damage increases, considering the continuous nature of the challenged activity. The fact that Uber acts as an intermediary between unlicensed carriers and users, without complying with the administrative requirements for passengers’ transport (as well as not offering a special insurance, not registering the employees in the Social Security and without complying with any tax obligations) prompts the need to adopt the precautionary measure.
- The online market fluidity, the speed of Uber’s communication system, the fact that the company operates from the US tax haven in Delaware and the difficulty to summons the defendant, were also considered to increase the danger of procedural delay if no precautionary protection is adopted.
- Existing evidence that Uber’s activity infringed the legal rules of a regulated industry (e.g. the Transport Management Act, the Land Transport Act, etc.).
Nowadays, the company is waiting for the trial and for the European Commission to rule on the formal complaint that was brought by the company against Spain for banning their service and violating the principles of the internal market within the whole European Union. Will Uber be operating in the Spanish cities again in a near future?
BlaBlaCar
BlaBlaCar’s business consists in connecting different travellers with the purpose to share the travelling costs by private car, usually on medium and long distance routes, that connect two cities. The idea behind this network is to share costs, not to achieve a profit. This platform is present in 19 European countries, although it is in Spain where the first complaint has been filed against BlaBlaCar.
Confebús, the confederation of bus companies, has applied for an injunction, calling for the immediate suspension of the social network, alleging unfair competition and that BlaBlaCar is causing significant loss of profits to them[2]. The pre-trial hearing was held on 10.01.2015 before –coincidentally– the same judge who had previously ordered the cessation of Uber’s activities across the national territory.
On the one hand, Confebús argues that BlaBlaCar acts as an intermediary between unlicensed transportation companies and their passengers. Hence, it would be committing acts of unfair competition towards the bus companies that pay their corresponding taxes for exercising its service. In addition, they complain that the platform is violating the regulatory and management rules governing retail transport services, and that it is also illegally gaining market share and causing economic losses.
However, on the other hand, BlaBlaCar defends that they are only a social network that connects travellers with the intention to share travel costs. There is no profit for the drivers, who often cannot even cover the full travel expenses. They also claim to have certain mechanisms in place, precisely to prevent abusive behaviours from drivers. Furthermore, they argue that they do not cause losses to the bus sector, as the decrease of bus users is due to the economic crisis that Spain is going through since 2007.
Although a priori it seems that, given the similarities, we face the same scenario, and that BlaBlaCar is doomed to the same outcome as Uber, the truth is that both platforms also have very significant differences:
- BlaBlaCar does not seek to be an alternative to the services provided by buses and trains, nor to the taxi services.
- There is no profit for drivers, who only seek to share costs on a journey which, if no partners are found, would take place anyway.
- BlaBlaCar is not a company that provides transport services with a private driver, but a technological intermediary between users.
Will the judge decide the same way as in the Uber case? In the coming weeks we will know whether BlaBlaCar must provisionally suspend their services in Spain or not, which could affect the future of the company in the rest of countries where it operates.
This article was co-drafted by Senior Associate Sofía Fontanals and Trainee Samara Schaar.
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[1] Court Order of the Madrid Commercial Court no. 2, dated 9 December 2014. Prior precautionary measures 707/2014.
[2] In this regards, it is interesting to highlight that there are other platforms that provide the same kind of services –the sharing of vehicles and travel expenses– that have not been sued by Confebús (e.g. Amovens).
