wednesday, 23 september of 2015

French Constitutional Council Rejects Uber Appeal of Law Banning Uberpop

France’s highest constitutional authority rejected Uber Technologies Inc.’s challenge of a law that bans its low-cost offering Uberpop, keeping legal pressure on the car-hailing company as two top executives face trial.

France’s Constitutional Council ruled late Tuesday that a provision of a new law that makes operating a system like Uberpop punishable with prison time is in accordance with France’s constitution.

In doing so, the court rejected Uber’s arguments that the law would effectively outlaw carpooling services that involve any kind of payment. The court ruled that such services are easily distinguishable from Uberpop, which uses drivers without professional licenses.

The case strikes a blow at Uber at the same time as the California company seeks to ease regulatory restrictions on its business in France. It also is a difficult sign for Uber’s two top executives in Paris, who face trial on Sept. 30 for a raft of taxi-related charges, including violating the law that was upheld.

Uber said the decision is “disappointing,” but added that it will still offer its professional services in France and push for “new, common sense regulations that offer riders more affordable, reliable options and drivers new job opportunities.”

The company and the two indicted men, Pierre-Dimitri Gore-Coty, Uber’s head of Western Europe, and Thibaud Simphal, its chief for France, plan to vigorously defend themselves at trial, Uber executives say.

While Tuesday’s decision directly affects only car services in France, the question it addresses stretches far beyond Uber to cover companies such as U.S.-based home-rental company Airbnb Inc. or French peer-to-peer car-rental company Drivy, which enables its customers to rent their neighbors’ cars.

France’s approach of distinguishing potentially profitable activities like Uberpop from collaborative ones like carpooling could help determine the way other governments handle the so-called sharing economy. Governments are increasingly facing questions of how to differentiate between peer-to-peer economic activity and a normal business, as well as how to regulate the activity of companies that exploit the sharing economy.

The upshot of Tuesday’s decision is that Uber will continue to offer its licensed services in France, but is unlikely to reintroduce its Uberpop service in its most recent form. The company suspended Uberpop in early July, under government pressure, after a series of violent taxi strikes in which Uber cars were overturned.

Now Uber’s legal battle to change taxi laws in France and elsewhere will increasingly be fought at the European Union level. Uber has lodged appeals in Brussels against the French law, as well as others in Germany and Spain, arguing that the laws in those countries violate European treaties—and that as a technology company it shouldn’t be bound by some national taxi rules.

In Tuesday’s decision, the court rejected Uber’s argument that its Uberpop service shouldn’t be subject to the new transportation law because its drivers were merely sharing the costs of owning their cars, rather than acting as crypto taxi drivers.

The court cited a provision of the law that allows carpoolers to receive reimbursement for expenses, but also specifies a driver must be making the trip for his own purposes, not simply to transport passengers.

“The contested provisions neither intend to nor have the effect of forbidding systems that put people who wish to carpool in touch with each other,” the ruling says.

Plaintiffs in the case, who had initially sued Uber in commercial court last year, were pleased. “The court recognized that there’s no protection of free enterprise for companies that organize an illegal activity,” said Maxime de Guillenchmidt, a lawyer for the plaintiffs, which include other car services that argued Uberpop was unfair competition.

The decision could lead to new legal complications for a French service similar to Uberpop called Heetch, which continues to operate. Uber has argued that Heetch’s continued existence is a sign that France is discriminating against an American company.

Heetch said Tuesday that its service isn’t covered by the decision in part because passengers are only given recommended prices to pay, and its drivers aren’t allowed to earn more than €6,000 ($6,714) a year.

But founder Teddy Pellerin acknowledged that passengers are the ones proposing the routes. And he agreed with Uber that rules around car-sharing and car-hailing should change.

“We need to look at the sharing economy generally and what the best framework would be,” Mr. Pellerin said Tuesday.

Dave Ashton, the founder of Snapcar, a French competitor to Uber that uses professional drivers, said that while the ruling will help his company, outlawing activities like Uberpop won’t last.

“The demand won’t go away because it’s illegal,” Mr. Ashton said. “The future is the low end of the market.”

(Published by The Wall Street Journal - September 22, 2015)

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