Uber-Brave New Service or Unfair Competition: Jasenko Marin Siniša Petrović Mišo Mudrić Hrvoje Lisičar Editors

Ius Gentium: Comparative Perspectives on Law and Justice 76
Jasenko Marin
Siniša Petrović
Mišo Mudrić
Hrvoje Lisičar Editors
Uber—Brave
New Service
or Unfair
Competition
Legal Analysis of the Nature of Uber
Services
Ius Gentium: Comparative
Perspectives on Law and Justice
Volume 76
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Jasenko Marin Siniša Petrović Mišo Mudrić
• • •
Hrvoje Lisičar
Editors
Uber—Brave New Service

or Unfair Competition
Legal Analysis of the Nature of Uber Services
123
Editors
Jasenko Marin Siniša Petrović
Faculty of Law Faculty of Law
University of Zagreb University of Zagreb
Zagreb, Croatia Zagreb, Croatia
Mišo Mudrić Hrvoje Lisičar

Faculty of Law Faculty of Law
University of Zagreb University of Zagreb
Zagreb, Croatia Zagreb, Croatia
ISSN 1534-6781 ISSN 2214-9902 (electronic)

Ius Gentium: Comparative Perspectives on Law and Justice
ISBN 978-3-030-31534-4 ISBN 978-3-030-31535-1 (eBook)
https://doi.org/10.1007/978-3-030-31535-1
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Preface
Inasmuch as it is said today that modern everyday life may not be imagined without
advanced technology and gadgets which have become indispensable both for work
and pleasure, we often neglect that, nowadays, a notoriously taken-for-granted thing
has dramatically changed the history: a wheel. The invention of the wheel made it
possible to improve agriculture, develop the industry, and allow us to transfer from
one point to the other much faster and on every possible surface; let us not forget
that wheels are indispensable in almost every mode of transport.
Even before the introduction of automobiles as a means of transportation, there
has existed a service of hiring a vehicle with a driver. With the arrival of auto-
mobiles, there came a simultaneous service of taxi cabs. At a certain point in
history, taxi services were quite popular as there were a lot of people who could not
afford to own a car. In modern days, taxis have become indispensable, notably in
some big cities, because they relieve us of the burden of bearing the maintenance
costs, finding a parking place, and storing a car in a garage. And for a long time,
this service of hiring a car with a driver has been basically monopolized by taxis.
Traditionally, this monopolization, although unwelcome form the point of view of
competition, has been defended as necessary to ensure the quality of service and
protection of consumers. In many areas, this kind of regulations and barriers to
entry the market has become almost a tradition.
From the point of view of consumers and their logical interest in services which
are affordable, it is no surprise that the appearance of competition such as Uber was
most desired. Today, Uber is not the only entity competing with the traditional
forms of taxi services, but it has been elevated to the status of a metaphor. At the
same time, the notion of “competition” as introduced by Uber and similar com-
panies bares various caveats, one of which is a tendency to operate under conditions
contrary not just to law, but also to public policies aimed at ensuring the safety of
transportation and public health.
This monograph explores certain aspects of Uber’s services, many of which are
of general and universal importance, at the same time analyzing a state of the play
in several countries. The immediate stimulus to gather different contributions to this
book was the fact that some of us have been asked by the Croatian government to
v
vi Preface
research various legal aspects of Uber’s services. However, it has been immediately
concluded that one has to go beyond that local focus and explore not only national
but also the global context. We are, therefore, very happy that our colleagues from
France, Germany, Italy, Spain, and Switzerland agreed to join us and send their
national contributions, whereas our Croatian colleagues’ (researching under the
auspices of “New Croatian Legal System” project run by the Faculty of Law,
University of Zagreb) contributions to this monograph are purposely covering
issues beyond the boundaries of national law.
More concretely, the monograph analyzes issues such as the nature of Uber’s
services, including particularities with regard the type of service offered, legal
relationships between various actors interconnected through Uber’s services, price
determination, and impact of Uber’s general terms and conditions on the overall
service. Furthermore, the monograph examines the impact of several relevant public
policies and role of insurance mechanisms when considering how to regulate the
transportation services, analyzing several different regulatory approaches and their
impact on the market of carriage of passengers by road. Additional topics covered
include the evaluation of Uber’s service in line with competition law, consumer
protection, and digital services’ regulation. A special focus is devoted to financial
and taxation issues connected to the Uber’s business model. Finally, the monograph
offers an overview and summary of several chosen jurisdictions, detailing the
impact of the different legislature and judicial activities in connection to the
appearance of Uber and similar companies in particular markets.
There is no doubt that the topics analyzed in the monograph do not cover every
possible aspect of Uber’s services; one example being the issue of the use of
autonomous vehicles and their impact on the development of both the traditional
taxi services and transport in general. The very notion of autonomous vehicles
opens various questions: legal issues, safety, insurance, future of car industry,
technology, just to mention a few.
We do sincerely hope that the readers will find the book and individual con-
tributions useful and interesting.
Zagreb, Croatia Jasenko Marin

August 2019 Siniša Petrović
Mišo Mudrić
Hrvoje Lisičar
Contents
Introduction . . . . . . . . . . . . . . ................................ 1
Mišo Mudrić
1 Uber’s Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 Disruption and Uberification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3 Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Nature of Uber Services . . . . . . . . . . . . . . . . . . . . ................. 15
Mišo Mudrić
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2 Predominantly Transportation Service . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1 C-434/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Relevant Comparative Case Practice . . . . . . . . . . . . . . . . . . . . . . 22
3 Legal Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.1 Uber and Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.2 Uber and Uber Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.3 Uber, Applications Users and Uber Drivers . . . . . . . . . . . . . . . . . 28
3.4 Contract or No Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.5 Uber Subsidiary Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4 Price Determination and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1 Traditional Price Determination . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.2 Uber’s Model for Price Determination . . . . . . . . . . . . . . . . . . . . . 36
5 General Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.1 Service Provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.2 Exclusion of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.3 Reasonable Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6 Existing Legal Configurations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.1 Transportation Intermediaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.2 Contractual and Actual Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . 45
vii
viii Contents
6.3 Ride-Sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.4 Identification with Taxi Service . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7 General Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.1 Legal Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.2 Main Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.3 Uber’s Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.4 Uber and Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.5 Uber and Uber Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
7.6 Price Determination and Payments . . . . . . . . . . . . . . . . . . . . . . . 54
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Public Interest and Regulatory Approach . . . . . . . . . . . . . .......... 57
Mišo Mudrić
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
2 Benefits and Detriments of Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 59
2.1 Regulatory Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
2.2 Regulatory Shortfalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3 Basic Public Policy Postulates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3.1 Public Interest and Public Safety . . . . . . . . . . . . . . . . . . . . . . . . . 61
3.2 Public Transportation Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.1 Passengers Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
4.2 Motor Vehicles Liability Insurance . . . . . . . . . . . . . . . . . . . . . . . 65
4.3 Transportation Intermediary Insurance . . . . . . . . . . . . . . . . . . . . . 65
5 Quality of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.1 Quality Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.2 Grading Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6 The Laissez-Faire Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.1 Basic Premise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.2 Market Competition and Unfair Competition . . . . . . . . . . . . . . . . 69
6.3 Discrimination Barriers to Public Transport Services . . . . . . . . . . 70
6.4 End-Game Scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
7 The Legal Adjustment Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.1 Limited Deregulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.2 Detailed Carriage Services Regulation . . . . . . . . . . . . . . . . . . . . . 76
8 New Legislative Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
8.1 Transportation Network Company . . . . . . . . . . . . . . . . . . . . . . . . 78
8.2 Digital Hailing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
8.3 e-Hailing Taxis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.4 Transport Booking Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.5 Positive Aspects of Legal Novelties . . . . . . . . . . . . . . . . . . . . . . 81
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Contents ix
Comparative Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 85

Mišo Mudrić, Antoine Gaudemet, Henning Jessen, Massimiliano Musi,
Maria-Victoria Petir-Lavall, Achim Puetz and Rino Siffert
1 Croatian Law and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
1.1 Basic Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
1.2 Basic Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
2 French Law and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
2.1 Basic Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
2.2 Brief Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
3 German Law and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
3.1 Basic Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
3.2 Brief Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
4 Italian Law and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
4.1 Basic Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
4.2 Brief Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
5 Spanish Law and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
5.1 Basic Report and Brief Summary . . . . . . . . . . . . . . . . . . . . . . . . 124
6 Swiss Law and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
6.1 Basic Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
6.2 Brief Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Regulation and Competition of Taxi Services . . . . . . . . . . . . . . . . . . . . . 153
Siniša Petrović and Tomislav Jakšić
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
2 Meaning of “Regulation” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
3 Analysis of Taxi Market and Uber Business Model as Disruptive
Element . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
4 Determination of Relevant Market for Uber’s Intermediary Service . . . . 160
5 The (Over)Regulation of the Taxi Market . . . . . . . . . . . . . . . . . . . . . . 163
6 Justification of the Grounds for (De)regulation of the Taxi Market . . . . 166
7 Possible Competition Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Taxing Uber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
Nevia Čičin-Šain
1 Introduction—Tax Structure of Uber . . . . . . . . . . . . . . . . . . . . . . . . . . 182
2 Taxing Uber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
2.1 Taxing Uber Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
3 New Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
x Contents
Passengers’ Rights and Consumer Protection . . . . . . . . . . . . . . . . . . . . . 199

Jasenko Marin
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
2 Protection of Passengers’ Rights According to the Legal Sources
of Transport Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
3 Relevant Sources of Consumer Protection Law . . . . . . . . . . . . . . . . . . 204
4 Contractual Relationship Between the Uber and a Passenger . . . . . . . . . 206
5 Selected Provisions Contained in Uber’s Terms . . . . . . . . . . . . . . . . . . 207
5.1 Amendment and Termination of Terms . . . . . . . . . . . . . . . . . . . . 207
5.2 Payment of Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
5.3 Exclusion and Limitation of Uber’s Liability . . . . . . . . . . . . . . . . 208
5.4 Arbitration and Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 210
6 Data Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
7 Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Introduction
Mišo Mudrić
Abstract The following chapter introduces the overall subject of analysis. The first
part offers basic information on what sort of an enterprise Uber and similar com-
panies represent, placing such companies into the context of global competition. A
special focus is placed on whether Uber’s business model represents a true disrup-
tion of traditional models of carriage of passengers’ services in general, or whether it
represents a disruption in terms of a law violation. Similarly, the Introduction chapter
examines to what extents the term “Uberification” represents positive appearances
in the transportation market, and in what cases it connotes negative manifestations
in commercial and consumer practices (such as monopoly aspirations, labor-related
issues, forced arbitration issues, security issues, data protection issues, traffic, and
public transport related issues, taxation issues and similar). Finally, a separate section
is devoted to the issue of legal sanctions in general.
It should be noted that certain terms used through-out the monograph have the same
meaning (i.e., Uber’s application/Uber’s digital platform/Uber’s digital service; transportation
options/transportation services; Uber drivers/Uber partner drivers; Uber’s service/Uber service; and
similar), whereas some terms are specifically meant as points of differentiation (i.e., public transport
refers to transport in general; public transportation refers to both public and private transportation
options; public-private or private transportation refer to the providers of taxi services and rent-a-car
with driver services; and similar). In addition, some terms, although refereeing to a particular object,
have a broader meaning (i.e., when referring to the term Uber’s business model, the same is, in gen-
eral terms, applicable to all other companies (mentioned in the present chapter and other places)
offering similar kinds of services and employing a similar business model). Finally, through-out
monograph the term Uber service refers to the particular categories of Uber services designed to
carry passengers by road. Uber, however, tends to offer a plethora of different services (i.e., “Uber”,
“UberX”, “UberXL”, “UberPOP”, “UberBLACK”, “UberSELECT”, “UberSUV”, “UberLUX”,
“UberBERLINE”, “UberVAN”, “UberEXEC” “UberFRESH”, “UberRUSH”, “UberEATS”, and
others), some of which are designated to carry passengers, some goods, whereas others offer totally
different kinds of services (such as renting electric bikes and scooters). It should, finally, be stressed
that a particular service, for example UberX, offered in one jurisdiction, does not necessarily corre-
spond to a service of the same name offered in another jurisdiction, having in mind that Uber tends
to adapt, as much as possible, to particular conditions in particular jurisdictions, in order to (at least
try to) fulfill certain goals.
M. Mudrić (B)
Faculty of Law, University of Zagreb, Zagreb, Croatia
e-mail: miso.mudric@pravo.hr
© Springer Nature Switzerland AG 2020 1

J. Marin et al. (eds.), Uber—Brave New Service or Unfair Competition, Ius Gentium:
Comparative Perspectives on Law and Justice 76,
https://doi.org/10.1007/978-3-030-31535-1_1
2 M. Mudrić
1 Uber’s Business Model
During the period between 2009 and 2013, Uber openly criticized its competition
(the main contemporary competitors being Lyft and Sidecar) for providing carriage
services without proper licenses and adequate insurance coverage. A quite surprising
starting point, having in mind that only four years later exactly the same business
model, once fully embraced by Uber, will turn Uber into a mega-player on a global
scale, valued in the amount of 68 US$ billion (primary investors’ projection; 50 US$
billion according to smaller stakeholders) in 2017, around 80 US$ billion in 2018,
and currently preparing the IPO with expectation of increasing its value to up to 120
US$ billion, despite numerous incidents and scandals, such as the Greyball scandal
(Isaac 2017), data breach (Chappell 2018) and others (Taylor 2017; Griswold 2019b).
Despite the noted value estimates, Uber operates under a constant turn loss (Horan
2017), irrespective of continuous inflow of new investments (Messamore 2019).
Nevertheless, Uber plans further expansions, such as the latest “rumor” with regard
buying the Middle-Eastern rival company, Carrem (Nair 2019), despite its regional
“failures” in certain other regions, such as is the case with South Asia (Marshall 2018).
Additionally, Uber’s long-term planning is focused on a projection where ride-hailing
will represent only a half of its core business activities in transportation, with the
other half centered around other services such as food delivery, cargo transportation,
electric bikes and scooters, and similar (Korosec 2019). Similar negative out-flow is
to be observed with Lyft (Economist 2019; Marshall and Thurm 2019) that recently
jump-started the IPO race with the projected 100 US$ billion (Edelstein 2019) value
estimate after IPO.
Having in mind that companies like Lyft and Sidecar offered the so-called “ride-
sharing” non-licensed carriage of passengers by road services without any serious
legal sanctions, in 2013 Uber openly introduced (Uber Policy White Paper 1.0, 2013)
its new business model—Uber’s business model—whereby Uber decided to follow
the “good example” of noted companies, stressing its commitment to fulfilling all
requirements as to the appropriate standards on safety and quality, as well as the req-
uisite insurance policies. Uber’s change of mind and new business policy comes as
a direct result of “silent approval” by the legislature and judicial powers during this
early era of a global phenomenon that will later be identified as the “Uberification”.
The company openly contested that any new business model should be deemed appro-
priate if not challenged by courts and legislature within 30 days of its appearance
in the market. This claim was never approved by any competent body, and Uber’s
manifest (White Paper) is no longer available on Uber’s portal.
Uber’s main advantage compared to traditional carriage of passengers by road
service providers (primarily the traditional taxi service providers and providers of
rent-a-car with driver services) is reflected through its utilization of private motor
vehicles that do not meet various technical and safety standards’ specifications, and
whose drivers have not procured the necessary permits, licenses or authorizations,
nor secured mandatory (and adequate) insurance policies. In addition, one of the
main features of Uber’s application is the dynamic charge increase model, allowing
Introduction 3
significant surge pricing when demand for carriage is higher than the supply, but also
a competitive lowering of prices when required. Coupled with additional aspects
of Uber’s business model, such as tax evasion, labor-related charges’ and duties’
evasion, continuous training and education of drivers’ evasion, quality upkeep of
motor vehicles’ evasion, and others (Ahmed et al. 2018), Uber’s services tend to be
(relatively) cheaper than that of those market actors who comply with all regulatory
requirements (Gabel 2016). It should be noted that such requirements are primarily
enacted to protect public interests such as the safety and security of transport, public
health, availability of transport and others. Even Uber asserted its financial-related
difficulties in meeting all requirements necessary to respect the above-named public
goals in the pre-2013 phase, whereas its contemporary competitors began their “street
operations” within 24 h after having been established.
In 2013, literally “overnight”, Uber changed everything. Lower business costs
enabled lower average carriage prices, which, from the perspective of an average pas-
senger (consumer), represents a key factor when choosing a service provider. Almost
in all countries where Uber gradually introduced its services, the price advantage had
resulted in an exponential rise in Uber’s popularity. Uber further exploited its stature
by an aggressive marketing campaign capitalizing on modern-day catch-phrases such
as “new technologies”, “shared or sharing economy”, “digital economy”, “gig econ-
omy”, “disruption” and similar, continuously repeating the main mantra epitomizing
Uber an as 21st-century business enterprise (operating completely legally). Draw-
ing from public outrage over traditional taxi industry’s natural or limited monopoly
(depending on how liberalized a certain taxi market was) and negative side-effects of
such state of affairs, Uber proclaimed its supremacy over traditional taxi industry by
means of Uber’s application and the benefits derived from utilizing digitals means
of communication, allegedly representing a new type of company with consumers’
interest in its forefront. For a long period of time, media praised Uber’s business
model, and technology-focused portals hailed the digitalization that Uber promotes.
Many promoters of Uber’s business model, contrary to Uber itself when, prior to
2013, referring to such business conduct as illegal conduct, simply advanced the
notions that Uber has successfully identified “loop-holes” and resourcefully circum-
navigated the regulation, legally conducting services that are, simply, unregulated.
2 Disruption and Uberification
Uber’s digital platform (Uber’s application) should not be identified with a new
technological paradigm in transportation. The technology, as such, was never in the
centerpiece of the traditional taxi industry’s opposition to Uber and similar com-
panies, and the traditional taxi industry slowly adapted and incorporated electronic
applications into its everyday operations. Rather, with the appearance of Uber, Lyft
and similar companies, the transportation sector has entered into a relatively fast-
paced transformation driven by the introduction of advanced digital technologies.
4 M. Mudrić
The digital services (information society services), incorporated by the named com-
panies as a core of their business models, are already, within the wider context of
the shared economy and the digital economy, established in the market and can be
observed in various consumer and intermediary related services. Additionally, digital
services, such as the ones offered by Uber, Lyft and others, are conceptually inher-
ent to the so-called “Internet of Things”, a modern-day phenomenon representing a
manifestation of technological and social development whereby everyday life and
business activities become inextricably connected with the Internet, and information
and possibilities offered through this network media.
In the context of Uber’s business model, it is, despite numerous attempts, incor-
rect to identify the technological advancement (use of applications) with the sharing
economy phenomena. Such a simplistic approach negates the basic principles estab-
lished with modern law, whereby the market competition and regulation of new
business models, irrespective of the terminology utilized, must align with the basic
requirements of consumer protection.
In the long-term, the transportation technological advancement aspires to the new
paradigm in making—the autonomous vehicles, and the true disruption such under-
taking is bound to create. The automobile industry proclaims the transport revolution
in all aspects, a part of which is a near-by future where autonomous cars offer car-
riage of passengers by road as a free service, earning profit exclusively through the
use of passengers’ data and in-ride commercials and consumer opportunities’ pro-
motion, cutting variety of other costs, such as partner drivers’ income (Blystone
2018; Economist 2019; Griswold 2019a). Alternatively, the owners of autonomous
vehicles compensate their costs by having their cars autonomously provide taxi ser-
vices while not in use by their owners. The true disruption, among other items, is
further reflected in the possible gradual decrease of traditional public transportation
options in general, with fleets of autonomous vehicles (both publicly and privately
owned) completely taking-over and overhauling the public transport. This, in turn,
offers companies like Uber and Lyft the so-called “path to profitability”, whereby
a significant decline of costs related to, among other factors, driver earnings, may
finally enable a yearly profit margin.
Contrary to Uber’s claims with regard their digital exclusivity, in practice many tra-
ditional taxi providers do implement digital applications in their everyday business,
where such applications (often referred to as commercial transport applications) are
simply understood as yet another set of tools for attracting customers and enhanc-
ing the core, transportation service (i.e., enhanced methods of matching carriage
demand and supply, higher service transparency, faster service, better customer feed-
back mechanism, ease of use, more flexibility in allocating the best suitable drivers,
more efficiency in providing the best suitable drive option, information on driver and
passenger available in advance, etc.).
It should be recognized that the appearance of Uber in certain markets did impel
and foster the introduction of digital applications among the traditional taxi services
providers. Additionally, it must be reaffirmed that the appearance of Uber in certain
markets was followed by an initial measurable drop in average prices of the carriage,
especially in “closed” markets (regulated and capped access to licenses and permits),
Introduction 5
dominated by existing market actors (International Transport Forum 2016). Such

occurrences are, in their essence, affirmative and represent the positive aspects of
“Uberification”.
The use of applications in the carriage of passengers by road services brings many
additional potentials and caveats. For example, the application, when connected with
relevant public service providers, such as police, fire department, medical emergency,
and others, may serve for the benefit of passengers and drivers in cases of emergencies
or distress prior, during and after the service provision. In addition, the data collected
through the provision of carriage service could offer additional information to service
providers, enhancing their current and future endeavors. Should such data be made,
to a certain degree, publicly available (such as is the case with public transportation
options), it may be of use to both the current and potential new entrants to the
market, as well as consumers in general, as is the case with, for example, the City
of Denver where Uber partnered with Denver’s Regional Transportation District
offering information on public transportation options, and, additionally, offering
various Uber’s services to complement public transportation options (Reid 2019).1
It is quite common to observe harsh resistance and antagonism by the established
market players when new market entrants begin to compete for the market share,
especially when the new business circumstances break part with established princi-
ples, practices and dogmatic schemes. Whether the noted resistance is valid depends
of various factors, and if the new services are touching upon issues of public interest
and safety, in addition to evaluating market-related factors such as disloyal com-
pletion, monopoly, equal position on the market and similar, the discourse over the
issue will very often include aspects of public interest protection, citizens’ protec-
tion, consumers’ protection, data privacy protection, data protection, and others. As
new commercial activities, such as Uber’s business model, affect to a great extent
the established commercial practices, it is to be expected that their appearance opens
a plethora of issues and open questions, and, having in mind that such services are
present and offered on a global level, this global phenomenon requires a global con-
sideration. Individual decisions made by individual jurisdictions, therefore, should
reflect the global deliberations over the noted issue.
Uber, as such, is a good example of a dogmatic disturbance in the market, and
points to a plethora of parallel processes arising when a new commercial activity
creates a “shock doctrine” effect, whereby the interested stakeholders (market play-
ers, national and supranational legislature, judiciary, and others) find it difficult to
discern the full scope and reach of this new manifestation. Uber enters the trans-
portation sector on a premise that it, de facto, does not offer the carriage services.
Uber highlights its mission devoted to the consumers (passengers), simultaneously
eliminating or severely limiting its responsibility and liability towards consumers.
Uber continuously fights for equality in and accessibility to the markets all around
the world, but the economic indicators point to an exponential rise of this company,
asserting monopolistic aspirations. Uber stands as a forerunner of development and
1 There are, however, opposing views on this matter, placing forward arguments with regard possible
Uber’s privatization of public transportation options (Buchanan 2015).

6 M. Mudrić
industry’s betterment, but through its sole existence, to a certain extent, puts the
industry’s sole existence into question.
A study commissioned by the European Parliament (Azevedo and Maciejewski
2015) enumerates a number of possibly detrimental effects of “Uberification”: unfair
competition, violation of regulation, violation of tariff models, monopoly tendencies,
uninsured and unsafe motor vehicles utilized for carriage, breach of passengers’
privacy and data, discrimination of partner drivers (Berger et al. 2018; Shokooh-
yar 2018; Rogers 2015), discrimination of passengers, violation of labor law, and,
potential issues with tax law.
The unhindered and continuous existence of Uber’s business model may bring
upon a plethora of contested claims, matters for concern and unwanted consequences,
one of which is the potential Uber’s de facto monopoly in the market (Cooper 2017),
with the traditional taxi industry’s gradual loss of market share and inability to
compete with unfair competition, leading to its collapse. Indeed, data from various
countries, such as Norway (Leiren and Aarhaug 2016) and United States (US) (San
Francisco Municipal Transportation Agency 2014), indicate a significant drop of
traditional taxi industry’s share in the taxi market, whereas other studies confirm a
significant difference in prices between the two competitors, such as in Australia
(Deloitte Access Economics 2016) and US (Bond 2015).
The question of Uber’s (and other companies’) partner drivers’ labor status, con-
tinuously battled over in various jurisdictions by individual partner drivers and partner
drivers’ syndicates and associations, is relevant not just with regard partner drivers’
rights, but as a tool for better understanding the nature of Uber’s business model as
a whole. Companies like Uber and Lyft have been struggling for years to maintain
their position on classifying partner drivers as (sub-)contractors or independent con-
tractors, rather than employees (Campbell 2018). Whereas comparative case law is
divided on this matter, some jurisdictions have decided to focus on specific issues,
such as is the minimum payments for partner drivers,2 that serves to supplement
the missing minimum wage requirement present in standard labor contracts (Brown
2019). The US case practice has already produced complex criteria for evaluating
the distinction between an independent contract and employee, as recently analyzed
in the Dynamex 3 case (McCarthy 2019; JC 2019), and several additional court cases
are currently pending (Lichten and Liss-Riordan 2019; Ng 2019; Park 2018). In the
United Kingdom (UK), the Aslam case, to be analyzed in the current study, paved
way for employer classification, whereas similar decisions are slowly beginning to
emerge in other European countries, such as France (Lee 2019).
Even if partner drivers are to consider a claim against companies like Uber, the
general terms and conditions very often point to arbitration proceedings before arbi-
tration courts and applicable law chosen by Uber and similar companies. This, in
2 See, for example: the New York City Council, establishing minimum payments to for-hire vehicle
drivers and authorizing the establishment of minimum rates of fare, Law no. 2018/150. 14 August
2018, approved by the New York City Taxi and Limousine Commission on 4 December 2018.
3 Dynamex Operations West, Inc. v. Superior Court of Los Angeles, No. S222732 (Cal. Sup. Ct.
April 30, 2018).

Introduction 7
turn, may sway partner drivers from venturing into an unknown and potentially very
expensive legal battle. However, the Ontario Court of Appeals has recently allowed
a claim to be made in Canada (demanding minimum wage, overtime, and vacation
time), irrespective of attempts to move the case to the Netherlands for mandatory
arbitration settlement, as required by Uber’s general terms and conditions (Claburn
2019).4
Furthermore, the inadequate security checks of partner drivers represent not just a
question relevant for comparison of taxi drivers and partner drivers, but a prima facie
issue relevant for the public interest and protection of citizens. Uber’s application
collects various data on passengers, drivers, traffic and similar, thus adding up to
global concerns with regard the data protection, data manipulation, privacy protection
(Calo and Rosenblat 2017; Bohorquez and Felz 2014), monopoly over the use of map
applications’ data (Vincent 2018) or monopoly in general (Kokalitcheva 2016), price
fixing (Bytes 2019; Paul 2017), antitrust (Anchustegui and Nowag 2017), and similar.
Uber’s general terms and conditions tend to favor exclusion of responsibility and
liability towards end-consumers (passengers), at the same time enforcing arbitration5
and applicable law choices irrespective on where a potential injury or damage may
occur. A growing number of studies indicate that companies like Uber significantly
affect the increase in traffic congestions, as well as a general decrease of utilizing
public transport options (Bliss 2019; Gustafson 2019; Saval 2019; Schmitt 2019).
Additionally, the overall earnings in the transportation sector seem to be in a serious
(over 50%) decline (Farrell et al. 2018).
Finally, to name just one more global concern, Uber tends to escape value added
tax (VAT) payments concerning its share of profits deducted from the carriage price,
allocating taxation burdens on the remaining sum to the partner drivers, creating
yet another legal conundrum. Even though Uber and similar companies continue to
argue that their services are strictly confined to digital services, a growing body of
comparative case law begs to differ, explicitly stating that Uber and similar compa-
nies are engaged in the provision of transportation services. On this issue, a recently
filed case before High Court of Justice in London, Maugham v Uber London Lim-
ited,6 may offer some clarification as to that particular issue, and adjudicate over
Uber’s claim that it only offers a digital service, thus not being under an obligation
to pay VAT connected to the rendered carriage service (Good Law Project 2019).
Needless to say, should the Court accept the claim as grounded, this would seri-
ously affect Uber’s financial standing, at least within the UK jurisdiction. It should
be reminded that Uber is already facing numerous issues in the City of London,
with Transport for London having, at one point, rejected Uber’s license to operate
4 David Heller v. Uber Technologies Inc., Uber Canada, Inc., Uber B.V. and Rasier Operation B.V.,
2019 ONCA 1, DATE: 20190102, DOCKET: C65073.
5 See, for example: Spencer MEYER, individually and on behalf of those similarly situated, Plaintiff,
v. Travis KALANICK, and Uber Technologies, Inc., Defendants, 291 F.Supp.3d 526 (2018).
6 Jolyon Toby Denis Maugham QC v Uber London Limited, High Court of Justice, Chancery
Division, Claim No. HC-2017001496, 15 June 2017.

8 M. Mudrić
in the City (public safety and security grounds), only to be renewed until September
2019 on a probation period (Topham 2019).
In other jurisdictions, such as is the case with Egypt, Uber (as well as its main
competitor in the Middle East, Careem), after several proceedings, voluntarily agreed
with the Egyptian Tax Authority to pay VAT (Haitham 2019). In other cases, courts
prompted Uber to change its policies, as was the case with the Federal Court of
Australia,7 that, after having reviewed the nature of Uber services, applied the relevant
taxation regulation in order to assess whether Uber is under an obligation to comply
with the taxation obligation as a provider of taxi and limousine service, or, in other
words, whether Uber is to be considered as a separate tax-payer entity. Reviewing
the Uber’s business model in line with what constitutes all basic elements of a taxi
and limousine service (interestingly, the Australian taxation regulation includes a
definition of taxi and limousine service), the Australian Court decided that Uber
partner drivers are under an obligation to pay taxes as taxi drivers.
It should be noted that different countries and local administration units have
begun, as of late, to consider additional taxation layers for Uber and similar compa-
nies. For example, Los Angeles County has been exploring a possibility of introduc-
ing a separate tax on Uber and Lyft rides, the so-called “ride-hailing” tax (Nelson
2019), as a part of the overall trends towards establishing various models of con-
gestion pricing (Marshall 2019). As per the transportation officials (Metropolitan
Transportation Authority), the companies “exacerbate” congestion in Los Angeles,
and do not participate in costs of maintaining public roads (the so-called “comprehen-
sive congestion pricing”). It should be noted that in areas where similarly specialized
taxation has already been introduced, such as Chicago, Washington D.C. and New
York City (or pending, such as San Francisco), the cost of such taxation is directly
added to carriage price.
3 Sanctions
Even though the comparative legislature and judicial practice have begun unwrapping
the legal issues concerning the aforementioned and connected issues, the (global)
legal opus necessary to fully evaluate and classify Uber’s business model is still under
heavy construction. Despite Uber’s claim on alleged legality, Uber’s business model
is essentially based on conduct contrary to the law (Edelman 2017). More concretely,
Uber defends its position that it, opposite to the traditional taxi service providers, does
not offer the carriage services—commercial activities strictly regulated by various
international (international conventions on the carriage of passengers and goods in
different modes of transport) and national legislation. To the contrary, Uber alleges its
sole activity as the provider of digital intermediary services between end-consumers
(passengers) and drivers. At the same time, the noted drivers in many cases (on a
global level) tend to operate contrary to the law (no proper licenses and qualifications,
7 Uber B.V v Commissioner of Taxation [2017] FCA 110.

Introduction 9
and insurance) and offer services that have been arranged through the aforementioned
digital service, thus establishing an obvious discrepancy with Uber’s allegations.
One of the prevailing arguments placed forward by Uber is the role of new tech-
nology involved in the carriage of passengers by road, making Uber’s business model
categorically different as opposed to the traditional providers of taxi (and rent-a-car
with driver) services. Such arguments, among other things, lead to a case held before
the Court of Justice of the European Union (CJ), where the main issue concerned
the question on whether Uber’s business model falls into a category of transport ser-
vices or information society services. The CJ classified Uber as providing services
in the transportation field, and in one of the subsequent cases before CJ, C-320/16,8
Advocate General Szpunar specifically stated that Uber “… when it developed the
UberPOP service, … deliberately chose an economic model that is reconcilable with
the national regulations governing the transportation of passengers”.
During the past several years, due to some of the above-mentioned reasons, Uber
has stopped offering its services in several jurisdictions, either by its own choosing
or through the virtue of legislative changes and judicial interim distraint measures.
Perhaps the biggest in-flow of cases against Uber is experienced in the US, especially
with regard the “claim actions” procedures, not too surprisingly exceeding the sta-
tistical records of other successful start-up ventures (i.e., exceeding claims against
Facebook by 4–5 points margins during the first 6 years of operation). However,
Uber adapts quickly, exhibiting enormous agility in adapting to regulatory and mar-
ket conditions, and even, where appropriate, showing interest in cooperating with
the traditional taxi industry.
Various media outlets and other sources offer a plethora of data and information
with regard to different kinds of legal sanctions employed against Uber and similar
companies during the past several years (Dickinson 2018; Orton 2018). It is often the
case that such information is inadequate and simply incorrect, especially with regard
the premises pointing to Uber being banned from operating in a certain country (this
being recorded only in rare occasions). It should, preliminary, be pointed out that it
is correct that Uber suffers continuous inflow of legal sanctions. In countries such as
Finland, Denmark, Bulgaria, Netherlands, Germany, Italy, Portugal, Sweden, India,
Brazil, New Zealand and others, Uber has repeatedly been fined and sanctioned with
interim distraint measures. The most usual reason why such measures have been
implemented is the lack of licenses, permits and necessary authorizations that have
not been procured by Uber partner drivers. Another most typical case involved Uber
partner drivers providing service (taxi services and rent-a-car with driver services)
contrary to the issued licenses and the law regulating the provision of such services. In
addition, Uber partner drivers, for the same reasons, regularly suffer legal sanctions,
typically fines and interim distraint measures, as well as confiscations of motor
vehicles utilized in providing such services.
Contrary, however, to the mentioned media captions, Uber, as a general rule,
despite different legal sanctions and issues, continues to operate in numerous coun-
tries, including jurisdictions where Uber has suffered or continues to suffer legal
8 C-320/16, Uber France SAS, Nabil Bensalem, ECLI:EU:C:2018:221, p. 33.

10 M. Mudrić
sanctions (Pelzer et al. 2018). In some cases, such as the very recent one occurring in
Barcelona (Field 2019), Uber single-handedly decides to withdraw from the market
(permanently or temporarily), usually following regulatory changes that do not favor
its business model or profit expectations (Lomas 2017). In Barcelona, for example,
the latest regulatory changes concerning the vehicles for hire (VTC) require the book-
ing to be made at least 15 min prior to the actual ride, as well as that motor vehicle
utilized for this service cannot circle the streets between bookings but have to be
returned to the original place of business (garage, depot, etc.). Only in certain cases
has Uber withdrawn from the market following particular kinds of issued interim
distraint measures. One such example was the situation in Hungary9 (Keszthelyi
2016) where the legislative changes enabled the interim distraint measures aimed
at preventing access to Uber’s application in cases where Uber does not comply
with regulation requirements (i.e., licenses for partner drivers, licenses for interme-
diary service, etc.). Another example is the City of Buenos Aires where the criminal
court10 issued identical measure following the determination that Uber’s business
model, being not aligned with the regulatory framework, constitutes a serious and
imminent threat to public health and security.
One explanation to such misinformation with regard media outlets lies in the fact
that Uber’s business model consists of various kinds of services that are prone to
quick changes and adjustments to any given market at any given time, making it
difficult to strictly classify particular services. The latter is aggravating when con-
templating a legal analysis of Uber’s business model as a whole, especially when
taking into account that a service called UberX or UberPOP rendered in one country
may be totally (legally and content-wise) different from service also called UberX
or UberPOP in another country. For that reason, it is necessary to stress that the
comparative analysis of regulation and case law (as well as Uber’s general terms and
conditions) present in the current study reflects a particular type of Uber’s service at
the time when a particular case has been heard, or particular legislation applied. Nev-
ertheless, the key legal theorems derived from such analysis are crucial for proper
understanding of Uber’s business model, especially having in mind that, despite
legal distinctions between different legal traditions, the public policies concerning
the public interest, citizens’ and passengers’ rights, and the safety and security of
transport tend to point to similar or same goals.
Finally, it is worth mentioning that the comparative case practice points to dif-
ferent types of judicial and executive (and other) bodies involved in hearing and
deciding on cases concerning Uber and Uber drivers. Thus, various case practice
examined or noted in the present analysis will have had been heard before civil,
commercial, misdemeanor and criminal courts, constitutional courts, ministries in
9 2016. évi LXXV. törvény az engedély nélkül, személygépkocsival végzett személyszállító szol-
gáltatáshoz kapcsolódó jogkövetkezményekről.
10 Incidente de apelación de clausura preventiva art. 29 LPC en autos UBER SRL s/infr. 83 CC,
Docket 4790-02-CC/2016, 5 May 2016; followed by the decision of first Instance Court on Con-
tentious Administrative and Tax Matters No. 15 of the City of Buenos Aires, “Federal District’s Taxi
Drivers Union et al. v. Government of the City of Buenos Aires”, Docket C3065-2016/0, decision
dated April 13, 2016, directing the City of Buenos Aires to cease all Uber activities in its area.
Introduction 11
charge of transportation affairs, internal affairs, finance and commerce, institutions in

charge of market competition, consumer protection, data protection, financial trans-
action supervision, and others. This, in turn, signifies the complexity of legal issues
that have emerged with the appearance of Uber’s business model.
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Introduction 13
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Nature of Uber Services
Mišo Mudrić
Abstract The current chapter will tackle several issues of importance for the provi-
sion of Uber’s services, with an overall aim to assess the nature of Uber’s services in
general. Section 2 examines the relevant case practice, starting with the recent case
held before the Court of Justice of the European Union, and continuing with com-
parative practice focused on Uber-related issues such as: unfair competition, main
organizer and/or direct provider of carriage services, level of control and differentia-
tion between employees and independent contractors. Section 3 scrutinizes different
contractual (and possibly non-contractual) relations between different actors engaged
in Uber’s services: Uber and Uber’s application, Uber subsidiary companies, Uber
drivers, application users, and passengers. Section 4 compares the traditional taxi
industry’s price determination model with that of Uber’s dynamic charge increase
model. Section 5 examines Uber’s general terms and conditions. Section 6 exam-
ines the existing transportation models (transportation intermediaries, contractual
and actual carriers, ride-sharing, taxi service) in search of the best match for legally
classifying Uber’s business model. Section 7 draws conclusions from the conducted
analysis.
1 Introduction
The present chapter will endeavor to examine several issues related to Uber’s business
model in an effort to discern the nature of Uber’s service. In summary, the pending
analysis will offer a set of conclusions with regard, primarily, the following questions:
a. What is the legal basis for the provision of Uber’s services and what consti-
tutes Uber’s services? Does Uber provide a de facto transportation service, a
transportation broker service, a digital service, or something different?;
b. What is the nature of the legal relationship between the end-users (customers,
passengers) and Uber? To what extent is Uber responsible to the end-users? Can
M. Mudrić (B)

https://doi.org/10.1007/978-3-030-31535-1_2
16 M. Mudrić
Uber limit or exclude its responsibility and liability through its general terms and
conditions?;
c. How does Uber determine the price of Uber’s services and what is the role of
a digital platform to that end? What is the difference between a taximeter and
tariff system as opposed to the scaling price model utilized by Uber’s digital
platform?; and,
d. What is the nature of the legal relationship between Uber drivers (employees
or contractors) and Uber, and do Uber drivers enjoy the same labor status as
traditional taxi drivers? How does Uber pay Uber drivers and how is that amount
determined? To what extent does the difference between an employee status and
contractor status affect the end users’ relationship with the said categories and
Uber?
The major issue that needs to be tackled first is whether it is possible to mark
a clear division between Uber’s application as a separate, digital service, from the
carriage service rendered by Uber’s partner drivers that would formulate a sepa-
rate transportation service. The noted division represented the core issue recently
examined by the CJ, as analyzed in the next section.
2 Predominantly Transportation Service
2.1 C-434/15
2.1.1 Introduction
The principal case before the CJ concerning the issue of Uber’s business model is
the Case C-434/15 (Asociación Profesional Elite Taxi v Uber Systems Spain SL).1
In accordance with the relevant Spanish legislation,2 in order to provide the urban
taxi services (or any intermediary activity related to the provision of taxi services)
the provider of such service must be granted a license (and necessary administrative
authorization) by the competent local authority for the territory where such service
is to be rendered. The association of taxi service providers, the Elite Taxi, brought an
action against Uber Systems Spain alleging the breach of relevant legislation, mis-
leading practices and unfair competition conduct3 (against both Uber Systems Spain
and Uber partner drivers; Uber’s service in question was UberPOP). The claimant
demanded that the commercial court in Barcelona (Juzgado de lo Mercantil No. 3
de Barcelona) orders the cease of all such activities and forbids the provision of
such services in the future, and, in addition, to order Uber Systems Spain to cease
1 C-434/15, ECLI:EU:C:2017:981, 20 December 2017.

2 Ley 19/2003 del Taxi, 2003 (Law No. 19/2003 on taxi services), and Reglamento Metropolitano
del Taxi, 2004 (Regulation on taxi services in the metropolitan area of Barcelona).
3 Based on Ley 3/1991 de Competencia Desleal (Law 3/1991 on unfair competition).
Nature of Uber Services 17
providing on-demand mobile and online booking services (Uber digital platform).
The Commercial Court affirmed that neither Uber Systems Spain nor Uber partner
drivers (non-professional drivers) possess the necessary licenses and authorizations,
and, additionally, confirmed that Uber runs its activity to acquire profit.
To assess whether such conduct represents unfair practices, the Court found it
necessary to first establish which rules are to be applied: that of the information
society services or that of the transport field, or a combination of both. Having in
mind that the information society services are covered by relevant European law,
whereas the transport field remains in the domain of national law regulation, the
Commercial Court requested for a preliminary ruling by CJ with regard several basic
questions on legal classification of the disputed service.
It should be noted that the legal and not factual clarification served as the basis
for CJ accepting the jurisdiction4 (irrespective of the fact that CJ regularly takes
the factual information into account). In addition, the Court highlighted the fact
that the digital service in question (Uber’s application) is provided not by Uber
Systems Spain, but another Uber company situated in the Netherlands (Uber BV,
usual provider of Uber’s digital platform within the European Union (EU) established
in the Netherlands, subsidiary of Uber Technologies Inc., with the principal place of
business in the US).
2.1.2 Preliminary Questions
Having in mind that the Directive 2006/123/EC on services in the internal market5
excludes the transport activities from its scope, CJ was asked to determine whether
Uber’s business model represents a mere transport service, or, to the contrary, an elec-
tronic intermediary service or an information society service. The referral describes
Uber’s business model as an …
… 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, ‘intelligent telephone and
technological platform’ interface and software application—which enable them to connect
with one another.
The relevance of preliminary question(s) is best described by noting that the poten-
tial CJ’s confirmation of Uber’s claims would effectively exclude the regulation of
Uber’s business model from the transportation regulation, as per Directive 98/34/EC
4 Case C-434/15: Request for a preliminary ruling from the Juzgado Mercantil No. 3 de Barcelona
(Spain) lodged on 7 August 2015—Asociación Profesional Élite Taxi v Uber Systems Spain, S.L.
OJ C 363, 3.11.2015, pp. 21–22.
5 Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on
services in the internal market, OJ 2006 L 376, p. 36.

18 M. Mudrić
on information society services,6 does allowing Uber to continue providing its core
business model unhindered by any national law transportation regulation.
Continuing with the line of preliminary questions, if CJ would consider Uber’s
business model as a partial information society service, a further question was raised
on whether such service could avail the benefits of the principle of freedom to pro-
vide services, as per Directive 2006/123/EC and Directive 2000/31/EC on electronic
commerce.7 In addition, should Uber’s business model be perceived as to fall outside
of the transport service field, CJ was asked to determine to what extent the principle
of freedom of establishment and authorization schemes play a role in determining
the rules on competitive activities, particularly with regard the domestic law require-
ments on permits, licenses and authorizations, and their possible negative impact
with regard restrictiveness and disproportionality. In other words, the preliminary
query raised was seeking a determination on the question to what extent Uber’s busi-
ness model is restricted by domestic law requirements with regard the provision of
certain services, reviewed in the context of information society services. Moreover,
CJ was additionally asked to, provided that it is found that Uber’s business model
falls into the information society services domain, determine the effect of freedom to
provide an electronic intermediary service as opposed to the domestic law restrictions
with regard the licenses and authorizations and the application of unfair competition
regulation.
The basic premise behind the preliminary questions was to determine whether
Uber’s business model is subject to national law regulation in the transport field,
especially given the fact that the transport field is predominantly conceded to the
EU Member States and their domestic law regulation (therefore, exempted from the
application of EU common rules). Should Uber’s business model be excluded from
the application of national transport law provisions, it would anchor Uber’s position
as a digital platform provider, and distance its core (potentially only) service from
the issues associated with Uber partner drivers, licenses, permits, authorizations and
similar (as noted above and in the Introduction chapter).
2.1.3 Considerations
CJ recognized the fact that the actual carriage of passengers by road constitutes, in
its own, a separate service (transport field service) as opposed to an intermediation
service linking drivers and passengers through an application (information society
service), allowing for, in principle, a different set of regulation to be applied to
6 Directive 98/34/EC 2 of the European Parliament and of the Council of 22 June 1998 laying down
a procedure for the provision of information in the field of technical standards and regulations and
of rules on Information Society services, OJ 1998 L 204, p. 37.
7 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain
legal aspects of information society services, in particular electronic commerce, in the Internal
Market (‘Directive on electronic commerce’), OJ 2000 L 178, p. 1.
each service respectively. It should be briefly noted that in the Joined Cases C-
340/14 and C-341/14,8 CJ acknowledged that, to assess the proper nature of a service
comprising of several parts, it is necessary to determine the contents and structure of
each individual service and the main purpose (meaning) of each individual service.
However, CJ proclaimed that the service in question is “… more than an interme-
diation service”, as the provider of information society services “… simultaneously
offers urban transport services” (pp. 37, 38), since Uber, through its application, ren-
ders the transport service in question (provided by non-professional drivers) acces-
sible and possible.
It should be noted that, prior to CJ’s adjudication, the Advocate General Szpunar
in his opinion on the case9 placed the emphasis on the so-called composite services,
dividing Uber’s business model into two (connected) parts. One part of Uber’s busi-
ness model represents an electronic service (digital platform, the location of the driver
through the application, connecting the driver with a potential passenger through the
application). The other part represents the transport service.
The purpose of the electronic service part, according to Advocate General, is to
enable the transportation service part (supplying the urban transport on demand).
Szpunar stressed the importance of determining the key purpose of the whole enter-
prise, identifying the carriage of passengers as the ultimate goal of all sub and related
activities. When discussing the potential of classifying the electronic service part
of Uber’s business model as an information society service, the Advocate General
warned about the futility of separating the second aspect of a composite service, espe-
cially in the case where such secondary service has no self-standing economic value.
In addition, Szpunar argued that in the case of composite services, a true division
of electronic and non-electronic services only exists in cases where a non-electronic
service provider is economically independent of the electronic service.
Examples given include the online purchase of tickets, hotel reservations and
similar, where the primary providers of flight and hotel services are the ones who
determine the price and conditions and have other means to attract potential cus-
tomers, whereby the intermediaries (electronic service) only enhance the inflow of
new customers.10 The opposite examples given refer to the online sale of goods
(all key components, including the payments, are done electronically, whereby the
actual delivery of goods is seen as an auxiliary service). On the other hand, where the
provider of electronic service exercises a decisive influence over the non-electronic
service to the extent that it is no longer possible to separate the two, the predominant
factor for determining the overall nature of such service or the main purpose of such
service is its economic impact.
8 Joined Cases C-340/14 and C-341/14, SL L C 381, 16.11.2015. In that particular case, CJ deter-
mined that not each and every service associated with transport activities represents a transportation
service.
9 Opinion of Advocate General Szpunar, Case C-434/15, 11 May 2017, ECLI:EU:C:2017:364.
10 What might not necessarily be the case with situations where an online intermediary has an
exclusive right to handle the flight or booking options (including the price determination), what, by
means of comparison, resembles Uber’s business model.
20 M. Mudrić
Szpunar conclusively argued that without Uber’s digital platform Uber drivers
would not be able to provide their service (unable to allocate clients, thus, unable
to earn any profit). It should be noted that the same Advocate General was asked to
give his opinion in case C-320/16,11 where he reiterated his findings and additionally
highlighted Uber’s preponderant control over the transport service (in strictu sensu),
naming it the real economic raison d’être of Uber’s business model (the particular
Uber service in question was also UberPOP service).12
Following the Advocate General’s premises, CJ reviewed Uber’s overall engage-
ment (projected as an intermediation service) in accordance with the following pos-
tulates:
a. Uber selects the non-professional drivers who use their own vehicles;
b. Uber provides the application to drivers;
c. Drivers are not able to carry out their service without the application;
d. Passengers would not be able to connect with drivers absent of application; and,
e. Uber decisively sets the conditions for the provision of carriage service.
With regard the postulate e., CJ specifically enumerated its findings: Uber deter-
mines the maximum fare (through Uber’s application algorithm); Uber first receives
the money collected from the application user and forwards a part of it to the partner
driver; Uber, to a certain extent, determines the quality of vehicles; and, Uber, to a
certain extent, determines the necessary conditions for Uber partner drivers and the
appropriate conduct while providing carriage services.
To that extent, it should additionally be noted that Advocate General Szpunar fur-
ther contributed by stating that Uber’s business model far exceeds a simple demand-
service nexus and, in fact, creates its own service, organizes it and defines its main
characteristics. Szpunar emphasized the role of Uber’s terms and conditions that are
binding for both the passengers and drivers, defining their roles, qualifications (driv-
ing licenses and vehicles qualifications; thus, the minimum safety requirements),
rights and obligations, ride fare (price determination, charging and processing),
rewards (both for drivers and passengers), drivers’ exclusion conditions, and similar.
Advocate General especially highlighted the role of application’s algorithm concern-
ing the offer-demand nexus, and its impact on the availability of drivers in certain
areas at certain times, thus, exerting a strong influence on the availability of service
as a whole. Szpunar asserted that even a sub-contracting nature of Uber and Uber
drivers’ relationship does not curtail Uber’s dominant position with regard fully
managing Uber drivers as if they were engaged in a traditional employer-employee
relationship. Observing the issue from the passengers’/application users’ perspec-
tive, Advocate General asserted that users generally perceive Uber as a transport
11 C-320/16, Uber France SAS, Nabil Bensalem, ECLI:EU:C:2018:221.

12 Itshould be noted that several more cases appeared before CJ concerning Uber, but they were
either dismissed (C-526/15, Uber Belgium BVBA v Taxi Radio Bruxellois NV, 2015); CJ found
(Order, 27 October 2016) the question to be insufficiently clear and accurate; the issue concerned
the differentiation between the ride-sharing concept (more on this later) and UberPOP service or
removed (C-371/17, Uber BV v. Richard Leipold; German Supreme Court withdrew its action on
preliminary ruling).
service, as they seek a carriage option that is to be performed in a certain manner and
with a certain level of quality. To this end and having in mind that the actual transport
service is the core aim of the whole enterprise, Szpunar concluded that everything
occurring on the application prior to the actual transport (electronic service part)
is of a secondary, auxiliary and preparatory significance, and only serves to enable
the performance of the main function: carriage of passengers (transportation service
part).
The accumulation of the above-enumerated factors within the direct control of
Uber, according to Szpunar, places Uber in control of all relevant economic aspects
of transport service. This, in turn, led Szpunar to believe that Uber’s business model
is, in fact, a single transportation service organized and operated by (or on behalf of)
Uber and that Uber is to be considered either as a carrier or at least as an organizer
of transport services.
In Uber case, CJ finally concluded that the above defined intermediary service
constitutes an integral part of an overall service primarily being of a transport service
nature, and inherently linked to a transport service. Thus, CJ decided that Uber’s
business model cannot be classified as an information society service, but rather
as a service in the field of transport. For that reason, CJ excluded the application of
rules outside of the transport field and specifically stated that intermediary services as
understood in the context of the case are to be regulated by the Member States through
their domestic law transport sector regulation. Such deliberations were confirmed in
the previously mentioned subsequent case C-320/16.
2.1.4 Key Elements Determination
Following the logic adopted by CJ and Advocate General Szpunar, several questions
require a definitive classification.
First, it is necessary to determine why is the application user/passenger utilizing
Uber’s application. More precisely, does the application user/passenger primarily
sign in Uber’s application to get connected with other persons (Uber drivers), or is
the primary reason why the application user/passenger utilizes Uber’s application
to order the carriage, irrespective of who actually performs the carriage service?
Based on the findings of both the Advocate General and CJ, the primary purpose
of Uber service viewed as a whole (composite service, intermediary service as an
auxiliary part of the overall transport service) is to provide the users with carriage of
passengers by road service.
Second, it is necessary to determine what is the primary purpose of Uber’s appli-
cation. More precisely, does it primarily serve as an online meeting place where third
parties meet and discuss the potential of entering into a contract of carriage, or is the
primary purpose of Ubers’ digital platform to enable the carriage service? Following
the logic of the first question and based on the findings of CJ and Advocate General,
the primary purpose of Uber’s application is to enable the carriage of passengers
by road service, this being the primary reason why potential passengers sign up to
Uber’s digital platform.
22 M. Mudrić
Finally, having in mind that Uber’s digital platform is a commercial activity, it

is necessary to determine what represents Uber’s principal venue of profit. In other
words, does Uber achieve profit primarily through its membership (is, application
subscription fee), or is the primary venue of profit derived from the carried-out car-
riage service negotiated through Uber’s application? Based on the findings of the
Advocate General and CJ, Uber earns profit exclusively through the revenue col-
lected from application users (ride fares), as Uber’s application membership is free
of charge. As the actual carriage of passengers by road service serves as an exclu-
sive profit-earning segment of the overall service, Uber’s application is permanently
linked and dependent on the transport service. This leads to a conclusion that the
primary purpose of Uber’s application is the realization of carriage of passengers by
road service (enabled and calculated through the virtual space), offered in order to
earn a profit. The absence of the transportation service would render Uber’s applica-
tion a non-profit platform for virtual communication.
2.2 Relevant Comparative Case Practice
2.2.1 Unfair Competition
In principle, the first level of legal sanctioning of Uber’s business model as observed
in comparative practice resorts to declaring a particular Uber service (most usually
UberPOP, UberBLACK, but also UberX, depending on jurisdiction) in violation of
the rules governing fair market competition. As a rule, such determinations follow
the notion of classifying the nature of Uber’s business model as falling under the
category of taxi service, therefore, transportation services in general.13
For example, the German regional court,14 in addition to stating that Uber drivers
do not possess the necessary licenses and permits (the German law15 requires both
the licenses (general requirements set by law), as well as permits (relevant for the
area where the taxi service is rendered)), observed that Uber drivers do not possess
adequate insurance instruments. Similar findings were repeated by Belgian courts
in Uber BV v. Taxi Radio Bruxellois Nv,16 where the first instance court specifically
stated that Uber’s business model (UberPOP service) was damaging not only to the
traditional taxi industry but to other associated industries, such as intermediaries and
13 Section 6 analyzes this issue in more detail, offering a comparison of Uber’s business model with
several transportation services categories.

14 Landgericht Frankfurt am Main (LG Frankfurt) Urt. v. 18.03.2015, Az.: 3-08 O 136/14.
15 Personenbeförderungsgesetz, PBefG, and, Verordnung über den Betrieb von Kraftfahrun-
ternehmen im Personenverkehr (BOKraft).

16 Dutch-speaking Brussels Commercial Court, 23 September 2015, Uber Belgium BVBA, Uber
BV, Uber International BV and Rasier Operations BV v. Taxi Radio Bruxellois NV, in the presence
of Brussels Hoofdstedelijk Gewest, Belgische Federatie van Taxis en Nationale Groepering van
Ondernemingen met Taxi- en Locatievoertuigen met Chauffeur VZW, 2015. Further analyzed in
this chapter, Sect. 6.3.
dispatchers, as well. The same approach was also adopted by the Italian court in
Milan,17 where the court highlighted the fact that the utilization of dynamic charge
increase model allows for significantly lower prices as opposed to the traditional taxi
service providers, additionally stating that Uber drivers circumnavigate the regulatory
requirements with regard the taxi service standards (i.e., costs associated with the use
of taximeters, costs associated with the radio-telecommunications networks, costs
associated with the mandatory insurance coverage, etc.).18
All mentioned Courts determined that Uber’s business model represents unfair
competition and disloyal competition, thus enacting interim distraint measures
against UberPOP service in each perspective jurisdiction.19
2.2.2 Uber’s Central Role as a Main Organizer/Direct Provider
The next step in applying legal sanctions against Uber concerns a more scrutinous
approach to determining the level of Uber’s involvement in the actual provision of
transportation service, in line with the previously analyzed considerations brought
forward by CJ. To that extent, several cases have pointed to Uber’s key role in
providing taxi service (the afore-mentioned Milan court) and Uber’s joint liability
for the de facto provision of taxi service due to its conscious and close tie with Uber
drivers (the Dutch Appeal Commercial Court20 ).
One of the more detailed analyses, to a great extent as profound as that of the
previously analyzed CJ case, is present in the proceedings before the Italian court in
Rome, occurring well prior to CJ’s judgment.21 In summary, the first instance Court
issued an interim distraint measure for UberBLACK service after having determined
that Uber drivers have failed to follow the Italian law requirements with regard to the
provision of rent-a-car with driver service. In concreto, Uber driver failed to return to
the principal place of business (i.e., garage, business headquarters, depot etc.) after
having performed an individual service.
The Court rejected the notions of Uber acting as an intermediary and placed for-
ward a detailed explanation on why it thinks that Uber actually manages Uber’s
integrated system as the main organizer and/or direct provider of all business activ-
ities. The Rome court offered the following structure of business activities either
managed or directly performed by Uber:
17 Tribunale di Milano, Sezione A, N. 16612/2015 R.G., 25 maggio 2015. Further analyzed in
Sect. 6.3.
18 The noted legal reasoning was, for example, later reconfirmed by the Italian court in Torino, see
Uber vs. Taxi: l’ordinanza del Tribunale di Torino. Tribunale di Torino, Sezione I Civile, Sentenza
1–24 marzo 2017, n. 1553.
19 Similar cases with the same result revolved around different Uber’s services and different trans-
portation categories. For example, the Italian Court in Genoa (Tribunale di Genoa, no. 509,
02.02.2015) ruled out against the unlicensed provision of rent-a-car with driver service.
20 ECLI:NL:CBB:2014:450 (8 December 2014). Further analyzed in Sects. 6.1 and 6.4.
21 Il Tribunale Civile di Roma, R.G. n. 76465/2016.
24 M. Mudrić
a. Initial setting-up and provision of digital system/program (Uber’s application);

b. Choice of and contracting with Uber partner drivers. This includes the advertise-
ment campaign and other activities aimed at attracting new partner drivers;
c. Determination and charging of ride fees for each individual carriage. This
includes special financial items such as discounts (for of passengers) and bonuses
(for Uber drivers);
d. Acceptance of application user’s order of carriage;
e. Processing of application users’ orders and the allocation of Uber drivers to
provide the carriage;
f. Processing of each individual ride by providing geo-location services and grading
services (prior, during and after the provided carriage);
g. Allocation to another Uber driver in case the first connection was either rejected
by the previous Uber driver or canceled by application user;
h. Acceptance and processing of payment (fee collected directly from the applica-
tion user after the carriage has been rendered);
i. Payment of Uber driver from the amount collected from the application user
through Uber’s application; and,
j. Advertisement and other activities aimed at promoting the overall service.
Based on such classification of relevant individual business activities, the Rome
court ruled out that Uber controls all essential elements of digital service and dictates
all essential elements of transportation service.
To that extent, the reasoning adopted by the Rome court goes a step further when
compared with the previously analyzed opinion of Advocate General Szpunar, and
especially the CJ’s judgment. The Italian court places the emphasis on Uber’s key
role (already recognized in the previously mentioned case before the Milan court)
by associating all essential elements of both the digital and transportation service
directly under Uber’s control (direct and indirect).
2.2.3 Employees Versus Contractors Dilemma and Level of Control
The labor status of Uber drivers, irrespective of Uber’s general terms and conditions
(that can significantly vary from jurisdiction to jurisdiction), is usually not contex-
tually determined. The business practice points to various contractual modalities
and legal solutions, whereas the judicial practice has (recently) begun reviewing the
status of Uber drivers and setting certain considerations of interest for the present
study (Bales and Woo 2017; Baron 2019; Casey 2017; Garden 2017; Lloyd 2016;
Means and Seiner 2016; Powell 2017; Redfearn 2016; Prassl and Risak 2016). The
differentiation between an employee and contractor, in general, poses a multitude
of legal questions, such as the nature of legal relationship between Uber drivers and
Uber, as well as Uber drivers and passengers, labor law issues (such as the minimal
wage, right to strike, right to sick-leave, right to paid-leave, etc.), various types of
social, health and pension levies (Bruckner and Hungerford 2018), and similar.
Whereas the previously analyzed CJ case did contain a mention of the employee
dilemma (as briefly touched upon by Advocate General Szpunar22 ), several other
cases focused primarily on this specific issue. One of the more interesting cases,
bringing forward major conclusions and determination with regard to the labor status
of Uber drivers, is the Alsam and Farrar v Uber 23 case. The UK Employment Tribunal
was asked to determine whether Uber drivers act as Uber’s employees or independent
(sub-)contractors. In general, the Court reviewed the level of control exhibited by
one party over the other, and to what extent the established level of control affects
the autonomy of another party, especially if the other party is self-employed.
The UK court blatantly stated that the notion of Uber acting as a mosaic of several
dozen thousand contractors is “faintly ridiculous” and ruled out that the essence
of Uber’s business model resides on various transportation services offered. Thus,
the Court reasoned, Uber undeniably de facto provides the transportation service,
and Uber drivers represent the employee workforce. Irrespective of Uber’s general
terms and conditions asserting otherwise, the Court cast aside the general terms and
conditions as “pure fiction” and established that Uber drivers are Uber’s employees.
In reaching this classification, the Court considered, among others, the following
factors:
a. The price of the carriage is determined by Uber;
b. Uber (de facto) pays Uber partner drivers;
c. Uber drivers utilize Uber’s application exclusively under the terms and conditions
set by Uber;
d. Uber chooses the partner drivers that will work for Uber;
e. Uber is, in accordance with its general terms and conditions (version relevant
for the UK at the time when the case has been reviewed), responsible for claims
handling and damage compensation based on passengers’ claims; and,
f. Uber drivers’ grading system, available through Uber’s application, represents
a mechanism for evaluating Uber drivers’ performance and can result in Uber
driver being expelled from the application.
The above-examined deliberation was recently upheld by the Court of Appeal.24
The position taken by UK court follows the line of reasoning adopted by the Rome
court (as analyzed previously), and despite the fact that more emphasis is placed on
Uber’s dominant role over Uber drivers’ activities, the core legal determination is
identical.
Among various similar proceedings undertaken in the US, several cases deserve
a special mention. In two cases against companies Uber and Lyft,25 American courts
were guided by a principle whereby the assessment of relationship between the
22 SeeSect. 2.1.3. Considerations.

23 Aslam and Farrar v Uber, United Kingdom Employment Tribunal, Case Nos. 2202550/2015 and
Others.
24 Uber B.V, Uber London Limited, Uber Britannia Limited v. Yaseen Aslam, James Farrar, Robert
Dawson, [2018] EWCA Civ 2748.

25 O’Connor v. Uber Technologies, Inc., No. 3:13-cv-03826-EMC (N.D. Cal. March 11, 2015);
Cotter v. Lyft, Inc., No. 3:13-cv-04065-VC (N.D. Cal. March 11, 2015).
26 M. Mudrić
noted companies and their partner drivers must be made based on influence that
one person can exert with regard the means of controlling the ways and methods on
how the other person performs the principal obligation of a certain service. Having
determined that the said companies exert a high level of control (Redfearn 2016)
over their partner drivers, especially highlighting the companies’ right to cancel
the cooperation with partner drivers or disable the partner drivers from accessing the
application,26 the courts assessed that the factual relationship between the companies
and partner drivers adheres to the employer-employee category. Similarly, as in the
previously noted court assessments, the Labor Commissioner in Berwick v. Uber
Technologies27 classified Uber partner drivers as employees, restating the control
principle, and additionally asserting that Uber is involved in absolutely every aspect
of the provision of carriage service.
It should, however, be noted that not all case law follows the same premises,
and that, in some cases, US courts opted to classify Uber drivers as independent
contractors (Means and Seiner 2016).28
3 Legal Relationships
One of the commonly used arguments Uber insisted on, especially prior to the pre-
viously analyzed CJ decision, is Uber’s assertion that the company on its own is not
involved in the actual carriage, but rather serves as a platform where such carriage
is contracted. This alleged hypothesis requires more attention.
3.1 Uber and Clients
To evaluate the role of Uber in the overall business model, several depictions of legal
relationships between the relevant parties to Uber’s business model will be analyzed
in more detail to better understand how Uber usually operates. Figure 1 focuses on
how a relationship is established between Uber and potential clients.
Uber (designated to provide the digital service for an individual country, a group
of countries or a wider region) provides the digital platform/Uber’s application (usu-
ally provided for an individual country, a group of countries or all countries within
a certain region). With application user downloading, installing and registering to
Uber’s application, the application user and Uber realize a contractual relationship,
26 On this point, see also: Mohamed v. Uber Technologies, No. C-14-5200 (N.D. Cal. June 9, 2015).
27 Uber Technologies, Inc., A Delaware Corporation vs. Barbara Berwick, Superior Court of Cal-
ifornia, County of San Francisco, Case Number: CGC-15-546378, Labor Commission Appeal,
001C04954780.
28 See, for example: Darrin E. McGillis, Appellant, vs. Department of Economic Opportunity; and
Rasier LLC, d/b/a UBER, Appellees, Third District Court of Appeal, State of Florida, No. 3D15-
2758 Lower Tribunal No. 0026283468-02.
Uber -
provider
of digital
service
Uber's
application
Application Potentially the same

user Passenger
person
Fig. 1 Legal relationships—Uber and clients
whereby application user becomes a registered user, and Uber becomes a provider
of digital services to the registered user.
Among other data, the application user is required to enter its bank card details
during the registration to Uber’s application, and the payment for carriage service
is done automatically through Uber’s application by charging the bank card upon
the arrival to the destination. Such payment is processed irrespective of whether
the application user and actual passenger utilizing the carriage service are the same
people.
If a passenger is a person different from the application user, the question is
raised on whether there is any actual interrelationship (contractual or non-contractual)
between Uber and such passenger.
3.2 Uber and Uber Drivers
Next in line is the relationship between Uber and Uber drivers. Figure 2 shows the
relationship between Uber and Uber drivers.
The perspective Uber driver downloads the Uber’s application (usually a special-
ized Uber’s application for drivers), installs it on its smart device (mobile phone,
tablet, etc.), and registers on Uber’s application as a driver. This forms two initial
contractual relationships through Uber’s application. First, Uber driver becomes the
application user, type driver. And second, a contractual/labor (more on this particular
differentiation later) relationship is formed between Uber and Uber driver whereby
28 M. Mudrić
Uber - provider
Uber Application Uber Driver
of application
Fig. 2 Legal relationships—Uber and Uber drivers
Uber driver accepts to offer carriage services through Uber’s application, and Uber
accepts to allocate passengers to Uber driver.
3.3 Uber, Applications Users and Uber Drivers
Figure 3 details the interrelationship between Uber, Uber drivers and application
users/passengers.
As stated above, the Uber driver makes its motor vehicle available for provid-
ing a carriage of passengers’ service through Uber’s application, provided by Uber.
Application user (possibly also the passenger) starts the application and orders a
ride (order of carriage). Uber’s applications algorithm determines the best possible
available Uber driver and makes the best suitable connection (matching) between
the application user (possibly also passenger) and Uber driver. Once the connection
has been made, it represents an offer (including the approximate price and route
Fig. 3 Legal
relationships—Uber,
application user, and Uber Uber -
driver
provider of
application
Uber
Application
Application
user / Uber Driver
Passenger
determined by Uber’s application, more on this issue later) that has to be accepted
by the application user (possibly also passenger) through Uber’s application and,
additionally, must not be rejected by Uber driver (more on this issue later). At this
point, the application user and Uber driver enter in a contractual relationship of
carriage of passengers by road. Once the ride is finished, Uber’s application pro-
cesses the payment and issues an e-bill (e-mail receipt), and application user pays
the calculated price automatically through Uber’s application upon the arrival to the
destination.29 Uber’s application then first deducts its share (commission, charge,
fee, approximately 20–25%), and then pays/forwards (more on this issue later) Uber
driver the remaining fee, who is then left to properly resolve all relevant gross-net
aspects (taxation, levies, etc.) and, depending on jurisdiction and taxation laws, issues
a standard bill to the passenger. The last point may constitute a separate problem is
the passenger is not the same person as the application user (more on this issue later).
The above-presented scheme deserves a closer look. Figure 4 follows the basic
stages of Uber’s business model.
In order to access Uber’s business model, with the main goal of ordering a car-
riage service, a potential user must (Stage 1), by means of digital equipment (i.e.,
smartphone, tablet, etc.), download and install Uber’s application, and, register and
6a. Application 7a. Uber Driver's Rejection

User's Cancellation to Provide a Commissioned
of Accepted Offer Carriage Service
7. Uber's Application
1. Application User's 6. Application User's Commission to Uber
Registration Acceptance of Offer Driver to Provide a
Carriage Service
5. Uber's Application 8. Uber Driver's

2. Uber Driver's
Offer of Carriage to Provision of Carriage
Registration
Application User Service
9. Application User's
4. Uber's Algorithm
3. Application User's Payment of Carriage
Best Matching
Order of Carriage Price through Uber's
Calculation
Application
Fig. 4 Uber ride: legal deconstruction
29 Depending on jurisdictions, it is possible to select a split-fare options, whereby several application
users share a same ride and share the payment.

30 M. Mudrić
sign into Uber’s application as application user. During the registration, the appli-
cation user enters its personal data, including the bank card details (depending on
jurisdiction, the payment options may include other services, such as PayPal) to be
used for in-application automatic payments (on destination arrival) of carriage ser-
vices to Uber’s account directly. The application user, by means of registering to
Uber’s application, by default (adhesion contract) accepts Uber’s general terms and
conditions. The application user will only be able to order a carriage service through
Uber’s application when signed into the application.
In order to access Uber’s business model, with the main goal of providing car-
riage services, a potential Uber driver must (Stage 2), by means of digital equip-
ment (i.e., smartphone, tablet, etc.), must download and install Uber’s application,
register on Uber’s application as Uber driver (usually a separate Uber’s applica-
tion for drivers), and sign into Uber’s application. During the registration, Uber
driver is obliged to enter its personal data, including the bank card details to be used
for in-application automatic payments of carriage services from Uber’s account to
Uber driver’s account. Uber driver, by means of registering to Uber’s application,
by default (adhesion contract) accepts Uber’s general terms and conditions. Uber
driver will only be able to offer carriage services through Uber’s application when
signed into the application. It should be noted that Uber dictates the entry criteria
that must be complied with when applying for Uber driver position. This, depending
on jurisdiction, includes a certain type of driver’s license, a certain type of motor
vehicle, certain kinds of procured insurance policies, certain kinds of background
checks’ documentation, and similar. In addition, Uber dictates the rules of conduct
and behavior, appearance and the general state of the motor vehicle (if applicable,
depending on a type of Uber’s service), access to Uber’s application and grounds for
being expelled from Uber’s application, and similar.
When signed into Uber’s application, the application user may request (order) a
carriage service (Stage 3) by providing the pick-up and drop-off points’ specifications
and choosing between the available types of service (depending on whether Uber
offers different types of services in a particular area). Uber’s application will, prima
facie, prior to application user’s choice, offer basic data with regard any potential
ride (approximate price, approximate route, type of motor vehicle utilized, estimated
pick-up time, estimated arrival time, etc.). As the application user browses through
the available options, Uber’s application algorithm calculates all relevant factors con-
cerning that particular request and allocates the best suitable Uber driver to provide
the service currently reviewed by the application user (Stage 4).
Other than the noted elements, the application user cannot opt for or influence
other potential ride-relevant choices, such as the choice of driver, choice of route to
be taken, and similar. More importantly, it needs to be stressed that the application
user’s carriage service request is not directed towards Uber driver, but towards Uber
through Uber’s application. Therefore, the application users, at this stage, are unable
to communicate with Uber drivers directly.
Having allocated the best suitable Uber driver for each particular service currently
reviewed by the application user, Uber’s application responds to the application user’s
request by offering the best suitable match for every particular carriage service option
under review (Stage 5). The application user is free to review all individual offers
arising out of its initial request and select the most suitable one (Stage 6).30 The
application user may decide to forgo all options, thus effectively canceling the initial
request for carriage service (Stage 6a).
In case that the application user has accepted the offer issued by Uber’s application
as a response to application user’s initial request, Uber’s application contacts Uber
driver and commissions a carriage service to be provided to the application user (Stage
7), based on the application user’s acceptance of the offer. Providing that the selected
Uber driver does not reject the commission issued by Uber’s application (Stage 7a),
Uber driver proceeds to the pick-up point. At the same time, the application user
is provided with more information on the selected driver (i.e., name, photo, grades,
etc.), and can track the position of Uber driver on Uber’s application.
Starting with the actual pick-up point, Uber driver continues to fulfill the commis-
sion issued by Uber’s application, and, at the same time, enters into a direct contrac-
tual relationship with the passenger (Stage 8) who may or may not be the application
user who has made the initial order and accepted Uber’s application offer as previ-
ously discussed. Having in mind that all the relevant details of that carriage have been
pre-negotiated (Uber and application users with regard the carriage-related elements
such as type of service, price, pick-up and destinations, payment, etc.; and, Uber and
Uber driver, with regard the carriage-related elements such as type of service offered,
type of motor vehicle utilized, rules of behavior, etc.), the passenger and Uber driver
are in no position to make any individual further contractual specifications. Rather,
they are operating on a contract that was concluded between the application user and
Uber (more on this issue later), and Uber driver and Uber, both under the premises
of Uber’s general terms and conditions. In essence, in terms of the actual carriage
service, it is Uber that handles all relevant aspects of contracting, with Uber drivers
simply performing the actual carriage service. The only option that Uber driver has,
as mentioned above, is to reject a commission that is issued not by application user
(or passenger), but by Uber through Uber’s application. Even the payment of carriage
(Stage 9) is handled directly through Uber’s application between the application user
and Uber.31 It should be noted that Uber drivers have the additional option of choice
when deciding when to sign-into and sign-off from the Uber’s application.
What is left unclear is the nature of the contractual relationship between the
application user and the Uber driver. It remains to be determined whether this is a
full-fledged contractual relationship of carriage of passengers by road, or whether
this is only a partial carriage service where another party, specifically Uber, plays
a certain role (dominant or otherwise). The questions that require attention are
to what extent do the certain activities described above influence different con-
tractual relationships, and whether there is, in fact, a clear legal inter-relationship
between all the involved parties. In addition, the question is raised on whether
the above described legal conundrum constitutes an existing legal framework,
30 Depending on jurisdiction, it is also, in some cases, possible to schedule a ride, with a guaranteed
pick-up option.
31 See Sect. 4.2.3.
32 M. Mudrić
or whether it requires a new sui generis legal categorization. These issues, among
others, are further discussed in later text.32
3.4 Contract or No Contract
3.4.1 Contractual Maze
Whereas the application user negotiates relevant aspects of actual carriage service
with Uber through Uber’s application and can, therefore, to a certain extent, influence
several factors related to the actual carriage service, if the passenger is not the same
person as the application user, its influence over the overall service is non-existent.
In addition, the passenger has no contractual ties with Uber or the application user (at
least none derived from Uber’s business model, even in cases where the application
user has chosen to pay a ride for someone from its contacts’ list who is also an
application user), and his only link with the overall service is the fact that Uber
driver is carrying such passenger from the pick-up to destination location (passenger
as an object of carriage service). However, as stated previously, this carriage service
is already and completely negotiated, and cannot be influenced, not even with regard
the possible in-ride change of destination (as this needs to be done electronically as
well, as the price must be calculated and processed electronically and paid by the
application user).
In a typical traditional taxi service scenario, person A orders a taxi for person B
(either by phone, SMS, on road, etc.), but person B enters into a contractual relation-
ship with a taxi driver, by potentially setting or changing the destination location,
and, more importantly, by paying for the ride. In Uber’s business model this is not
possible, as the contractual relationship is established between the application user
and Uber driver, whereas all relevant contractual elements have been pre-negotiated
by the application user and Uber.
This, in turn, not only renders a passenger potentially absent from any contractual
regimes but possibly places Uber drivers into the same category. As discussed pre-
viously, Uber drivers are, more or less, left only with an option to either reject a ride
(pending possible sanctions by Uber’s algorithm for having received low reviews
from applications users, thus potentially getting expelled from Uber’s platform33 )
or provide the carriage service. To this end, and as discussed in the further text,34
their role resembles more that of an actual carrier, or even more accurately, a simple
employee.
Equally complex questions can be raised with regard to the application user when
not being the same person as a passenger. As stated earlier, the application user enters
32 See Sect. 6.
33 With better option being signed-off from Uber’s application until Uber drivers acquire a certain
level of certainty that the supply-demand nexus works in their favor (profit-wise).
34 See Sect. 6.
into a contractual relationship with the Uber driver (through Uber’s application) and
pays for a ride. However, as in this case, the application user is not a passenger,
what is the nature of the application user’s contractual relationship with the Uber
driver? This no longer represents a standard carrier-passenger contract of carriage,
and, having in mind that the application user, practically, negotiates on behalf of pas-
senger, including the price payment (paid by application user within Uber’s business
model, possibly remunerated later outside of Uber’s business model scope), it would
appear that the application user, in such cases, becomes a variant of transportation
intermediary for the passenger (Allen 2017).
Finally, does a passenger, enjoying a ride negotiated and paid by application user
within Uber’s business model, enter into any sort of contract with any of the relevant
actors? The passenger: is not registered on Uber’s application (or is not using Uber’s
application for that particular ride), was not involved in any carriage negotiation,
does not pay the carriage price, and cannot dictate any carriage-related elements
to Uber driver who fulfills the commission received from Uber’s application. If no
contractual ties can be made and having in mind that the passenger does utilize the
carriage service (that is hailed and paid for by the application user), a further question
is raised on whether it is possible to contemplate non-contractual avenues.
It should, however, be noted that in certain jurisdictions the Uber’ application
does allow the passenger to pay the ride with cash, thus, to a certain extent, creating
a potential contractual tie between a passenger who is not the application user and
Uber driver. Further analysis is, nevertheless, concentrated on the prevailing practice
of exclusively digital payments.
3.4.2 Tort
This, in turn, creates difficult legal questions with regard the potential non-contractual
(tort) relationships (McPeak 2016, 2017; Walpert 2017) that may arise between the
following actors: a. Uber and passenger, who is not an application user; b. Uber driver
and passenger, who is not an application user; c. application user and passenger; and,
d. application user, who is not a passenger, and Uber driver.
On a., the passenger is effectively a part of a carriage service that was arranged
on behalf of Uber and application user. If for whatever reason, the carriage service
results in any kind of injury or damage to the passenger, a question arises on whether
such passenger can claim against Uber. Similarly, on b., a question arises on whether
such passenger can claim against Uber driver. At the same time, on c., a question
is raised on whether such passenger can claim against the application user. Finally,
on d., if a passenger claims against application user, a question arises on whether
application user can (counter-)claim against Uber driver and, on e., against Uber
(Pfeffer-Gillet 2016).
As is discussed in the later text,35 Uber generally tends to avail, through its general
terms and conditions, an extensive system of responsibility and liability exclusion
35 See Sect. 5.
34 M. Mudrić
and evasion, placing all compensation burdens on Uber drivers and application users.
Interestingly, no mention is made of passengers. Irrespective of the noted exclusion
clauses, and as argued in a later text, it would appear that such clauses go against
established contractual and non-contractual (tort) principles on damage compensa-
tion.
Without going to details with regard the (comparative) non-contractual (tort) reg-
ulation, it can be generally argued that a passenger could potentially claim against
Uber in cases of injury or damage, if it can be proven that Uber has caused such
injury or damage due to its omissions or negligent acts (i.e., substandard driver, sub-
standard motor vehicle, etc.). Such a claim would be even easier against Uber drivers
(as persons directly providing the carriage service), especially in jurisdictions where
the law mandates strict liability in cases of traffic and related accidents.
With regard the remaining questions, it would appear that such claims are not
possible, as the application user cannot control the actual performance of carriage
service (controlled by Uber), thus not being susceptible to passenger’s claims, nor,
therefore, able to pursue the relevant counter-claims on its own.
Exceptionally, in cases of delay or late arrival to the destination,36 application
user, being the paying agent, could potentially claim against Uber for monetary
compensation, irrespective of that fact that another person acted as a passenger. A
successful compensation would open-up a possibility of passenger’s claim against
application user (for that or different amount), but on grounds outside of Uber’s
business model.
3.5 Uber Subsidiary Company
Figure 5 examines the interrelationship between the afore introduced actors and the
additional actor, Uber subsidiary (F.).
Fig. 5 Uber subsidiary

company C.
Application
user / D.
Passenger
A. Uber - F. Uber
provider of subsidiary
application / E. Uber
B. Uber Driver
Application
36 For more information on this particular issue, see Sect. 5.3.

Uber subsidiary companies, established by Uber company that serves as a provider

of the digital platform (Uber’s application), are not in charge of providing Uber’s
application. Rather, their primary purpose is to provide an advertisement for Uber’s
services, conduct general public relations activities, and conduct public evaluation
surveys. In addition, Uber subsidiaries often help promote Uber partner driver posi-
tions, assists potential drivers in becoming Uber partner drivers, offer legal, financial
and other (i.e., leasing vehicles assistance) support to Uber drivers, assist and com-
municate with application users (if given such a role) and passengers (if given such a
role), assist Uber in promoting new mechanisms and features of Uber’s application
in a specific market, and, represent Uber (if given such a role) in legal disputes. Sev-
eral of the previously analyzed cases from practice have shown that the claimants
wrongfully addressed their claims against such subsidiary companies, whereas the
courts rightfully warned that the appropriate defendant should be a specific Uber
company that provides a digital service (Uber’s application).
4 Price Determination and Payment
4.1 Traditional Price Determination
In accordance with the traditional price determination model, the carriage service
price is determined based on tariffs and with the use of taximeter. Whereas the
taximeter is an internationally recognized measuring instrument, the tariffs, usually
enacted by local administration units, represent the pricing model with established
and fixed (capped, usually to a minimum or maximum amount) categories of prices.
Irrespective of the (low or high) demand on a current location at a particular time in
Fig. 6, the price will remain the same. Typically, the tariff will allow certain factors
to increase the price (i.e., night ride, special conditions for carriage, etc.), but up to
a maximum price cap.
Situation A: Low Average Demand Situation B: High Average Demand
Fig. 6 Demand average

36 M. Mudrić
Opposite to the above, Uber’s business model will take advantage of the high
average demand scenario and increase the carriage prices (as discussed below).
4.2 Uber’s Model for Price Determination
4.2.1 General Factors for Price Determination
It should be pointed out that Uber’s price determination model represents one of
the key features of Uber’s business model. Unlike the traditional taxi services price
determination model noted above, Uber utilizes its own price determination model
with features that contradict several key aspects of the traditional model. This inde-
pendent price determination mechanism is problematic in those jurisdictions where
the law requires the adherence to the tariff/taximeter model (more on this issue later).
Based on the publicly available materials and information (Uber 2019) Uber’s
price determination model takes into consideration several variables. The basic ele-
ments for price determination, depending on the general location and type of motor
vehicle utilized, are a basic tariff, time and distance. The basic price determination is
then further supplemented by additional categories. First, the basic tariff is multiplied
with the duration of ride and distance, whereas the final price is influenced by the
particularities of location (type and size of city or area, etc.), type of motor vehicles
utilized, type of provided service, booking fee, minimum fare, possible changes to
per-minute and per-distance fare (enhanced base fare), waiting time, location charges,
reservation charges, toll charges, airport fee, cleaning fee, lost item fee, cancelation
fee and similar. Finally, and most importantly, the price heavily relies on the dynamic
charge increase model.
4.2.2 Dynamic Charge Increase
Out of the enumerated factors, the dynamic charge increase (also referred to as the
scaled model of price calculation or scaling price model) deserves further attention
as this factor marks the most important step of the distinction between the traditional
price determination model and Uber’s price determination model.
The dynamic charge increase takes into consideration the (current) state of the
offer of (supply) and demand for carriage services in a specific time and on a specific
location. This is better described with the drawings in Fig. 7, where black dots
represent the available Uber cars in a certain area, and the white dots represent
the passengers currently hailing an Uber car in that same specific area at the same
moment.
In accordance with the traditional price determination model, the status of offer
and demand plays no role in determining the price of the ride, as the tariff models
do not usually include such variables, and the calculation methodology utilized in
taximeters has fixed elements for price calculation. For example, the price of getting
Situation A: Low Demand, Low Offer Situation B: Low Demand, High Offer
Situation C: High Demand, Low Offer Situation D: High Demand, High Offer
Fig. 7 Offer/demand ratio
from a suburban residential area to a business zone during a rush-hour and during any
other time of day will differ only due to the length of ride (due to road congestion).
Another significant difference, as opposed to Uber’s price determination model, is
the fact that the previously noted length factor is also predetermined with the tariff
methodology, thus providing certainty as to the maximum price and the ability to
calculate the maximum price well in advance (even before hailing a ride).
Uber’s price determination model, however, places a significant emphasis on the
offer and demand variables. In principle (absent of any other major factors), low offer
and low demand situation (Situation A) will result in a lower price (mild competition).
In situations with low demand and high offer (Situation B), the price might even go
down further (high competition). Contrary to the latter, in situations with high demand
and high offer (Situation D), the price will be higher (high competition), whereas,
in a situation with high demand and low offer (Situation C), the price will surge to,
possibly, extreme values (mild competition). The basic tariff is multiplied with the
charge increase multiplicator, thus significantly, especially in the Situation C type of
scenario, increasing the basic price of the ride.
As visible from the above, the best profit-margin is achieved in a mild competition
state, thus encouraging Uber drivers to sign into the application and start offering
their service in Situation D and, preferably, Situation C conditions. Situation C is
most favorable for Uber drivers as it enables the highest revenue and will, therefore,
be preferred to other scenarios. Special occasions, such as concerts, festivals, New
38 M. Mudrić
Year Eve, rush-hours, etc. will create the conditions as described under Situation
C, and attract the highest supply offer, even though the actual overall supply offer
remains low as opposed to the high demand at that particular time in that particular
location, thus, irrespective of the high demand, still conserving the mild competition
layer.
Unlike as is the case with the traditional price determination model, the price
of, for example, getting from a suburban residential area to a business zone during
a rush-hour and during any other time of day will vary significantly, depending
on the number of people trying to hail Uber drivers at the same moment, and the
number of Uber drivers available to take such calls. Unlike the traditional price
calculation model, Uber’s price determination model, especially in the Situation C
scenarios, does not allow a pre-calculation of the expected carriage price (just an
approximate figure), and the perspective passenger must first order a car through
Uber’s application to get a preliminary idea of what the final price might be (subject
to changes, depending on the application’s algorithm). It should be noted that Uber’s
general terms and conditions often contain a clause37 whereby Uber is obliged to
enroll a reasonable amount of care in notifying the passenger on charging elements
and price increase. This adds another argument with regard the uncertainty of prices
in Uber’s price determination model, as such price should be known well in advance,
and not depend on what Uber considers to be a reasonable amount of care in providing
such information.
4.2.3 Payment
As was already restated with regard the payment procedure, Uber first collects its fee
from the application user automatically through Uber’s application upon reaching
the destination, and then sends the rest of money to Uber driver.
An important differentiation is, however, to be made between options whereby:
a. Uber is first paid by the application user, deducts its share, and then forwards the
rest of money to Uber driver, who is effectively paid by the application user as well
(through Uber’s application); or, b. Uber is paid by the application user, deducts its
share, and then pays Uber driver, who is, therefore, paid by Uber and not application
user.
Irrespective of the above, it should again be pointed out that the payment pro-
cedure represents another key element of cohesion between digital services and
carriage service. In accordance with Uber’s business model, it would, from one
side, be impossible to render carriage services without the digital platform (as
it is responsible for driver allocation, carriage service request, offer and com-
mission processing, and payment calculation, charging and processing), whereas,
from the other side, absent of carriage services, Uber’s business model would
make no profit. To that end, the above differentiation is of less importance
37 For example, see Sect. 5.

with regard to the classification of Uber’s business model as a whole38 but is relevant
with regard to the labor status of Uber drivers.39
In case C-320/16,40 CJ has expressly stated that Uber first collects the full fee
from the application users, deducts its fare, pays a part of that total fee to the non-
professional driver (UberPOP service), and then prepares the invoices. It should be
noted that in its general terms and conditions,41 Uber often states that it “helps to
ease” the payment process by acting as a limited payment agent for the third party
(Uber driver), by charging, processing and issuing an e-bill (e-mail receipt). In other
cases, Uber will simply state that it is responsible for payment procedure,42 allowing
the use of a limited payment option in certain cases.
4.2.4 Lack of Calibration
It should be noted that, in principle, taximeters are subject to regular technical inspec-
tions and alignments, based on the competent authorities’ requirements over the use
of taximeters, in order to ensure that the measurement and charging instruments are
technically accurate. Such calibration additionally serves to promote accessibility
and availability of carriage services in general, as well as to protect the consumers’
interests.
Opposite to the taximeters, there is, currently, no established and internationally
recognized systems of electronic applications’ calibration. This, in turn, creates a
refutable presumption of fair measurement and charging on the side of the electronic
application provider, with high expectations projected towards a scenario whereby
such provider will ensure fair price charging algorithm that will give the advantage
to price accessibility and availability before profit. However, unlike in the case of
taximeters, there are no means available to control the practice of electronic applica-
tion providers, thus adding an additional layer of uncertainty with regard the carriage
service whose price is calculated through a digital platform’s algorithm. In addition,
as the electronic application is not publicly recognized and approved measurement
system, another refutable presumption exists in terms of accepting the electronic
application as a reliable and accurate measuring instrument. Although based on the
generally accepted GPS system, there is nothing to prevent the provider of an elec-
tronic application to interfere into a standard GPS measurement by adding additional
criteria with regard the choice of route, charging models and similar, thus signifi-
cantly altering the price determination as opposed to the traditional taximeter and
tariff price determination model.
All the above, in turn, create new venues for manipulating the price determination.
As an example, a scenario is placed forward whereby 10 Uber drivers are waiting for
38 As discussed earlier and in Sect. 6.

39 For more on this issue, see Sect. 2.2.3.
40 C-320/16, Uber France SAS, Nabil Bensalem, ECLI:EU:C:2018:221.
41 For example, see Sect. 5.
42 Id.
40 M. Mudrić
clients at an airport. In order to surge the price based on the supply-demand nexus
and keep it constantly well above the average price (high price), only 2 Uber drivers
are signed into the application, whereas the remaining 8 Uber drivers are signed-off.
When the first of the 2 signed-in drivers accept a commission to provide a carriage
service through Uber’s application, the next driver in line (out of the remaining 8 Uber
drivers) signs into Uber’s application, thus constantly keeping the supply low, and,
thus, the price high (mild, or to be more precise, almost no competition conditions).
Such manipulation is not possible in the traditional taxi contexts where the price is
determined through the use of taximeters and tariff models.
5 General Terms and Conditions
When discussing Uber’s general terms and conditions, it is important to stress that
Uber does not provide a universal set of general terms and conditions applicable to its
operations as a whole. Rather, Uber tends to tailor the general terms and conditions
to individual jurisdictions. Thus, the following section reflects upon general findings
with regard certain types of clauses often found in various Uber’s general terms
and conditions (noting that general terms and conditions are additionally mentioned
throughout the current study, where appropriate) and does not attempt to make a full
and comprehensive analysis of all terms and conditions.
5.1 Service Provided
When observing the terms and conditions from the EU law perspective (example
used: Uber’s Terms and Conditions, Croatia 2017), it should be noted that Uber
failed to take into account the previously analyzed CJ’s decision in case C-434/15.
Uber generally states (Sect. 2) that its service consists of a technological platform that
enables the application users to connect and plan carriage options with independent
third-party providers of such service. Uber highlights with capital letters that it does
not offer carriage services and that such services are provided by its subcontractors.
Similar terminology is utilized in the US terms and conditions (Uber’s Terms and
Conditions, US 2017), with a noted exception of utilizing the term “Third Party
Providers” when referring to Uber drivers, and not subcontractors.
Whereas the first claim is wrong and contrary to the established practice by CJ
(European context, and comparative case practices), whereby Uber’s service is clas-
sified within the transportation field, thus pending the null and void classification,
the second claim is contrary to the recent comparative case practice on the status of
Uber drivers classifying them as Uber employees.
5.2 Exclusion of Liability
Through its general terms and conditions (using the same examples as above), Uber
tends to exclude its potential liability with regard the carriage services by stating that
it does not guarantee (no guarantees, warranties or representations): their reliability,
timeliness, quality, suitability and availability; that such services will be uninterrupted
or error-free; or the quality, suitability, safety or ability of third parties (Uber drivers).
Uber specifically states that any risk associated with the use of such services remains
with the application users/passengers, to the extent permitted by law.
Again, having in mind the deliberations of both CJ and various other courts ana-
lyzed in the previous text, such an exclusion cannot withstand the classified position
of Uber within the transportation field, when subjected to the national law provisions
on carrier’s or transport intermediary’s general responsibility and liability.
In addition, despite the fact Uber usually classifies the following provisions under
the “limitation of liability” title, Uber’s general terms and conditions often add an
additional, heavier layer of liability exclusion by stating that Uber is not liable for:
indirect, incidental, special, exemplary, punitive or consequential damage (including
various specifications such as loss of profit, lost data, personal injury, property dam-
age and similar) arising, in any form, from the use of services. This includes cases
when negligence can be established, even if Uber has previously known that there
is a chance that such damage might occur. This section, in accordance with defined
terms in Uber’s general terms and conditions, refers to Uber’s digital services.
Furthermore, Uber’s general terms and conditions additionally tend to exclude
Uber’s liability with regard any damage and loss that arise out of (although not
clearly indicated) carriage services, even if Uber has previously known that there
is a chance that such damage might occur, and even if such services are provided
by non-professional drivers who do not possess the necessary licenses, permits, and
authorizations.
The last two examples of liability exclusions are, again, contrary to the estab-
lished practice. The last noted exclusion with regard the non-professional and non-
authorized drivers goes a step further, clearly confirming the fact that Uber recognizes
the possibility that it might be associated with third parties who break the law while
providing carriage of passengers’ service. Despite that, Uber claims it retains its
exclusion of liability with regard to any negative occurrences that might result when
services are provided by non-authorized drivers. Additionally, Uber introduces the
exclusion of liability despite the potential negligent performance or lack of perfor-
mance, and despite the potential knowledge that damage might result. This sort of
knock-out liability exclusion clause is common in the certain business-to-business
contract43 but is unacceptable in business-consumer contracts.
Furthermore, if Uber is to be reviewed as a transportation intermediary (analyzed
in next section), based on the usual statutory provisions on mandatory insurance for
43 Ie,knock-for-knock exclusion of liability clauses present in maritime law contracts, such as the
off-shore and towage standard contract forms.
42 M. Mudrić
transportation intermediaries,44 Uber should procure adequate insurance coverage

to compensate potential damage to, among other persons, carriage users and third
parties. This, in turn, establishes a statutory liability of transportation intermediaries
towards, among other persons, carriage users and third parties, thus signifying another
point where Uber’s general terms and conditions go against the established ius cogens
norms, rendering such clauses null and void.
Finally, and similarly to the previous point, if Uber is to be reviewed as a (con-
tractual) carrier (analyzed in next section), based on the usual statutory provisions on
mandatory insurance with regard the carriage of passengers,45 Uber should procure
adequate insurance coverage to compensate potential damage to passengers. This,
in turn, establishes a statutory liability of carriers towards passengers, thus signi-
fying yet another point where Uber’s general terms and conditions go against the
established ius cogens norms, rendering such clauses null and void.
It is of interest to note that Uber additionally tends to reject its responsibility and
liability with regard to any transactions between application users/passengers and
Uber drivers. This clause is quite surprising given the fact that Uber confirms its role
as either the limited payment agent (charging and processing the payment and issuing
an e-bill) or a person responsible for payments.46 It would appear that Uber openly
states to be performing a certain service, at the same time refusing to be responsible
for the performance of the same service. Such a clause in itself attracts the null and
void classification.
Even if Uber is to be classified as a sui generis entity within the transportation
field, the above stated clauses completely negate the possibility of pursuing the non-
contractual (tort) claims, both concerning the relationship between Uber and Uber
drivers, and, Uber and application users/passengers (McPeak 2016; Pfeffer-Gillet
2016). This is especially troubling with regard to the latter option, having in mind
that this is a business-consumer contract, as discussed previously. Additionally, if the
passenger is not a same person as the application user, the issue is further complicated
as it becomes less clear on whether the general terms and conditions apply directly
or indirectly, or at all, on such passenger.
Although Uber generally tends to accept the fact that the previously noted exclu-
sions might be in collision with the applicable national law, Uber tends to reserve the
right of choice over the applicable law. To what extent the choice of applicable law
collides with national law ius cogens provision on consumer protection is separately
analyzed in Chapter ‘Passengers’ Rights and Consumer Protection’ of this study. To
conclude this section, it would appear that the noted exclusion of liability clauses
tend to go against the established national law principles and norms, especially hav-
ing in mind the relationship between Uber and application user which is based on
an adhesion type of contract (application user can only accept or reject the contract
and the associated general terms and conditions), and the possible collision with the
44 See in this volume Mudrić, Public Interest and Regulatory Approach, Sect. 4.
45 Id.
46 See Sect. 3.3.
principle of fairness, leading to potential imbalance between contractual parties and

jeopardizing the main purpose of contract as a whole.
5.3 Reasonable Control
Finally, Uber often relieves its responsibility and liability with regard to the delay or
non-performance for causes beyond Uber’s reasonable control. Although the usual
wording does not specify towards what exactly is such exclusion or limitation aimed,
this clause is usually found within clauses dealing with Uber’s exclusion of liability
with regard the carriage service and carriage service providers. In this example, Uber
takes upon a softer approach, allowing for potential exposure of liability if such delay
or non-performance could have been avoided with more agility on Uber’s side.
Interestingly enough, such wording collides with the findings of CJ (and Advocate
General) and previously analyzed Rome court and UK court cases (and other analyzed
relevant cases) with regard the level of Uber’s control over the actual performance
of carriage service, and provides for, perhaps, a singular spot within Uber’s general
terms and conditions where the company does assert its role in the actual rendering
of carriage services.47
6 Existing Legal Configurations
When contemplating the appropriate classification of a particular service, especially

in cases where such service does not easily fit into the standard services, it is nec-
essary to evaluate key elements of such services and compare them to the already
existing ones. The following section examines the possibility of classifying Uber’s
business model within the existing transportation forms and enterprises. The section
will specifically examine the transportation intermediaries, contractual and actual
carriers, ride-sharing concept and carriage service that can be identified as a tradi-
tional taxi service.
6.1 Transportation Intermediaries
6.1.1 Comparison
Having in mind the fact that Uber highlights its role of an intermediary in connecting
Uber drivers with application users/passengers, it is necessary to examine Uber’s
possible role of a transportation intermediary (broker) (Domurath 2018).
47 On possible ramification with regard non-contractual (tort) claims, see Sect. 3.4.2.
44 M. Mudrić
The traditional concept of transportation intermediary contemplates the relation-

ship between a carrier (i.e., Uber driver) and an intermediary (i.e., Uber), whereby
the carrier commissions the transportation intermediary to broker carriage contracts,
and, additionally, where the carrier pays the broker a commission for successful bro-
kering. It should also be noted that the traditional transportation brokerage implies
placing the client and prospective users into contact with a certain degree of certainty
that they will sign into a carriage contract, whereas the final decision on whether the
contract will be signed or not is left for the carrier and client to decide upon.
Obviously, this traditional definition is not aligned with Uber’s business model,
where, as examined earlier, Uber collects the fee directly from the application user
through the in-application payment system. In addition, it is Uber that negotiates and
sets all relevant aspects with regard the provision of carriage service (in communicat-
ing with the application user), whereas Uber driver is only left with an option to accept
or reject Uber’s (and not application user’s) commission. Finally, in the traditional
sense, the carrier is not necessarily strictly associated with one intermediary and can
employ the services of more intermediaries. In the case of Uber drivers, they provide
the carriage services exclusively through Uber’s digital platform. Therefore, Uber’s
business model does not fit the traditional concept of transportation intermediaries.
The latter marks another important differentiation between Uber’s business model
and the traditional taxi industry. Unlike Uber drivers who are exclusively available
through Uber’s application, the traditional taxi service providers offer different pos-
sibilities of hailing a ride (i.e., a phone order, application order, e-mail order, SMS
order, hailing on the road, taxi stop, etc.). Therefore, unlike as is the case with Uber’s
drivers who are exclusively linked to Uber’s application, the traditional taxi service
providers can avail the services of various intermediaries, and, at the same time, are
able to independently acquire customers and offer carriage services.
Moreover, extending the previously examined postulate with regard Uber’s dom-
inant role, it can be argued that the possible contractual relationship between Uber
driver and passenger is further devitalized by the fact that Uber drivers follow the
instructions (referral to a specific ride to be undertaken, absent from any choice to be
made by Uber driver) determined by Uber’s application. Thus, Uber does not simply
allocate Uber drivers’ available carriage capacity (subject to carrier’s contracting of
the carriage, as would be the case in a traditional transportation intermediary’s role),
but instead entirely and independently directs its usage. To that end, Uber driver’s
commission given to Uber to connect that Uber driver with potential passengers
becomes a frivolous legal expression, as in reality Uber driver transfers not just its
capacity but also the right to manage its capacity completely to Uber. Therefore, the
initial Uber driver’s commission to Uber becomes a contrariwise Uber’s dictate over
Uber driver’s commercial activity, and, as such, Uber driver’s obligation towards
Uber.
Furthermore, it should be noted that various jurisdictions have a different under-
standing of what is meant by transportation intermediaries and may have different
rules with regard agents as opposed to brokers. For example, whereas a broker is
simply establishing the initial contact between the client (carrier) and prospective
client’s client (passenger), an agent may be in charge of concluding such contract in
the name of the client, including the managing of payment. The latter option comes
closer to Uber’s business model, and, contrary to previous remarks, does allow for a
separate legal existence of Uber and Uber drivers (through the contract of agency).
However, agency often includes an obligation on the side of the agent to negoti-
ate with its clients prior to contract conclusion, what is definitely not the case with
Uber’s business model, even taking into consideration Uber driver’s right to reject
the commission to provide a specific carriage service.
6.1.2 Practice—Not a Mere Intermediary
Thus, it is difficult to align Uber’s business model to a standard transportation inter-

mediary due to many factors, especially the relatively weak position of Uber drivers
as opposed to Uber’s dominant role in setting the carriage conditions. Such finding
was confirmed by the Italian court in Milan,48 where the Court emphasized Uber’s
key role in enabling Uber service as a whole, stating that Uber is not acting as a mere
intermediary. Going a step further, the Dutch Appeal Commercial Court49 reasoned,
after having determined that Uber drivers provide a taxi service without a license,
that Uber should be considered not as a mere intermediary, but as a jointly liable
person for such illegal activity due to the fact that there lies a conscious and close
tie between Uber and Uber drivers (more on this particular case below). The Italian
court in Rome50 restated the rejection of Uber’s status of an intermediary, further
deepening Uber’s general role as the main organizer and/or direct provider of all
business activities.
6.2 Contractual and Actual Carrier
6.2.1 Comparison
An existing category of transportation that may possibly fit Uber’s business model
is the role of contractual and actual carriers. In the traditional sense, the contractual
carrier enters into a carriage contract with the passenger and takes on the obligation
to carry the passenger in accordance with the agreed terms. The passenger is under
an obligation to pay the ride fee to the contractual carrier after the carriage has been
carried out. The contractual carrier then arranges for the carriage to be carried out
by a different person, the actual carrier (the contractual carrier, for example, may not
necessarily have the transportation means available at a particular time, or finds it
economically viable to use services of a third party instead of its own fleet). After the
carriage has been completed, the contractual carrier directly pays the actual carrier
48 See Tribunale di Milano, op.cit., further analyzed in Sect. 3.3.3.

49 ECLI:NL:CBB:2014:450, op.cit.
50 Il Tribunale Civile di Roma, op.cit.
46 M. Mudrić
•Registration •Commission
•Order notification
on Uber's Uber's
Application processing •Possible
application Application Uber Driver
User •Best match rejection
•Order / Uber
option •Performance
placed of carriage
•Possible •Payment
processing •Invoice on
cancelation
Uber's (invoice) and the reduced
Application •Payment Application Uber's fee Uber Driver sum
User upon collection
/ Uber •Taxation
carriage •Payment to and similar
completion Uber driver
Fig. 8 Roles and procedures
for the service rendered. In addition, the contractual carrier remains responsible to
the passenger for all acts or omissions on the side of the actual carrier.
The nature of the previously examined carriage service sub-commissioning
requires further attention, as detailed in Fig. 8.
Uber drivers cannot individually accept hailing orders. Instead, the initial request
for a carriage service is initiated by the application user (who have previously regis-
tered on Uber’s application) not towards Uber driver, but through Uber’s application
towards Uber. The noted request is to be understood as passenger’s call to conclude
a carriage contract made through the virtual environment operated by Uber. The
request is, therefore, not issued directly towards the provider of carriage service but
the provider of the digital platform (in strictu sensu, purposely viewed as different
service, irrespective of CJ’s deliberation). Upon receiving the request, Uber’s appli-
cation automatically processes the request through its algorithm that calculates all
the necessary elements (as described earlier) and provides the best possible option for
matching the potential passenger with the potential Uber driver. Once the potential
match has been determined and the best suitable driver allocated and accepted by
application user, Uber’s application forwards the accepted offer to Uber driver who
is notified that he is the to carry out a carriage service (carriage commission), and
who can reject the commission. If the commission has not been rejected, Uber driver
is to provide the carriage service. Additionally, it should once again be stressed
that the application user/passenger cannot choose an individual driver but is only
left with an option to reject Uber’s application matching offer after the match has
already been established. In the latter case, the application user/passenger can only
reinitiate the request and await the next match. As noted earlier, Uber’s application
then processes the payment (automatically upon arrival to the set destination; invoice
issued), keeps a portion of collected fee on Uber’s account, and directs the rest to
Uber driver (payment/forwarding differentiation, as discussed above). Finally, Uber
driver receives a certain (reduced) amount, issues a paper invoice (depending on
jurisdiction, for taxation and other purposes) on the amount so received (not from
application user/passenger, but Uber’s application), and deals with all other taxation
and similar obligations.
Uber driver and application user are not able to directly negotiate the carriage
contract as all relevant aspects of contract negotiation are rendered through the digital
platform (Uber’s application). Therefore, the notion that Uber follows the potential
application user’s/passenger’s request to connect the Uber driver and application user
so that they can individually enter in the contract of carriage stands incorrect. Since
Uber determines all relevant aspects of that contract of carriage (choice of driver,
route, price, etc.), it would appear that it is Uber who actually embodies a contracting
party on the side of carriage of passengers by the road service provider, whereas Uber
driver simply performs the noted service. Such interpretation does, indeed, allow for
the comparison and possible identification with the contractual/actual carrier nexus,
where the contractual carrier and passenger are the ones who conclude a contract of
carriage.
With regard the previously examined remarks over the subordinated position of
Uber drivers (Uber’s dictate over Uber drivers, and Uber drivers’ obligation towards
Uber) and in the context of contractual/actual carrier, it is noteworthy to accentu-
ate several important factors. Irrespective of whether Uber is potentially understood
as a transport intermediary or a contractual carrier, upon receiving a request from
application users, Uber sends out a separate commission (order, call) through Uber’s
application to the best suitable driver. However, this separate commission is not
directed towards a specific Uber driver prima facie. Rather, the application user’s
request is evaluated through Uber’s application algorithm, taking into consideration
various relevant factors for that particular ride (i.e., the level of supply and demand
on the passenger’s location, the distance between individual Uber drivers and the pas-
senger, the general level of free carriage capacity and individual passengers’ orders
in the larger area of passenger’s location, etc.). Therefore, Uber’s separate commis-
sion inquiry (matching procedure) does not initially encompass all registered Uber
drivers through its network (digital platform) but is determined by Uber’s application
algorithm that independently makes the choice of the most suitable Uber driver, and
directs the order to that Uber driver. Thus, and adding up to the previous analysis,
Uber driver has almost no influence whatsoever over negotiating the actual carriage.
Its options are simply limited to either rejecting the carriage commission received
through Uber’s application or performing the commissioned carriage. Taking into
consideration so perceived Uber driver’s carriage capacity, and having in mind the
previously enumerated restrictions, it is highly questionable to what extent does Uber
driver enjoy the independent business activity at all. This is of particular importance
if Uber drivers are to be classified as sub-contractors (as examined in the previous
text), as this casts doubt on the validity of the actual status of a sub-contractor (given
its apparent lack of independence). On the other hand, should Uber driver be consid-
ered as an employee, the afore-described relationship perfectly fits the employment
model.
Nevertheless, Uber’s business model has more similarities with the traditional
role of contractual and actual carriers (Uber as a contractual carrier), than as is the
48 M. Mudrić
case with the transportation intermediary model. The obvious similarity lies in the
fact that, in most cases, Uber does not operate its own fleet of cars, but rather relies
on the partner drivers to carry out the actual carriage. The relatively weak position
of Uber drivers as opposed to Uber’s dominant role in setting the carriage conditions
raise questions as to the sustainability of Uber drivers as independent entities (i.e.,
sub-contractors), and, rather, incline towards the employer-employee relationship.
6.2.2 Practice—De Facto Carrier
Several previously examined cases do imply a correlation between Uber and the posi-
tion of a contractual carrier, as is the case with the previously examined Rome court
and English court deliberations.51 It is, furthermore, of interest to point to conclu-
sions of several German courts with regard to the role that Uber plays. In accordance
with both the High Administrative Court in Hamburg52 and the High Administrative
Court in Berlin-Brandenburg,53 Uber is not a mere intermediary, but, in line with the
consumer protection regulation, it establishes a direct relationship with a consumer
(professional-consumer relationship) through contract with the consumer, setting the
price of carriage, processing the payment, and directing Uber driver to provide the
actual carriage. Irrespective of the fact that Uber’s general terms and conditions (ver-
sion valid in Germany at the time of proceedings) classify Uber as an intermediary
service provider, both German courts invalidated such a provision, stating that Uber’s
service is predominantly associated with the transportation service, thus assorting
Uber’s role to that of a de facto carrier. Such deliberations have resulted in both the
interim distraint measure with regard to the provision of Uber service, as well as the
interim distraint measures with regard to the use of Uber’s application.
Another case of interest is the deliberation of Public Utility Commission in Penn-
sylvania,54 where the Commission analyzed the nature of Uber service. Having
accepted the level of control55 as the main criteria for evaluating the relationship
between Uber and its partner drivers, the Commission acknowledged Uber’s princi-
pal role as a de facto transport service provider, irrespective of whether Uber provides
carriage service with its own fleet or not. This, in turn, accurately reflects the differ-
entiation between a contractual and actual carrier.
It should, however, be noted that in this case, as well as a number of other cases
(Elliott 2016), the Commission penalized Uber for not having acquired the trans-
portation intermediary license. This, in turn, enables fusion of intermediary and
51 IlTribunale Civile di Roma, op.cit., Aslam and Farrar v Uber, op.cit.

52 Hamburgisches Oberverwaltungsgericht (OVG Hamburg) 3. Senat, Beschluss vom 24.09.2014,
3 Bs 175/14.
53 Oberverwaltungsgericht Berlin-Brandenburg (OVG Berlin-Brandenburg) 1. Senat, Beschluss
vom 10.04.2015, 1 S 96.14.

54 Pennsylvania Public Utility Commission, Harrisburg, PA 17105-3265, C-2014-2422723, Septem-
ber 1, 2016.
55 For more analysis on the issue of level of control, see Sect. 2.2.3.
contractual/actual carriers models whereby the legal basis for being able to partic-
ipate in the taxi market is based on the transportation intermediary status, whereas
the relationship with clients is based on the contractual carrier role.
6.3 Ride-Sharing
Another, relatively new mode of transportation deserves moderate attention. The

concept of ride-sharing signifies an alternative mode of transportation outside of the
sphere of public transportation services, whereby, in theory: a. the driver who travels
from point A to point B offers to take in companion-traveler(s) without charging a
carriage fee; and, b. driver and companion-traveler(s) share the basic transportation
costs (i.e., gas costs, tolls, etc.).
The difference between a ride-sharing model and carriage of passengers by road
service is obvious, as shown in Fig. 9.
Unlike the taxi service which falls under a general category of public transporta-
tion services, the ride-sharing is a private initiative outside of the scope of public
transportation options. Whereas the general idea behind fee collection model in ride-
sharing is to enable the driver/owner of the vehicle to cut its costs by sharing the
transportation costs with companion-travelers, the taxi drivers charge fees to com-
pensate the said costs and earn an extra profit. Finally, whereas with the ride-sharing
system the companion-travelers depend on the pick-up locations and destinations
set by drivers, in the taxi service it is the passengers who choose the pick-up and
destination locations.
During a certain period of its operation, Uber was alleging that its service repre-
sents a classic ride-sharing concept, embodied in the “sharing economy” philosophy.
This claim was, among other places, tested before Belgian courts in case Uber BV v.
Ride-Sharing Taxi Service
Not Fee equals Destination Public Fee equals Destination

considered a costs’ set by transportation costs’ set by the
public compensation driver/owner service compensation passenger
transportation of the + profit
service vehicle
Fig. 9 Ride-sharing versus taxi service

50 M. Mudrić
Taxi Radio Bruxellois Nv.56 In summary, the first instance Commercial Court deter-
mined that Uber57 conducts unfair commercial (market) practice by sending out
orders to Uber partner drivers who carry out carriage of passengers by road service
without licenses.58 In the appeal proceedings, Uber claimed that, unlike the general
statutory requirements for the provision of taxi services (carriage of passengers by
road with appropriate motor vehicles for a fee, public availability of such service, a
destination set by the passenger), its service constitutes a ride-sharing model. Uber
argued that the service in question is offered by non-professional drivers, that such
service is not a public service, and that Uber drivers select the destination. The Appeal
Court reasoned that Uber drivers offer services for a certain fee, stating as a fact that
a fee, in general, may be equal to the transportation cost,59 or go beyond the mere
compensation of such cost. Should it be determined that Uber drivers’ collected fee
exceed the transportation costs, such service fulfills all relevant elements of a taxi
service in accordance with Belgian law. Having recognized the latter as a fact, the
Appeal Court affirmed the first instance Court’s judgment and re-stated that Uber
acts contrary to the rules governing the unfair market practices (non-professional
drivers without licenses offering taxi services).
Similar considerations were also adopted by the Italian court in Milan.60 The court
specifically stated that Uber’s service cannot be classified as ride-sharing service
(compensation of transport costs to the destination set by motor vehicle owner), but,
rather, Uber’s service, taking into consideration that the nature of that service is
characterized with all key elements of a taxi service (carriage contract, choice of
destination set by passenger, fee), constitutes a direct competition to the traditional
taxi service providers.
As a result, both Courts issued interim distraint measures with regard to UberPOP
service. It should be noted that the Advocate General Szpunar, in the previously
analyzed CJ case, simply stated that Uber’s business model cannot be considered as
a ride-sharing platform as its revenue options far exceed simple reimbursement of
transport costs, thus also confirming the basic postulates established by the previously
noted Courts.
56 Uber BV v. Taxi Radio Bruxellois Nv., op.cit.

57 It should be noted that the first instance court analyzed the conduct of Uber Belgium, a subsidiary
of Uber Netherlands BV. Contrary to the first instance court, the second instance court (correctly)
directed the analysis toward Uber Netherlands BV as the provider of Uber digital platform.
58 As required by Belgian law: Ordonnantie van het Brussels Hoofdstedelijk Gewest van 27 April
1995 betreffende de taxidiensten en de diensten voor het verhuren van voertuigen met chauf-
feur/Ordonnance de la Région de Bruxelles-Capitale du 27 avril 1995 relative aux services de
taxi et aux services de location de voiture avec chauffeur.
59 The appeal court referred to CJ for a preliminary ruling over the issue of ride-sharing, but as
stated earlier (previously mentioned C-526/15 case), the case was dismissed.
60 Tribunale di Milano, op.cit.
6.4 Identification with Taxi Service
It is quite common to find case practice where different courts, after having examined
Uber’s business model, came to a conclusion that the service provided by Uber is,
in its nature, identical to a regular taxi service or rent-a-car with driver service (i.e.,
provision of carriage of passengers by road service, use of personal motor vehicle,
carriage is being ordered, carriage is being paid), albeit the major differences such as
method of hailing, price determination and payment, and other. The basic premise of
such reasoning is based on a typical courts’ conclusion that Uber’s business model, as
such, is not precisely regulated by the existing regulation. Nevertheless, as the service
provided does fall into the transport field, it was deemed necessary to examine its
legality in line with the existing transportation models, applying such regulated model
that, by its nature, best encompasses Uber’s business model. In practice, the courts
usually referred to taxi and rent-a-car with driver services, applying legal sanctions
typically utilized when violations of law are determined with regard the provision
of such services (various financial sanctions for misdemeanor or criminal breaches,
interim distraint orders (temporal ban of providing the service, requisition of motor
vehicles, etc.) and other).
One such example is the decision of the Croatian Administrative Court,61 where
a person was providing a combination of taxi service and transport for personal use.
After having determined that such specific type of service was not regulated per se
in the existing Croatian regulation, the Court concluded that the carriage in question,
by its nature, is to be classified as a public transportation service. The Court further
reasoned that it is necessary to adjudicate the case in line with the normative model
that best fits an existing regulated model of public transportation based on the context
of service provided. Finally, the Court concluded that the best fitting regulated model
of transportation is a taxi service, deciding that the person in question had no proper
licenses and permits to provide such a service. A similar classification is visible in
the aforementioned Dutch case,62 where the Court stated that Uber, having in mind
that it provides the digital platform, determines the price and collects a share of that
charge as a fee, and, therefore, acts as a de facto taxi service provider.
Finally, unlike the previously examined comparative practice where the courts
classified Uber’s services as an illegal taxi service (or illegal rent-a-car with driver
service), several courts’ considerations allowed for a possibility to classify Uber’s
business model as a carriage of passengers by road service that does not necessarily
fit into the regulated forms of carriage, thus prompting for legislative actions to be
undertaken in order to amend the current regulation. One such case is the decision
of Italian Supreme Administrative Court63 where, after having compared Uber’s
service with the established modes of carriage under Italian law,64 the Court found
61 Administrative Court of the Republic of Croatia, UpSRH Us 8272/2003-4.

62 ECLI:NL:CBB:2014:450, op.cit.
63 Consiglio di Stato, n. 3586, del 23/12/2015.
64 Legge quadro per il trasporto di persone mediante autoservizi pubblici non di linea, L 15/01/1992
n. 21.
52 M. Mudrić
that Uber’s service constitutes a separate mode of carriage not currently regulated
by law. Such occurrences are, however, rare, and usually, contradict other courts’
decisions within the same jurisdiction. Thus, with regard to the Italian example, it
should be noted that the subsequent Italian cases, some of which are analyzed in this
study, differ significantly from the noted determination.
7 General Conclusions
The analyzed case law as well as the legal issues concerning Uber’s business model
point to several conclusions with regard to its legal nature and scope. The below
available summary reflects the initial questions raised in the introduction of the
present chapter.
7.1 Legal Basis
First and foremost, it would appear that it is not possible to legally separate the digital
service from the transportation service, both having been incorporated into Uber’s
business model. Rather, it would seem that the two are inextricably associated, with
the transportation service being a dominant element when determining the overall
purpose of Uber’s service.
In essence, and with the exception of cases where certain jurisdictions have
enacted separate (new) legal models (to be analyzed in the next chapter), the national
courts (as well as CJ) tend to classify Uber’s services in accordance with the already
established and regulated modes of public transportation, namely, taxi services and
rent-a-car with driver services (and not transportation intermediaries). This, in turn,
very often bring upon different kinds of legal sanctions as previously mentioned.
7.2 Main Purpose
Based on the examined case practice and carried-out legal analysis of Uber’s busi-
ness model, it can be argued that the main purpose of Uber’s business model is to
provide the carriage of passengers by road service with an aid of digital platform
(Uber’s application) that enables the establishment of contractual relations between
the involved parties (integrated service with the transportation service as a dominant
aspect of the overall service). Irrespective of the digital aspect present in Uber’s
business model, it would appear that the role of that individually definable digital
(information society) service cannot exists separately from the transportation service,
and that it, in its core, serves as an auxiliary service to the transportation service.
Absent of transportation service, the digital service would serve no actual purpose,
especially having in mind that Uber’s business model, as established by case practice,
is not a ride-sharing model, but, rather, a profit-motivated enterprise.
7.3 Uber’s Role
Although Uber does not usually carry out the carriage services with its own motor
vehicles but tends to utilize the services of Uber partner drivers (or partner com-
panies) who perform such service with their own motor vehicles (owned or under
lease), in accordance with the afore analysis, it can be argued that Uber retains a
dominant role and control over the provision of such services. Observed from the
public policy aspect (examined in more detail in the next chapter), Uber additional
bears responsibility for wider issues such as the safety and security of transport,
availability, and accessibility of transport, as well as other relevant issues.
Therefore, it can be argued that Uber remains responsible and liable irrespective of
who actually renders the carriage service. Although it is possible to construe different
legal modules for Uber’s role, the established case practice clearly places Uber in
the dominant position with regard to the actual provision of carriage service. This, in
turn, renders Uber the de facto provider of transportation services, or, the manager of
integrated service where the transportation service is a dominant aspect of the overall
service, and where Uber directly provides the transportation service (by dictating and
supervising all aspects of carriage services, with Uber drivers acting as mere actual
carriers with almost no influence over the provision of carriage services).
7.4 Uber and Clients
Based on the classification of Uber as a de facto provider of transportation service,

it would appear that the link between Uber and application users is not merely
reserved to Uber’s application registration and carriage request forwarding. Uber,
in essence, appears to be genuinely responsible for a plethora of tasks prior, during
and after the actual provision of carriage services. This highlights Uber’s exposure
to potential responsibility and liability towards end-users (applications users and
passengers alike) that can be compared to the general level of responsibility and
liability of traditional taxi service providers, irrespective of various Uber’s general
terms and conditions clauses excluding and exonerating Uber from potential liability
towards passengers. In addition, this reflects Uber’s general obligation to procure all
relevant insurance policies (as discussed in the next chapter).
54 M. Mudrić
7.5 Uber and Uber Drivers
The case practice over Uber drivers’ labor status varies, with different courts taking
opposing stances over the issue. Based on the overall analysis in the present chapter, it
would appear that Uber exerts an overwhelming influence over Uber drivers, limiting
their capacity to separately and independently control and render carriage services.
Thus, it seems inappropriate to label Uber drivers as independent sub-contractors,
as their conduct and options are construed in a similar fashion when compared to a
typical employee’s (taxi drivers) position towards an employer (taxi company holding
the necessary licenses and permits to provide taxi services). At the same time, the
lack of basic employee rights (such as a right to strike, vacation, sick-leaves, etc.,
enjoyed by traditional taxi service providers) widens the gap between Uber drivers
and traditional taxi service providers, especially having in mind the fact that many
Uber drivers spend as much time driving for Uber as a typical taxi driver works on
a daily basis.
It should additionally be noted that the sub-contractor classification purposely
(endeavors to) transfer(s) responsibility and liability exposure from Uber to Uber
drivers, what is particularly significant when considering issues such as consumer
protection and market competition. Such exertion is particularly troublesome hav-
ing in mind the noted Uber’s overwhelming influence over the service as a whole,
whereby Uber drivers, as sub-contractors, are left to bear responsibility and resolve
matters over which they had little or no influence whatsoever.
7.6 Price Determination and Payments
Based on the conducted analysis, it would appear that Uber’s dynamic charge increase
(scaling) model for determining the price of individual rides significantly differs
from the established price mechanism routed in traditional taxi services (use of
tariff models and taximeters). Unlike the traditional taxi service model for price
determination (with maximum price caps and various price increase conditions set
by the tariff models), Uber’s model allows for drastic changes in prices for the same
routes, depending on a number of different factors (supply-demand nexus, traffic
congestion, and other, calculated by Uber’s algorithm for each individual ride). In
addition, it would additionally appear that Uber gets paid directly by the application
users (issuance of e-mail invoice (e-bill) to the application user), collects its fee
from the accepted gross amount, and then pays the remaining amount to Uber driver
who is left to handle all relevant aspects of financial transaction (taxation and other
charges, invoices to passengers, etc., what, in turn, creates certain taxation issues, as
examined in Chapter ‘Taxing Uber’).
References
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terms/us/. Accessed on 4 Mar 2019
Public Interest and Regulatory Approach
Mišo Mudrić
Abstract The following Chapter examines different regulatory approach models

applicable when tackling the issue of Uber’s business model’s appearance in the
market. In addition, the Chapter focuses on several relevant public policies promot-
ing certain values in common interest that need to be fulfilled when contemplating
possible regulation of, among other commercial activities, Uber’s business model.
Section 2 examines the benefits and detriments of transportation sector regulation,
particularly with regard to Uber’s business model. Section 3 analyzes the noted public
policies in more detail, focusing on issues such as public safety and functional public
transportation services. Section 4 examines the relevant insurance mechanisms in the
transport field, particularly with regard to the relevant passengers’ insurance, motor
vehicles liability insurance, and transportation intermediaries’ insurance. Section 5
reviews the relevant factors concerning the quality of service, with several points of
interest such as quality standards and drivers’ grading systems. Section 6 examines
the Laissez-faire Model in more detail, with a particular focus on several issues,
such as potential discrimination barriers connected to Uber’s business model and
worst-case scenario analysis. Finally, Sect. 7 analyzes the Legal Adjustment Model,
whereas Sect. 8 examines the New Legislative Paradigm Model, detailing differ-
ent venues of adjusting the regulation or placing forward new regulated modes of
public(-private) transportation.
1 Introduction
The following Chapter examines different public policy and regulatory approach
models (Transportation Research Board 2016) that can be applied in circumstances
when Uber (and similar companies) appear on the market. In summary overview, the
chapter will analyze four perspective models: Laissez-faire Model for Uber’s Services
Regulation, Status Quo Model for Uber’s Services Regulation, Legal Adjustment
M. Mudrić (B)

https://doi.org/10.1007/978-3-030-31535-1_3
58 M. Mudrić
Model for Uber’s Services Regulation, and, New Legislative Paradigm Model for
Uber’s Services Regulation.
The Laissez-faire Model for Uber’s Services Regulation emphasizes the market
mechanisms, whereby the judicial, legislative and executive powers concede to the
market the competence to spawn and determine dominant business models. The
market independently sets the paste of changes in how market players act and behave,
whereas the only corrective is the consumers (their needs, habits, and interests). Such
a model clearly lacks appropriate mechanisms for protecting certain public interests
and public policy goals, as well as necessary mechanisms for consumer protection
and market competition protection. Within such a model, there is, in fact, no proper
regulation in place, or the regulation is purposely deregulated and liberalized to
the highest level. Prior to analyzing the effects of Laissez-faire Model, the current
Chapter will examine a number of factors (benefits and determinants of regulation,
relevant public policies, insurance, and, quality of service) necessary to understand
the plethora of potential negative consequence that might arise in scenarios when the
market is left to “self-regulate” the provision of transportation options.
The Status Quo Model for Uber’s Services Regulation aspires to a proper and
stringent application of the current legal framework and rules, applying hard sanc-
tions on all manifestations in the market that behave contrary to the regulated busi-
ness behavior. In its core, such a model requires a timely and effective judicial and
supervisory bodies’ reaction, where these bodies act immediately and disable such
business actors that violate the law. Such a restrictive model, however, aggravates
development and application of new technologies and hinders the development of
new business practices. The core analysis of Status Quo Model was already con-
ducted in Chap. 2, where a number of relevant cases have been examined. Where
appropriate, the benefits of a partial application of the Status Quo Model postulates
will be highlighted when reviewing the Legal Adjustment Model.
The Legal Adjustment Model for Uber’s Services Regulation takes into consid-
eration the basic postulates of Status Quo Model and does anticipate an active role
of judicial and supervisory bodies. The main role of said bodies is, however, not
necessarily (just) focused on pure sanctioning, but rather, on spotting and analyzing
to what extent the new business models fall outside of the current regulatory scope
of approved practices. Such work is to be complemented with actions undertaken by
legislative and executive powers whose role is to consider appropriate and necessary
amendments to the current regulatory framework, if viable and desirable, to allow
new business models to adapt to and comply with the amended regulatory frame-
work. Such model requires a certain degree of normative action aimed at, what is
often the case, (gradual) liberalization of the market with an aim of encouraging new
business models as well as incentivizing the traditional business models to adapt to
new circumstances and adopt key principles and methods present in new business
models. The gradual deregulation and liberalization of the market often lead to a
prevalence whereby the traditional and new business models, after a while, level the
score in terms of core business activities.
Finally, the New Legislative Paradigm Model for Uber’s Services Regulation
presupposes the active role of legislative and executive powers whose actions are
Public Interest and Regulatory Approach 59
aimed at either significantly amending the present regulatory framework or enacting

a completely new set of rules. Such an undertaking is necessarily based on a set of
revised public policies whereby the new business models are recognized and affirmed
as necessary, justifiable and desirable. Such models are usually modest in scope and
represent a set of preliminary legislative attempts to tackle the legal issues concerning
the appearance of Uber’s business model.
2 Benefits and Detriments of Regulation
2.1 Regulatory Benefits
When generally considering the potential benefits of regulating the taxi services field,
a well-devised regulation may ease the access of new stakeholders to the taxi services
market (Rienstra et al. 2015). For example, it is often the case that the providers of taxi
services are exempted from securing a certain level of financial capability (a certain
amount of funds as a guarantee for potential liabilities arising from the provision
of public service of carrying passengers, as a prerequisite for obtaining a license).
Such an exemption improves the position of taxi service providers, especially the
new entrants, as it softens the initial burdens by lowering the high costs of initial
investment.
In addition, the regulatory requirements for procuring licenses may often contain
special requirements that are not necessarily confined with financial, technical or
personnel limitations, thus extending the circle of persons eligible to procure a license
(i.e., providing slots or extra points for certain categories of persons, etc.).
Furthermore, the established mechanism of tariffs and taximeters, where items like
price determination, quality of vehicles, professional drivers’ qualification standards
and other criteria are set in advance, enhances the position of service users (consumer,
passengers) as it provides them with clear, accessible and transparent information on
taxi services providers, thus fostering their capacity in making an informed choice
on which taxi service provider to choose among the available market actors.
Carefully tailored regulation may, additionally, take into consideration different
general and particular interests, such as the circumstances in particular local sur-
roundings, needs of particular categories of passengers, and similar. Many jurisdic-
tions allow the local administration units to, supplementary to general regulation,
enact further secondary legislation with regard the provision of taxi (and rent-a-car
with driver) services, placing more focus on local needs and particularities. The
combination of state-level and local-level legislation, thus, may further address and
enhance numerous issues, such as: improvement of service’s quality, safety and secu-
rity (especially with regard the professional qualifications of drivers and technical
standards for motor vehicles utilized in the provision of particular services), traffic
regulation and decrease of traffic congestion (i.e., setting the maximum limit for taxi
60 M. Mudrić
vehicles in a particular area, depending on factors such as population size, availabil-

ity of public transportation and similar), decrease of noxious emissions, protection
of workers’ rights (i.e., guaranteed minimal wage, right to holidays and sick leave,
maximum working hours, etc.), advanced supervision of quality and safety mecha-
nisms (especially in such jurisdictions where the number of taxi licenses/permits can
be limited), availability of transport options (especially important for areas where the
public transport is either not available, or limited), and similar (Leiren and Aarhaug
2016; Fagerli et al. 2000).
2.2 Regulatory Shortfalls
Too much regulation can, however, result in unwanted effects. An increased number
of primary and secondary legislation requirements may bring upon a significant
increase in different sorts of financial levies, charges, and taxes, thus amplifying
the business costs. This, in turn, may lead to the general increase of carriage price
that is not necessarily just the result of costs associated with safety and security
qualifications and requirements.
Furthermore, in cases where regulation allows taxi vehicles’ number limitation
in a certain area, and a limitation as to the maximum price, the market competi-
tion is hampered, not just between the existing players in the market (price limita-
tion), but especially toward the new potential entrants to the market (capped number
of licenses/permits, based on particular set of limitation factors (size of the local
population being just one of the criteria), limited availability of public tenders for
new/renewed licenses/permits, limited number of permits per a taxi service provider,
and similar).
The more the authority to regulate the provision of taxi services in detail is rel-
egated to the local administration units, the higher are the chances of discrepancy
between the conditions and characteristics of the same service in different areas.
It is not rare to find the price of service and the quality of utilized vehicles vary
(sometimes significantly) between two neighboring local administration units, or to
observe a significant difference in the capped licenses’ numbers in different local
administration units.
3 Basic Public Policy Postulates
When considering which public policy model of regulating Uber’s business approach
to apply, each jurisdiction must consider a plethora of factors relevant to public policy
determination. In general, the public policy of ensuring public transportation avail-
ability and efficiency, the public policy of safety and security of transport, and public
policy of consumer protection represent key factors for drafting the relevant public
policy postulates. In addition, each country will be concerned with issues such as the
general level of adhering to regulatory requirements, taxation and related financial

obligations’ requirements, labor status of persons involved in the provision of cer-
tain services, adequate insurance mechanisms, and similar. The issue of consumer
protection is analyzed separately (Chap. 7), whereas the remaining two emphasized
public policies are analyzed in further text.
3.1 Public Interest and Public Safety
The public interest with regard the provision of transportation or, more precisely,
public carriage of passengers by road service as a taxi service (and, in the context
of the present study, rent-a-car with driver service), is usually, irrespective of any
particular jurisdiction, focused on several key points that require attention.
Safety of transport, as a public policy, in general, requires a higher level of care on
the side of professional transportation service providers, as well as a high standard of
technical condition of motor vehicles utilized in providing such services. The noted
basic criteria usually represent some of the key requirements that such persons must
satisfy to be allowed to provide such services, and as such, are usually regulated
within the same statutes and acts regulating licenses and permits. Safety of transport
public policy, therefore, adheres to the wider public policy requirements of offering
a satisfactory level of protection of human life and health.
3.2 Public Transportation Service
3.2.1 In General
Public transportation service (irrespective of individual sub-category, depending on a

jurisdiction, encompassing the public transportation (i.e., busses, trains, trams, etc.),
public-private transportation partnership and privately provided carriage of passen-
gers by road public service (i.e., taxi service, rent-a-car with driver service, etc.),
must satisfy several individual requirements all aimed at enhancing the position of
consumers and citizens in general. Table 1 details several important base require-
ments of an adequate and satisfactory taxi transportation service (similar conclusions
can also be made with regard the rent-a-car with driver service) within the general
category of public transportation service.
It should be noted that the general public policy goals will reflect additional
goals, usually associated with particular stakeholders, such as: consumer protection
(personal safety of passengers (and drivers as well), prevention of exorbitant prices,
prevention of price fixing, clear and transparent general information on available ser-
vices and prices, etc.), local interests (general decrease in the average duration of car-
riage, decrease in traffic congestion, decrease in environmental pollution, decrease of
traffic-related noise, etc.), market competition (fair market competition, stimulation
62 M. Mudrić
Table 1 Key elements of public transportation

Efficiency of service Transportation options must be made publicly available, usually
through a form of public-private partnership. Taxi service is seen as a
contribution to the existing public transportation options, and an
auxiliary mechanism (and sometimes as a supplementary
mechanism) in areas where the public transportation options are
either limited or unavailable at certain times/locations
Effectiveness of service Transportation options must be duly rendered—when, where and in
what time-frame they are required. Taxi service is seen as a
contribution/supplement to the existing public transportation options,
especially having in mind the limitations of the existing public
transportation options (scheduled rides, scheduled routes, schedules
pick-up/drop-off locations, etc.), offering more diversified carriage
options
Economic contribution Taxi industry plays a relevant role as a financial contributor to the
state, regional and local administration units’ budgets (taxes,
different kinds of levies and charges, etc.). In addition, taxi industry
plays an additional relevant role with regard its significance for the
supporting industry (broader transport industry, i.e., technical
(inspection) stations, motor vehicles industry, the insurance industry,
etc.) as well as the general population (i.e., employment options)
Accessibility of service Transportation options must be accessible to the general population.
The accessibility is not confined to the financial affordability of such
service but includes various other factors (i.e., special carriage,
carriage of persons with disability, carriage of children, carriage of
and animals, etc.). Taxi service is seen as a contribution/supplement
to the existing public transportation options, especially with regard
its capacity to offer tailor-made carriage options not always available
(or allowed) through the public available transport options
Quality of service The quality of service relates to both the safety and security aspects
of providing taxi service (fulfilling all regulatory requirements with
regard the professional status of drivers and technical safety
standards of motor vehicles utilized to provide taxi services), as well
as subjective evaluation of taxi service provision by passengers
(general level of satisfaction with the driver, motor vehicles and
general service)
of new business models advancing the market in general, removal of over-regulation

detriments, incentive to new market entrants, etc.), special types of carriage1 (as
noted above), and similar.
1 See,
for example: Ramos v. Uber Technologies, Inc. United States District Court, Case No: 5:14-
cv-00502, W.D. Texas, San Antonio Division, and, Blount v. Philadelphia Parking Authority, 965
A.2d 226, 234 (Pa. 2009).
3.2.2 Obligation to Provide Service
Certain jurisdictions predetermine an obligation to provide public transportation.

As an example, the Regulation (EC) No 1370/2007 on public passenger transport
services by rail and road2 requires that the public passenger transport services must be
offered on the non-discriminatory and permanent (continuous) basis. The Regulation
particularly emphasizes the need to ensure reasonable and affordable prices of such
transport.
Examining the noted requirements through the perspective of taxi services, the
taxi industry can be viewed as a “tool” utilized by states, regional and local adminis-
tration units to, by means of private entities (through quasi-public or public-private
partnerships) and without any additional investment into transport infrastructure and
transportation means, satisfy the above named requirements and ensure publicly
available transport (on all locations, at all times). This is particularly beneficial for
such areas where public transport is not profitable to the effect that it attracts sched-
uled bus (or similar) lines. Additionally, by implementing the system of tariffs and
taximeters, regulation aims to satisfy the above-noted requirements as to reasonable
and affordable prices.
4 Insurance
The existence of adequate insurance both on the side of Uber and Uber drivers is a
disputable issue, subject to constant changes depending on a particular jurisdiction,
Uber’s general terms and conditions for that particular jurisdiction, and Uber drivers’
practice in procuring (or not) the relevant insurance policies. The practice has shown
that it is not always the case that Uber drivers, as well as Uber, procure all necessary
insurance instruments (Daus and Russo 2015; Davis 2015; National Association of
Insurance Commissioners 2015).
The current section examines the typical insurance policies relevant for the public
transportation that ought to be procured in order to provide the carriage of passengers’
service in line with the general requirements of public policies aimed at protecting
the public interest (such as safety and security of transport, public health, etc., as
discussed earlier).
2 Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007
on public passenger transport services by rail and by road and repealing Council Regulations (EEC)
Nos 1191/69 and 1107/70.
64 M. Mudrić
4.1 Passengers Insurance
Typically, various jurisdictions will have recognized a specialized type of insurance

aimed at providing cover for cases where passengers get injured during the perfor-
mance of public carriage of passengers by road services. Usually, such insurance
is enacted on a mandatory basis, requiring all owners of motor vehicles utilized in
the performance of public carriage of passengers by road services to acquire such a
policy. It is also often the case that the relevant statutes and acts will specifically point
to the owners of taxi vehicles and rent-a-car vehicles as persons required to obtain
such insurance policy, thus adding an extra requirement to the list of conditions that
need to be fulfilled in order to be granted a license (and a permit where applicable)
to perform taxi and rent-a-car with driver services. In addition, it is often the case
that national law extends such obligation to the users of such vehicles, recognizing
the practice whereby persons other than owners of motor vehicles engage into the
provision of named services.
Insurance of passengers, typically being a mandatory insurance (depending on the
jurisdiction) enables the injured person (passenger, end-user, in some cases also any
other person) to seek compensation (personal injury, damage to personal belongings
and luggage, etc.) directly from the insurer (direct action (actio directa) against the
insurer, whereby a successful claim renders insurance money being paid directly to
the injured party). In addition, and what is of particular importance for direct action,
the insurer is not allowed to object such claims based on grounds of objection possibly
valid against its client (previously noted owners and users of motor vehicles). As per
example, a failure to pay the insurance premium in time would normally render
the insurance contract void (depending on the particularities of national law and
insurance terms and conditions). However, such a fact does not affect the injured
person who retains the right to seek compensation. Such a feature heavily relies
on the greater public interest to override the contractual relationship between the
insurer and insured person (ex contractu) and provide a separate legal position of
the injured person (ex lege) in order to ensure that certain funds are made readily
available to the injured persons (justification based on public interest of safety in
transport, citizens’ health, etc.), irrespective of particularities of previously noted
contractual relations. The noted feature is a usual companion to mandatory insurances
and signifies the states’ recognition of public interest in certain services, professions
and activities carried out by a private sector, but of a general concern for public health,
livelihood and normal functioning of everyday life. Having in mind the relevance
of transportation public service in general, it is often the case that national law will
specifically point to a passenger as a person included in the definition of an injured
person.3
Therefore, Uber drivers should acquire the necessary insurance coverage with
regard to the compensation of injuries and damage suffered by passengers. It is often
the case, depending on jurisdictions, that separate acts and statutes covering such
3 For more detailed national law specification, see in this volume Mudrić et al., Comparative Anal-
ysis.
mandatory insurance define in detail the nature of particular services, such as is a taxi
service or rent-a-car service,4 thus adding additional legislative pressure on persons
conducting carriage services to procure the necessary insurance. The absence of such
insurance coverage creates different sorts of issues, as, apart from the fact that, in
most cases, the lack of insurance policy renders such a service illegal, the passengers
are placed into a vicarious position when opting to compensate their losses. It should
additionally be noted that in certain countries, such as is the case with the EU Member
States, there exists a special guarantee fund, run by national insurance bureaus, that,
among its other uses, serves to offer compensation in cases when a person suffers
damage in an accident caused by a motor vehicle that is not insured under a motor
vehicle liability insurance policy (discussed below) or a motor vehicle utilized for
carriage of passengers with no passenger insurance policy procured. In such a case,
the guarantee fund handles the payment of insurance coverage. Whereas this serves
to promote the public interest, it, on the other side, creates a disbalance whereby
the initial obligation on the side of Uber drivers is transferred to the citizens in
general, having in mind that the guarantee fund collects its money through a certain
portion of money paid to procure an individual motor vehicle liability insurance
policy (“Uberification” in a negative sense).
4.2 Motor Vehicles Liability Insurance
A common feature of modern regulation with regard the use of motor vehicles is
the motor vehicles liability insurance, mandatory insurance that must be procured
by owners of motor vehicles as one of the requirements that need to be fulfilled
to be able to use such motor vehicles in traffic. This type of insurance addresses
the liability of owners with respect to damage suffered by third parties due to the
use of motor vehicles. The third party usually encompasses a passenger as well,
thus allowing for a situation where a passenger might be able to seek remedies
either based on one insurance coverage (insurance of passengers) or the other (motor
vehicle liability insurance). Depending on the jurisdiction, it is often the case that the
redress based on the motor vehicle liability insurance does not encompass a possible
claim based on the passengers’ insurance coverage, thus allowing for effective and
separate utilization of both claims.
4.3 Transportation Intermediary Insurance
In general, transportation intermediaries (transportation brokers) require a liability

insurance coverage that is, depending on jurisdiction, often nominated as mandatory
insurance. National law often states that a transportation intermediary is required to
4 See,for example, the Croatian law example in this volume Mudrić et al., Comparative Analysis,
Section 1.7.
66 M. Mudrić
acquire an insurance policy up to a certain sum (capped amount) to cover its liability
for potential damage arising out of the performance of its services to the carrier,
person commissioning the ride (carriage user, consumer, passenger, etc.) and third
party.
Depending on Uber’s general terms and conditions with regard to their services
in individual countries, the noted regulation may be in collision with Uber’s general
terms and conditions with regard to its exposure to liability. Per example, and as
analyzed in previous chapter (Sect. 5), Uber’s terms and conditions often include
a clause relieving Uber from all direct, indirect, accidental, special, appropriate,
criminal or consequential damage (including the loss of profit, loss of data, personal
injury, damage to property, etc.) that arises out of any use of Uber’s services in general,
even if Uber had knowledge that such damage might arise. Such wording resembles
the standard knock-for-knock provisions (as noted in the previous Chapter), with the
major difference being that this particular clause is exclusively one-sided.
However, such wording is in direct collision with a national law that enacts the
mandatory insurance for transportation intermediaries. As argued earlier, if accepted
that Uber acts as a transportation intermediary, by means of mandatory insurance
framework, transportation intermediaries are liable to the carrier, commissioner of the
carriage and any other person suffering potential damage. In addition, the mandatory
insurance grants any injured person direct action claim against the insurer. If the
above clause is reviewed in the light of relevant legislation, it contradicts not only the
transportation intermediary’s noted exposure to liability, but it additionally enables
the insurers a right to deny third party claims, as insurers generally are only liable
to claims for which their clients are liable. If Uber has denied responsibility for the
above-stated damage, such damage cannot be included in the insured risk and is not
covered by the insurance coverage.
Due to the fact that the provisions related to mandatory insurance are of an ius
cogens nature (mandatory application), such clause can only be treated as null and
void, as it contradicts not only the general insurance principles (as stated above)
but also general principles regulating contractual and non-contractual behavior (i.e.,
contrary to the principle of fairness, creating obvious inequality between parties,
negating the purpose of contract, and similar).
5 Quality of Service
5.1 Quality Standards
It must be stressed that the public policies aimed at satisfying general public interest,
such as the safety and security of public transport services, require the enactment of
a variety of rules and regulations irrespective of the general level of familiarity of
citizens with regard the said issue. Despite the general public’s average knowledge
with regard the minimum quality standards, both with regard the professional status
of drivers as well as the technical conditions of motor vehicles utilized in the provision
of public transportation options, such as the taxi services and rent-a-car with driver
services, the noted public interest and public policies place an obligation on states
to enact a set of predetermined values and conditions that must be complied with
all providers of public transportation services (as examined in detail in Chap. 4;
International Transport Forum 2016).
In practice, with regard the professional standards of drivers, legal norms prescribe
various starting qualifications’ theoretical and practical examinations, that include
not only the driving capabilities and knowledge or relevant transport-related legis-
lation, but, very often, additional criteria, depending on a type of carriage service in
question. It is often the case, for example, the that providers of taxi services will have
to pass a special exam with regard the cultural, historical and other aspects relevant
for the area where the taxi service is to be rendered, in order to be able to provide
a more general, public-relevant service of providing the passengers with useful and
relevant information on the surroundings and places of interest.
With regard the technical standards for motor vehicles utilized for the noted ser-
vices, it is often the case that national legislation prescribes a set of rules and con-
ditions with regard to both the external and internal conditions of such vehicles,
necessary equipment that must be inserted into such vehicles, and other relevant
elements that such vehicles must be in compliance with.
5.2 Grading Drivers
In accordance with information available on Uber’s portal, Uber’s digital platform

enables a separate model of monitoring the quality of Uber drivers, particularly with
regard to the quality and safety of performed service. Uber’s application incorporates
a driver evaluation platform, whereby application users may if they wish to do so,
grade Uber drivers upon the completion of a ride. This, in turn, allows Uber to inter-
nally evaluate the performance of individual Uber drivers, allowing for advancement
in the internal Uber’s structure system and getting enrolled in the more lucrative
Uber’s services. In addition, the better Uber drivers are evaluated by the passengers,
the higher are the chances of attracting further rides (Rosenblat et al. 2017).
This, however, is not a proper objective quality monitoring system. Uber’s appli-
cation marking system represents a subjective evaluation of passengers with regard
to their general satisfaction with Uber driver and rides as a whole. It does not enable
an objective measure of quality, safety, and security of service. The objective mea-
sure of monitoring and evaluation can only be prescribed through regulatory means,
good practice and industry standards (experienced-based standards and good prac-
tices incorporated into law or inserted into the companies’ codes of conduct). The
application users who grade Uber drivers have no previous or subsequent knowledge
on Uber drivers’ professional/vocational capacity, nor the technical characteristics
and performance value of utilized motor vehicles. The good grades can be a good
68 M. Mudrić
indication to the next potential application user/passenger on how pleasant a particu-

lar Uber driver is in general, the general state of the motor vehicle and similar, but it
generates no added value as to the objective measures of quality, safety and security
of service.
Such information (quality, safety, and security of service) is vital for passengers
(application users) and represents one of the key aspects of passengers’/consumers’
protection and right to the proper information. As it is not expected that the application
user is to review such information prior to hailing a ride, the usual mechanism of
ensuring high standards presumes the adoption of adequate regulation requiring such
standards prior to allowing an individual or a company to engage into providing public
carriage of passengers by road services. Imposition of an individual grading system
over the regulatory requirements bears no legal or actual value.
Depending on individual jurisdictions, it is often the case that drivers and com-
panies engaged in the public carriage of passengers by road services, after having
satisfied the necessary requirements and basic qualifications, pay little or no atten-
tion to continuous periodical training and education. Thus, a benefit of utilizing an
application-based grading system (in many cases adopted by traditional taxi industry
as well) is the indicative nature of feedback received from the customers, hinting a
possible need to invest more time and money in personnel training and fleet upkeep.
In addition, the service provider may utilize such a system to get more feedback over
the professionality of its drivers and the state of motor vehicles utilized to perform ser-
vices and to improve on noted deficiencies accordingly. Finally, the cross-utilization
of the grading system, feedback, and continuous improvements may serve to attract
new customers.
6 The Laissez-Faire Model
This section examines a laissez-faire scenario whereby the market players are free
to conduct their business without regulatory and judicial intervention, and with little
regulatory hindrance.
6.1 Basic Premise
Upon Uber’s entry to a particular market, Uber’s prices tend to be initially lower
than that of its rivals (traditional taxi services providers), especially in cases where
Uber’s business model circumnavigates the regulatory requirements in the name
of “disruption”, “shared economy” or “ride sharing” (to name a few). The price
advantage, in turn, tends to be seductive to a wide section of consumers’ market,
especially having in mind that the average consumer (passenger) is not acquainted
nor interested in the basic postulates of a taxi service regulatory requirements. Thus,
guided primarily by its low price and not concerned with safety and security issues,
consumers hurl to take advantage of the new carriage by road option. Depending on
the total number of passengers opting for Uber over a certain period, the market can
get significantly altered with the appearance of Uber.
A number of studies (mentioned in the Introduction chapter) have indicated a
pattern whereby the traditional taxi industry continuously tarnishes its share to the
established Uber’s business model. A significant loss in the market share necessarily
lowers the profit the traditional taxi industry is accustomed to, making it harder for
the traditional taxi service providers to continue operating in the market. This, in
turn, can have significant and detrimental effects on the market as a whole.
As noted earlier, the traditional taxi service market is a (heavily) regulated mar-
ket, most often confined with various types of licenses, permits, and authorizations,
pending numerous conditions and requirements to be satisfied by potential providers
prior to being able to provide the taxi service. The traditional taxi service providers
are under an obligation to satisfy a number of financial, technical and personnel
requirements (i.e., costs of licenses, permits and authorizations, relevant insurance
coverage costs, regular and irregular technical audits and inspections, different kinds
of levies and charges, social, pension and health levies for employees, minimal and
regular wages, etc.) in order to fulfill the public policy stipulations with regard the
public safety and security. In addition, the traditional taxi service providers, as dis-
cussed above, are under an obligation to provide the service on the whole area for
which they have been granted a license (and a permit where applicable). Finally,
the traditional taxi service providers are under an obligation to meet all additional
financial obligations (levies, charge, taxation and other).
Opposite to the above, Uber drivers engaged in the “non-professional drivers”
provision of carriage service (usually, but not restricted to UberPOP service; pro-
viding the carriage of passengers by road service without the necessary licenses,
permits and/or authorizations), do not comply with the above-named impositions
and requirements. Furthermore, unlike the traditional taxi service providers, Uber
drivers do not respect the general obligation of providing the service on the whole
area for which the license/permit has been issued, but rather focus on those locations
and time-frames where the demand promises highest profits. These factors represent
some of the key reasons why the cost of Uber ride can get significantly lower than
that of the traditional taxi service providers, at least during the early period of Uber’s
entry into a market.5
6.2 Market Competition and Unfair Competition
The issue of market competition is separately analyzed in Chap. 5. In the context of

the above-named major factors of differentiation between the traditional taxi service
providers and Uber’s business model, it is sufficient to point out that the traditional
5 See:Wallen v. St. Louis Metropolitan Taxicab Commission, No. 15-cv-01432 (E.D. Mo.), with
regard the limitation of price competition and the use of Uber’s dynamic charge increase model of
price determination.
70 M. Mudrić
taxi service providers are claiming that Uber’s business model represents unfair
competition.6 In accordance with their claim, and unlike the competitive taxi service
providers’ prices set in accordance with the tariff model for a particular area where
the taxi service is provided and other relevant business costs, Uber’s business model
allows for a significantly lower price.
Unlike Uber’s business model, the traditional taxi industry is limited by, from
one side, the costs threshold as described above (costs equal profits), and from the
other, by the maximum prices determined by tariffs (enacted either by state or local
administration units, in order to secure the financial accessibility of service to average
citizens). Uber drivers operating in accordance with Uber’s business model are not
restricted by these limitations, allowing for the price to be determined within and
outside of the noted margins.
In addition, as analyzed in the previous Chapter, Uber’s application utilizes the
dynamic price increase model, whereby the prices of a single fare can significantly
vary depending on the supply-demand nexus. Achieving high profit in cases where
supply is low and demand high creates extra funds that can be utilized to offer lower
prices (even below costs threshold) when demand is lower and overtake the traditional
taxi industry competitors.
6.3 Discrimination Barriers to Public Transport Services
It is necessary to highlight another benefit of having the tariff model of determining,

or rather, limiting the maximum prices of taxi services. As noted earlier, the taxi
service, to a certain extent, complements the public transport, especially in those
areas where public transport is not constituted (i.e., no regular bus or tram lines
in suburban and rural areas, etc.) or where it is limited (i.e., no night lines, scarce
schedule, etc.). In addition, public transport is not capable to fulfill different sorts
of particular needs required by different passengers. A typical example of this is
the “door-to-door” or “address-to-address” service, which represents time and target
focused service typical for taxi service (other similar examples have been mentioned
earlier, i.e., a specialized carriage for children, persons with disabilities, animals,
etc.).
Furthermore, the additional benefit of tariff system is accentuated having in mind
the public policy goal of making the transport accessible, not just from the physical
perspective, but also from the economic standpoint. It is necessary to achieve a
reasonable price of transport services so that it is financially accessible to average
consumers (citizens). As Uber’s business model introduces the dynamic increase in
prices model, should Uber completely or to a great extent take over the taxi market,
6 As a reference, see: Southern Transportation, Inc. et al. v. Lyft, Inc. et al., Case No. 2:15-cv-02157,
in the U.S. District Court for the Western District of Tennessee, Western Division, and, Davis et al.
v. Miami-Dade County et al., Case No. 2015-2645-CA-01, in the Circuit Court for the Eleventh
Judicial Circuit of Florida.
even in case that Uber drivers are willing to operate in a certain area at a certain time,
the supply-demand nexus (examined earlier) may result in prices so high that they
are not financially accessible to a fair portion of general population, that has, thus
far, found the traditional taxi service providers’ prices reasonable.
In addition, as Uber’s business model does not operate on the tariff models, there
is nothing to prevent Uber to significantly alter general carriage prices in different
areas based on specifications of such areas. For example, Uber’s algorithm may
take into account the type of neighborhood, the average income of the residents, the
density of daily traffic and other factors. As a result, Uber may be charging more in
richer residential areas and business areas, and less in poorer areas (Nelson 2019;
Schaller 2018). Alternatively, Uber may only be interested in providing services in
the aforementioned areas, totally neglecting the latter due to poor projected income
revenue (Jin et al. 2019; Lu et al. 2018). Such discrimination based on earnings
is not possible in the traditional taxi service, where the enacted regulations create
certain rules with regard the obligation to provide service in the whole area covered
by license/permit, and at all times (as discussed earlier).
Uber’s business model, reviewed in line the afore-mentioned aspects, can produce
at least three direct discrimination effects or barriers as detailed in Fig. 1.
Uber drivers are not bound to offer the carriage service in a specific area, and
usually endeavor to offer their services in locations with the most rewarding supply-
demand nexus (for example, a residential or business area where residents have larger
incomes, as discussed above) guaranteeing higher profits. This creates a discrimi-
nation effect of the discretionary choice of location, whereby it is not the state or
local administration unit that determines the locations where transportation options
Fig. 1 Discrimination
barriers
Discretionary
Choice of
Discretionary Location
Cho
Choice of Time
Discretionary
Price
Determination
Uber's Business Model

72 M. Mudrić
are required, but, rather, Uber’s application and Uber drivers themselves. As a result,
and especially in cases where Uber gradually pushes its competitors from the market,
a certain location may have difficulties in securing transportation options.
Furthermore, unlike the traditional taxi service providers who are bound to offer
carriage services through-out the whole location covered by license/permit, with no
time-frame limitations (i.e., rush hours, individually chosen time for providing car-
riage services, etc.), Uber drivers do not operate under such restrictions and may
freely choose to provide carriage service only during specific time-periods when
the supply-demand nexus favors higher prices (a good example being the rush-hour
period). This produces another possible unwanted discrimination effect, the discre-
tionary choice of time.
The previously examined dynamic price increase model utilized by Uber’s algo-
rithm places value on profit, absent of any regulatory intervention to secure public
interests (i.e., accessibility of service, as discussed above). Such individually set
price determination model that does not take into account certain postulates based
on relevant public policies and public interest, represents yet another unwanted dis-
crimination effect, the discretionary price determination.
Among other possible discrimination effects, it is noteworthy to mention that,
unlike the traditional taxi service that can be ordered through different means (phone
order, SMS order, e-mail order, application, taxi stand, hailing a vehicle on road, etc.),
Uber’s service is exclusively available through Uber’s application. This, to some
extent, discriminates certain categories of citizens (lack of accessibility) that, for
various reasons, do not or cannot use digital means of communication (i.e., internet,
tablets, smartphones, etc.) and digital services in general (Leiren and Aarhaug 2016).
6.4 End-Game Scenario
The so-called end-game scenario takes into account all negative aspects of Uber’s
business model and projects the worst-case scenario outcome of the “Uberification”
process. Whereas it is not considered that the end-game scenario may occur in its total
form, the negative aspects and consequences that such scenario highlights can, and in
some cases, already have appeared in practice. As an example of a partial worst-case
scenario, a dozen local administration units in the United States have decided, led
with the laissez-faire principle, to fundamentally liberalize its taxi service market
(Price Waterhouse 1993). This, in most cases, included a total abolishment of tariffs
and licenses system, and a significant reduction of basic requirements and conditions
for providing taxi services. The arising negative consequences have prompted the
local administration units to revert to previous regulatory model in a relatively short
period of time. Among the many issues that have arisen, the following are highlighted:
a. The liberalization has brought a significant rise in average carriage prices. The
study has shown that the discretionary exercised price determination has demon-
strated a trend of exploitation, what constituted, from the perspective of con-
sumers, unpredictability, and lack of transparency of service.
b. The liberalization has brought a significant decline in the quality of motor vehicles
utilized for taxi services, and the extension of motor vehicles’ active utilization
beyond a standard age of service. In addition, the traffic increased in residen-
tial areas, with additional side-effects such as noise increase and air pollution
increase. Contrary to the previous, the taxi service reduced in less inhabited
areas, due to lower profit margin and the fact that the liberalization has canceled
licenses system that incorporated the obligation to provide service in the whole
area covered by the license.
c. The liberalization has brought a significant decline in service quality, particularly
due to an increased number of non-professional and non-experienced drivers.
d. The liberalization has brought a significant increase in road accidents (involving
taxi drivers and taxi motor vehicles).
e. The liberalization has aggravated the core taxi service business, as the higher
supply (due to the uncontrolled entry of new players on the market) decreased
the average taxi drivers’ and companies’ income. In addition, the general drop
in income has further aggravated the ability to maintain a high-standard service.
The unhindered loss of market share experienced by the traditional taxi industry
creates significant financial losses that may result in the collapse of the traditional taxi
industry (“Uberification” in a negative context). A significant decrease or collapse of
traditional taxi industry leads to a “natural monopoly” (“private” monopoly) enjoyed
by Uber (and/or similar companies operating under the same business model), what
constitutes a diametrically opposite scenario as noted in the Introduction chapter,
where the traditional taxi industry enjoys a “regulated monopoly” due to the capped
systems of licenses and permits.
Breaking the monopoly of any kind is generally accepted as a positive advance-
ment, both for the market actors and end consumers. However, such a process must
follow the generally accepted procedures and norms of behavior, such as the fair
market competition and the promotion of consumer protection mechanisms. Within
the context of “breaking-up” the traditional monopolies in the transport sector in
general, such a process is usually associated with liberalizing markets dominated by
national companies through enabling access to new entrants to the market, vertical
and horizontal unbundling, and, at the same time, ensuring the high quality of ser-
vice and consumer protection mechanisms. Regulation on market liberalization often
produces numerous rules with regard to the passengers’ rights, service providers’
obligations, and transport infrastructure managers’ obligations. Therefore, the pro-
cess of market liberalization cannot be, in any way, associated with switching the
regulated with private (natural) monopoly.
The described scenario of attaining private monopoly status represents, however,
only the beginning of negative consequences arising out of Uber’s business model. It
is no longer the state and/or local administration units that are in charge of determining
74 M. Mudrić
when and where the carriage of passengers by road public service is to be provided,
but Uber drivers and Uber’s algorithm. At the same time, the partially (location
and time-limited) provided service has no regulatory backing in terms of satisfying
the quality standards (safety, security, the professional status of drivers, technical
adequacy of utilized motor vehicles, etc.). With the gradual disappearance of the
traditional taxi industry, certain local communities, within a certain time-period,
experience a (total or partial) lack of public transport options. This is particularly
true for areas where taxi services represent the major or only method of public
transportation, as well as for areas with lower income (as discussed earlier).
Loss of transportation options unfolds another set of issues and difficulties for
local communities (wider scope of negative effects of “Uberification”). Uber’s busi-
ness model is not restricted by the public policy of guaranteeing transport options
(obligation to provide service in a certain area over a certain time). Therefore, the
local community where the traditional taxi industry is no longer present cannot guar-
antee the continuity and availability of public transportation services. Furthermore,
Uber’s business model is not restricted by the public policy of setting reasonable and
affordable prices, thus rendering local communities where traditional taxi industry is
no longer operating powerless with regard ensuring the accessibility of public trans-
portation services. Due to the fact that the state, regional and local administration
units are, depending on jurisdiction, under an obligation to ensure accessible and con-
tinual existence of transportation services, the only available remedy, in cases where
no traditional taxi service is available and Uber’s business model is too selective, is
to invest in new transport infrastructure and equipment in order to provide adequate
level and capacity of public transportation options. Whereas such an option is con-
ceivable in wealthier regional and local administration units, it is quite unreasonable
to expect that poorer areas would be able to afford such investment, particularly such
areas where Uber’s business model is not present at all (no prospect of profit).
Such a development creates an absurd effect that lies in total contradiction with the
contemporary market setting. The typical market setting of public transport recog-
nizes public-private transportation services (taxi industry and rent-a-car with deriver
industry, and related services), a supplement and enhancement of public transporta-
tion options, especially in areas where public transportation options are either limited
(location and time limitations) or not available. Such public-private quasi-partnership
not only serves to offer adequate and accessible transportation options but addition-
ally aids regional and local administration units by enriching their budgets (due to
various levies and similar charges, as discussed earlier). With the loss of traditional
taxi industry, regional and local administration units not only lose the transportation
options and additional funding but are, to the contrary, forced to allocate funds from
the existing budget to build up the transportation infrastructure, in worst cases, from
the scratch.
The examined worst-case scenario would completely negate the key elements
present in public policy of ensuring adequate public transportation in Table 2.
On a more general level, it should additionally be noted that with the steady
decline of traditional taxi service providers, especially in jurisdictions where Uber’s
business model insists on utilizing services of non-professional drivers (regardless
Table 2 Failed public policy

Inefficient service Transportation options are no longer available on locations where and
in times when they are needed
Ineffective service Transportation options no longer satisfy particular service demands
Not cost effective State, regional and local administration units’ budgets experience
direct and indirect loss, whereas the supporting industry no longer
enjoys the level of cooperation (and monetary gain) as was the case
with the traditional taxi industry
Non-accessible service With the maximum prices no longer regulated, the transportation
options are no longer affordable and accessible to all
citizens/passengers equally, and/or under the same conditions
Substandard service The service can no longer be considered safe and secure as Uber’s
business model does not necessarily utilize the services of
professional drivers with high-standard motor vehicles. Additionally,
if no competitor is present on the market (i.e., the traditional taxi
service providers), it is no longer possible to compare the level of
service with another provider
of the nominal name of such service), the number of professional taxi drivers and
high-standard motor vehicles utilized in the provision of taxi services declines as
well. For the same reason, the same can be argued with regard to the general interest
in attaining the professional driver status. This, in turn, leads to the overall drops
of quality of service, the safety of transport in general, as well as the accessibility
of service, especially with regard the availability of special carriage options and
demands (as noted earlier).
Finally, the “Uberification” can bring along further negative consequences with a
wider, more long-term effect. On such example is the question of Uber drivers’ labor
position (employees or contractors7 ). If they are to be considered as contractors, it is
conceded to Uber drivers to choose whether to pay the appropriate social, pension,
health and similar charges. Should Uber drivers evade such payments, a different set
of issues arise for the state budget in the long-term planning, placing more pressure on
the current employers (and employees) in general. Additionally, if the local admin-
istration units are no longer capable of controlling the public transportation options,
it is quite unlikely that they will be in a position to control the connected issues, such
as the traffic congestion, environmental pollution, and similar, thus creating further
wider issues for the community as a whole.
7 The Legal Adjustment Model
As stated in the introduction of the current chapter, the Legal Adjustment Model for
Uber’s Services Regulation aims to enable an easier adjustment of new transportation
7 For more on this issue, see in this volume Mudrić, Nature of Uber Services, Section 2.2.3.
76 M. Mudrić
models into the existing regulatory framework. Such an undertaking usually incorpo-
rates a certain level of market liberalization, ensuring that both the new entrants and
existing players can benefit from the legal adjustment and changed market circum-
stances (Elliot 2016). The current section examines several comparative regulatory
frameworks of interest.
7.1 Limited Deregulation
The Dutch Passenger Act from 2011 significantly liberalized the taxi market (Rien-
stra et al. 2015) by allowing taxi drivers to operate freely in the whole country (an
important aspect of taxi market deregulation). At the same time, the local adminis-
tration units are free to incorporate a separate model of further regulation (so-called
“Toegelaten Taxi-organisatie”) aimed at ensuring the quality of service, relevant for
those taxi drivers that mean to operate in their areas, and who, for that purpose, must
procure a special permit from the local administration unit. Thus, whereas the market
is to a certain extent liberalized, the local administration units are enabled to control
the quality of taxi service in their own area by enacting more detailed requirements
for the provision of carriage services.
Additionally, the Dutch law does not necessarily insist on specific differentiation
between individual types of carriage (i.e., taxi service and rent-a-car with driver
service), but instead places focus on the so-called “street taxis” as opposed to the
so-called “contracted carriage” models. The significance of the noted differentiation
lies in the fact that the second model does not require the use of tariff models and
taximeters, and is, therefore, quite suitable for the introduction of new business
models, such as Uber’s business model.
7.2 Detailed Carriage Services Regulation
With regard the question on utilizing electronic applications instead of tariff models
and taximeters, the English court examined the necessity of utilizing such means in
carriage options other than taxi services in TfL v Uber and Others,8 by evaluating
and comparing Uber’s application with a standard taximeter.
The relevant English legislation9 provides for two kinds of taxi services: the so-
called “hackney carriage” or “black cab”, and the so-called “mini-cab” service. The
“hackney carriage” refers to a standard taxi service that requires issued licenses and
conformity with special requirements. The “mini-cab” service refers to rent-a-car
8 Transportfor London v Uber London Ltd [2015] EWHC 2918 (Admin).

9 Therelevant statutory provisions include: Transport Act 1980, Metropolitan Public Carriage Act
1869, London Cab and Stage Carriage Act 1907, London Cab Order 1934, Private Hire Vehicles
Act 1998, and, Measuring Instruments (Taximeters) Regulations SI 2006 No. 2304.
with driver service (also requiring a license and special requirements conformity) and
is based on contractual pre-order of the carriage. The regulated system is, therefore,
similar to the previously noted Dutch model. In addition, the hackney carriage model
also allows the pre-order, but strictly for carriage provided outside of the licenses
area. For example, the body in charge of issuing licenses for the City of London is
the Transport for London that issues licenses either for the complete area of the City
of London (“All London”) or a certain part of the City (“Suburban”). If the hackney
carriage service provider has been issued with the “All London” license, it cannot
perform the pre-order carriage in the City of London.
The Court found Uber’s application to be different than a taximeter,10 thus absolv-
ing Uber from the requirement of using taximeters as Uber operated on the basis of
the mini-cab carriage model.
The relevant German law11 requires an equal number of preconditions and require-
ments to be satisfied by persons wishing to procure licenses and permits for the provi-
sion of taxi services and rent-a-car with driver services. Unlike the taxi services, the
German law does not regulate the prices for rent-a-car with driver service but assigns
additional conditions with regard to the provision of that service. First, the motor
vehicle utilized for rent-a-car with driver services must be clearly distinguishable
from a motor vehicle utilized for taxi services. And, second, after having provided
the rent-a-car with driver service (destination set by the passenger), the motor vehicle
must be returned to the original place of business (the permanent business location
where the services are being negotiated and where the passengers’ orders are being
accepted; i.e., garage, depot). The only exception to that rule is a situation where
there is an additional reservation for a new carriage to follow directly after the first
has been rendered. In that case, the motor vehicle must be returned to the original
place of business after having completed the second carriage. A failure to follow
these rules may, as was the case with the case before the Regional Court in Berlin-
Brandenburg12 (specifically, the second rule), result in an interim distraint measure
(the mentioned case specifically analyzed the UberBLACK service).
The relevant French law13 adopts the similar approach as is the case with the
previously examined German law (similar provisions are to be found in the previously
examined Italian and Belgian law) but places more focus on differentiation between
taxi services and rent-a-car with driver services. In principle, the rent-a-car with
driver service is restricted to tourist tours and limousine services (similar as is the
case with the previously examined Belgian law) and cannot participate in the so-
called “cruise” market, reserved for taxi services. In addition, the legislative changes
in 2015, apart from widening the regulatory requirements of established mechanisms
10 There are, however, recorded cases where attempts are being made to standardize the use of
electronic applications (Office of Consumer Affairs 2017).

11 See in this volume Mudrić, Nature of Uber Services, Section 2.2.1.
12 Landgericht Berlin (LG Berlin), 2015, no. 101 O 125/14.
13 LOI n° 2014-1104 du 1er octobre 2014 relative aux taxis et aux voitures de transport avec chauf-
feur (1), so-called “Loi Thévenoud”, and, LOI n° 2016–1920 du 29 décembre 2016 relative à la
régulation, à la responsabilisation et à la simplification dans le secteur du transport public particulier
de personnes (1), so-called “Loi Grandguillaume”.
78 M. Mudrić
(such as the license procurement, professional status of drivers, technical standards

for utilized motor vehicles, tariffs and required insurance coverage), introduced a
number of additional restrictions, such as the ban on utilizing mobile devices for
carriage orders in the “cruise” market, ban on utilizing GPS geolocation services in
motor vehicles utilized for rent-a-car with driver service, and, ban on charging per
kilometer when providing the rent-a-car with driver service. The last provision came
under judicial scrutiny, with the French Constitutional Court finally deciding that
such a ban is unconstitutional.14 The further legislative changes in 2016 enabled the
new licensing system (“VTC”) with regard to the rent-a-car with driver services.
8 New Legislative Paradigm
As stated in the introduction of this chapter, the New Legislative Paradigm Model
for Uber’s Services Regulation assumes a proactive role and devises a completely
new regulatory framework for the purposes of enabling new business models on the
market. Typically, the new regulatory framework will run parallel to the existing
legislation with regard to the traditional business models. In some cases, the new
regulatory strategy will define a time-frame within which the traditional business
models are required to adapt to new commercial practices.
8.1 Transportation Network Company
Having in mind that the US has experienced an early inflow of the new business
models, such as Lyft’s and Uber’s business model, it is not surprising that the noted
jurisdiction experienced some of the first new legislative frameworks aimed at accom-
modation such new commercial practices. The so-called Transportation Network
Company (TNC) regulatory framework was first drafted in California, adopted in
Colorado, and then gradually spread over the US and several other jurisdictions.15
TNC model enables the provision of pre-arranged carriage services for a fee, con-
tracted via an application or digital platform where passengers are connected with
drivers who use personal motor vehicles. In order to procure a license, TNC model
14 Le Conseil constitutionnel, Decision No. 2015-468/469/472 QPC of May 22, 2015, Corporation
UBER France SAS et al.

15 California Public Utilities Commission (2016). Decision Adopting Rules and Regulations to
Protect Public Safety while allowing New Entrants to the Transportation Industry, Order Instituting
Rulemaking on Regulations Relating to Passenger Carriers, Ridesharing, and New Online-Enabled
Transportation Services. The Council of State Governments, Capitol Research: Transport Policy
(2016). State Regulation of Rideshare Companies. The TNC model is used in certain areas of Canada
(and in other countries, such as Mexico City, Federal District’s Department for Mobility), see for
example: Alberta, Traffic Safety Act, Bill 16 amendments, Transportation Safety Amendment Act
2106, and, Ontario, Bill 131, Opportunity in the Sharing Economy Act, 2015.
requires a number of preconditions (not necessarily the same in all jurisdiction apply-
ing TNC model), such as: good reputation (absence of misdemeanor and criminal
records), professional standard (certificates, training and education, drivers’ exams,
etc.), commercial insurance policy (minimal amount cap, i.e., 1 million US$), motor
vehicles technical standards, loss items’ system, financial and other data gathering
and processing system (i.e., data on registered users, drivers, motor vehicles, motor
vehicles’ movement, statistical data with regard the provided services, etc.) and an
obligation on the side of TNC to make such data available to responsible authorities
(state authorities, local administration units, insurance industry, etc.), availability of
all relevant data on the driver, motor vehicle and price, online system of payments
(exclusion of cash payments), regular technical inspections and technical supervi-
sion, and similar.
The local administration units are entitled to amend the general TNC model in
accordance with their own local needs and requirements, thus often adding addi-
tional criteria, such as: multiple layers of insurance coverage (valid prior, during
and after the carriage has been completed), naming the local administration unit
as the additional beneficiary of insurance policy, obligation to procure necessary
licenses and permits for commercial activities, special drivers’ obligations (includ-
ing, for example, a prohibition of using a motor vehicle not appertained to TNC),
rules on drivers’ conduct (prior, during and after the carriage), legal specifications
with regard TNC and partner drivers’ contractual relationship (sub-contractors), set-
ting up special taxation schemes for TNCs, obligation to check misdemeanor and
criminal records through fingerprint control, and similar.
8.2 Digital Hailing
It is of further interest to mention the Estonian model, whereby the legislative changes
introduced in 201616 conceived a new category of carriage of passengers by road,
different from both public transportation options in general and taxi service. The
new category anticipates an exclusively digital method of hailing carriage (through
a digital platform), the motor vehicles utilized in the provision of this service have
no access to zones particularly reserved for the taxi motor vehicles, and the informa-
tion on drivers and motor vehicles must be made available to the public competent
authorities through the digital platform. The provider of service must, through the
digital platform, ensure the transparency of price determination, electronic bills, and,
the availability and accessibility of information on drivers and utilized motor vehi-
cles. As a means of compromise, the new regime also anticipates a number of relief
measures set-up for the traditional taxi industry sector (in order to help traditional
taxi service providers to adapt to new business circumstances), such as softening the
drivers’ professional education requirements, and enlarging the geographical area
within which the taxi service providers can offer their services (Aivar 2016).
16 Ühistranspordiseadus RT I, 12.03.2015, 85.

80 M. Mudrić
8.3 e-Hailing Taxis
In 2016 China introduced the online taxi services’ (so-called “e-hailing taxis”) cate-
gory.17 The Chinese law establishes different permits for the digital service providers,
owners of motor vehicles utilized in the provision of taxi services, and drivers. Each
permit specifically presupposes a different set of requirements and conditions that
must be satisfied prior to procurement (with a special focus on quality, safety, and
security of service). The data collected through the digital platform must be archived
(for minimum 2 years) and made available to public body competent for taxi carriage.
In addition, the information on price, motor vehicle utilized for carriage service, and
the driver must be made available to passengers, passengers’ data must be adequately
protected, and, it is necessary to procure an insurance policy with regard injuries and
damage suffered by passengers. The provider of digital service, considered as the
overall principal service provider, must, in addition, procure a special permit for the
provision of on-line carriage ordering service. Furthermore, the provider of digital
service is under an obligation to enter into different types of labor contracts with
drivers, depending on drivers’ level of activity (how long and how often they per-
form the carriage services). The local administration units are entitled to further
regulate the noted business model in their respective area, particularly with regard
further (permit related) requirements. Finally, the existing regulation on the tradi-
tional taxi services has also been amended,18 allowing for, among other items, the
digital platform/application ordering.
8.4 Transport Booking Service
Another interesting legislative innovation has recently been introduced in Australia,

more precisely, in the Australian Capital Territory.19 The new law constitutes the
operator transport booking service (digital ordering service) and establishes a new
type of license with a specialized set of requirements and conditions. The operator
of transport booking service, among other items, is named the responsible person
(strict liability principle) for numerous acts of a misdemeanor and other violations of
law, thus placing considerable emphasis on public policy interests of protecting the
citizens in general. The amended Act further reinforces the criteria for evaluating the
drivers (criminal and misdemeanor records), procuring licenses, ensuring transparent
and available information on drivers, passengers, motor vehicles utilized for carriage
services and price (with the mandatory archiving obligation, and additional obligation
17 Ministry of Transport, the Ministry of Industry and Information Technology, Decree [2016] No.
60 on Interim Measures for the Administration of Operation and Services of E-hailing Taxis.
18 Ministry of Transport, the Ministry of Industry and Information Technology, Decree on Interim
Measures for the Administrative Provisions on Cruising Taxi Operations and Services.
19 Legislative Assembly, Road Transport (Public Passenger Services) (Taxi Industry Innovation)
Amendment Bill 2015 (No 2) (Amendment Bill).

to make such data and information available to public authorities), procuring the
adequate insurance policy (minimal sum of 5 million AUS$), and similar.
The noted novelty gradually spread through Australia, with certain states tak-
ing due care to facilitate the traditional taxi industry’s adjustment period to a new
business model. One such example is the regulation amendments in Queensland,20
where the State Government introduced a special “adjustment package” (100 million
AUS$) aid to the traditional taxi service providers in order to, after having recog-
nized the disbalance in the market, help them adjust to new business circumstances.
In addition, law amendments provided an adjustment period during which the tradi-
tional taxi service providers are granted exclusive rights with regard the provision of
carriage service in certain areas, and, additionally, enabled the traditional taxi service
providers to switch to the electronic payment system and price determination system
based on the dynamic charge increase model.
8.5 Positive Aspects of Legal Novelties
The plethora of interesting and innovative legal arrangements introduced to the mar-
ket with the arrival of new business models of passengers’ carriage by road services
(both within and outside of the scope of public transportation options) accentuate
the issues arising with the implementation of new technologies and seek to eliminate
practical problems associated with the utilization of new business practices. The true
value of legal innovations is yet to be fully determined, as new business models have
only been relatively recently introduced to various markets around the world. Nev-
ertheless, it should be recognized that the new business models, both with regard the
digital services and carriage services, require a new approach on both the regulatory
and market level, as it is necessary to devise a legal scheme that will respond to new
business circumstances and challenges ahead.
It is of interest to highlight several useful legal stipulations that are recommended
as a useful addition to any new regulation on commercial activities such as Uber’s
business model:
a. The obligation to store all data collected through the digital platform (application)
for a certain period of time;
b. The obligation to keep such data confidential;
c. The obligation to keep such data secure;
d. The obligation to make such data available to public authorities;
e. The obligation to connect the digital platform with competent financial authori-
ties;
f. The obligation to connect the digital platform with competent interior and security
authorities;
20 Queensland Government, The Queensland Cabinet and Ministerial Directory, Minister for Trans-
port and the Commonwealth Games, The Honourable Stirling Hinchliffe Monday, September 05,
2016.
82 M. Mudrić
g. The obligation to procure special licenses and permits for the provision of digital
services in the transportation field, that require a set of conditions to be satisfied
with regard safety, security, and quality of service;
h. The obligation to procure various insurance policies valid for the provision of dig-
ital services and provision of carriage services, whereby the insured period must
include time-frame prior, during and after the provision of digital and carriage
services;
i. Astringent responsibility and liability principles with regard to the providers of
both digital and carriage services;
j. The obligation to conclude different types of labor contracts with partner drivers,
depending on their level of involvement with the provider of digital services;
k. Special harmonization measures aimed to consolidate the traditional taxi and
rent-a-car with driver services with new business models; and,
l. Special aid measures tailored for the traditional taxi and rent-a-car with driver
industry to ease their adjustment to new business circumstances and new regu-
latory schemes.
References
Articles
Davis J (2015) Drive at your own risk: uber violates unfair competition laws by misleading UberX
drivers about their insurance coverage. Boston Coll Law Rev 56(3)
Elliott RE (2016) Sharing app or regulation hack(ney)?: defining Uber Technologies Inc. J Corpo-
ration Law 41:3
Jin ST, Kong H, Sui DZ (2019) Uber, public transit, and urban transportation equity: a case study
in New York City. Prof Geogr
Leiren MD, Aarhaug J (2016) Taxis and crowd-taxis: sharing as a private activity and public concern.
Internet Policy Rev 5(2):4
Daus M, Russo P (2015) One standard for all. criminal background checks for taxicab, for—hire,
and transportation network company (Tnc) drivers. Jay College of Criminal Justice, of the City
University of New York, New York
Fagerli K, Strømsnes A, Langli JC (2000) Taxinæringen i Oslo: Fra svart til hvitt. Report from
Handelshøgskolen, BI, Oslo
International Transport Forum (2016) App-based ride and taxi services: principles for regulation.
OECD/TIF
National Association of Insurance Commissioners (2015) Transportation network company insur-
ance principles for legislators and regulators. National Association of Insurance Commissioners
Price Waterhouse (1993) Analysis of taxicab deregulation and re-regulation. Price Waterhouse
Rienstra S, Bakker P, Visser J (2015) International comparison of taxi regulations and Uber. KiM
Netherlands Institute for Transport Policy Analysis
Rosenblat A, Levy KEC, Barocas S, Hwang T (2017) Discriminating tastes: uber’s customer ratings
as vehicles for workplace discrimination. Policy and Internet, Policy Studies Organization
Schaller Bruce (2018) The new automobility: lyft, uber and the future of American cities. Schaller
Consulting, New York
Transportation Research Board (2016) Between public and private mobility: examining the rise of
technology-enabled transportation services. Transportation Research Board, Washington DC
Online Publications
Aivar P (2016) Estonia to regulate Uber and Taxify ride-sharers. Postimees Portal. https://news.
postimees.ee/3583509/estonia-to-regulate-uber-and-taxify-ride-sharers. Accessed on 4 Mar 2019
Lu A, Frazier PI, Kislev O (2018) Surge pricing moves uber’s driver-partners. SSRN Portal. https://
ssrn.com/abstract=3180246. Accessed on 4 Mar 2019
Nelson LJ (2019) L.A. County weighs a tax on Uber and Lyft to curb traffic congestion.
Los Angeles Times Portal. https://www.latimes.com/local/lanow/la-me-ln-uber-tax-los-angeles-
20190226-story.html. Accessed on 4 Mar 2019
Office of Consumer Affairs and The Division of Standards, Government of Massachusetts (2017)
The Office of consumer affairs and the division of standards recognize weights and measures
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agencies/dos-lp/uber-technologies.html. Accessed on 4 Mar 2019
Comparative Analysis
Mišo Mudrić, Antoine Gaudemet, Henning Jessen, Massimiliano Musi,

Maria-Victoria Petir-Lavall, Achim Puetz and Rino Siffert
Abstract The following chapter analyzes several jurisdictions of interest: Croatia,

France, Germany, Italy, Spain, and Switzerland. Each section contains basic report
segment (relevant primary and secondary legislation, relevant articles, relevant case
practice) and brief summary segment (providing further relevant information and
summary with regard the noted legislation and case practice).
M. Mudrić (B)
A. Gaudemet
University Paris 2 Panthéon-Assas, Paris, France
e-mail: antoine.gaudemet@u-paris2.fr
H. Jessen
World Maritime University, Malmö, Sweden
e-mail: hj@wmu.se
M. Musi
Alma Mater Studiorum—University of Bologna, Bologna, Italy
e-mail: massimiliano.musi3@unibo.it
M.-V. Petir-Lavall · A. Puetz
Jaume I University, Institute for Transport Law, Castellon, Spain
e-mail: petit@uji.es
A. Puetz
e-mail: putz@uji.es
R. Siffert
Swiss Federal Office of Justice, Bern, Switzerland
e-mail: rino.siffert@bluewin.ch

https://doi.org/10.1007/978-3-030-31535-1_4
86 M. Mudrić et al.
1 Croatian Law and Practice
1.1 Basic Report
Primary legislation
Original Zakon o prijevozu u cestovnom prometu
language title
Original legal Narodne novine, 41/2018
source
English Carriage by Road Transport Act
translation title
Abbreviation CRTA
Relevant articles There is no official translation of the subsequent legislation to be reviewed.
– taxi services The following, non-official translation is a direct translation of relevant
norms, with no attempts to make certain provisions clearer. For
clarification, see comments in the summary below.
A number of rules regulating taxi service are also applicable to rent-a-car
with driver services.
Art. 4, para 1, p. 1 – Definition
“… autotaxi carriage is a public carriage of passengers service provided
with a personal M1 category motor vehicle, if one passenger or an
associated group of passengers are boarding in one or more locations, and
dropped-off only in one different location, and such carriage is provided
based on one order and with one payment of the overall charge for
provided carriage determined by taximeter or electronic application that
shows the maximum price and planned travel route in advance in
according with beforehand known conditions, whereby the order has been
realized through a call, electronic application or directly with the driver
and has no characteristics of other means of passengers’ carriage”.
Art. 5, para 2 – Professional Capacity
“Drivers who operate vehicles for the provision of autotaxi carriage of
passengers and who provide the rent-a-car with driver services as special
forms of the carriage in road transport, and for which the driving license
category B is necessary, must obtain the basic qualification in accordance
with the special program for B category drivers”.
Art 9, para 6 – Periodical Education
“Drivers who provide autotaxi carriage or rent-a-car with driver services
as special forms of the carriage in road transport are not obliged to attend
periodical education”.
Comparative Analysis 87
Art. 13, para 2 – Special Conditions for Motor Vehicles

“… vehicles utilized for the provision of autotaxi carriage must comply
with special conditions with regard to external signs, age and equipment in
vehicles connected with autotaxi carriage provision”.
Art 14, para 1, para 2, p. 4, para 7 – Licenses
“1. Legal or physical person - craftsman may carry out the public road
carriage of passengers service… if entered into court or trade registry…
and if it has procured a license [para 2: “… autotaxi carriage.”]… issued
by the office of state administration in a county, or administrative body of
the City of Zagreb… based on carrier’s place of establishment/residence”.
“7. … autotaxi carrier is in charge of records for vehicles utilized for
autotaxi carriage”.
Art 18, para 4 – Financial Capacity
“… legal or physical person - craftsman that carry out the public road
carriage of passengers service, proves the financial capacity with a valid
insurance policy of passengers in vehicle utilized for autotaxi carriage, and
that is procured in line with special act regulating mandatory insurances in
road carriage”.
Art. 31 – Public Carriage Services in Domestic Carriage
“… Public carriage of passengers in domestic road transport is performed
as… autotaxi carriage…”.
The autotaxi service is also listed in Art. 61 – Public Carriage Services in
Cross-Border Carriage.
Art. 47 – Autotaxi Service
“1. Autotaxi carriage of passengers in domestic road transport is
conducted on the basis of license for autotaxi carriage of passengers and
permit for autotaxi carriage of passengers…”.
“2. Legal or physical person - craftsman that carry out the public road
carriage of passengers service, exclusively for stopping in order to embark
or disembark passengers may use stops for vehicles utilized in public
transportation and autotaxi stops, a for driving may utilized special traffic
lines that provide circulation advantage”.
“3. The permit for providing autotaxi service… is issued by a competent
local administration unit’s administration body, or the City of Zagreb’s
administration body. Legal or physical person – craftsman may procure the
permit from more local administration units only if they satisfy all
conditions prescribed by this Law”.
“4. The permit… will be issued to the legal or physical person – craftsman
that have procured a valid license for carrying-out autotaxi carriage in
domestic road transport at the time when the permit issuance request has
been issued”.
“5. Local administration unit, or the City of Zagreb cannot limit the
number of issued permits in its area”.
“6. Local administration unit, or the City of Zagreb can enact a special act
determining autotaxi stops’ locations and equipment, means of their
utilization and permit issuance’s fee”.
“13. The permit is issued for a period of 5 years, maximally up to the day
when the license expires”.
“14. The permit is not negotiable and can be used only by the carrier to
whom it is issued”.
“19. The bodies in charge of licenses and permits issuance must enter all
issued permits and licenses for autotaxi carriage of passengers and data on
vehicles utilized for autotaxi carriage into the Database of Issued Licences
and Permits for autotaxi carriage, which is a part of the National Registry
of Road Carriers”.
Art. 48 – Scope of Activities and Pricing
“1. The autotaxi carriage of passengers is conducted on the basis that the
carrier who performs autotaxi carriage activity is allowed to embark
passengers and begin the carriage only in the area of local administration
unit, or the City of Zagreb for which it has procured a permit”.
“2. If the carrier is providing the autotaxi carriage of passengers through a
taximeter, during the service performance the taximeter in a vehicle must
be turned on, and the price-list must be placed in a visible spot”.
“3. The autotaxi price-list… is independently determined by the carrier,
and must contain at a minimum the price per one traveled kilometer”.
“4. If the carrier offers autotaxi carriage of passengers’ service through an
electronic application that shows in advance to the passenger the
maximum price and planned travel route, the application must be turned on
in the vehicle during the whole period of service performance”.
Relevant articles As noted above, certain provisions relevant for autotaxi services are
– rent-a-car with additionally relevant for the rent-a-car with driver services (as listed
driver services above), and shall not be repeated here.
Art 4, para 1, p. 16 - Definition
“Renting vehicles with a driver is an activity of special mode of
passengers’ carriage in road transport, where through a written contract
the lessor (carrier) obliges to lessee (tourist or travel agency, hotel, agent
in road carriage) to place at disposal a personal M1 category vehicle of
high class that besides driver’s seat has at maximum for seats for
passengers (vehicle at least of E segment) with driver, in order to carry-out
the carriage service of special purpose (limousine carriage, VIP person
carriage, carriage of smaller number of persons for tourist purposes,
emergency carriage of persons, and etc.), and where drivers and vehicles
must comply with special conditions prescribed with an ordinance enacted
based on this Act, that has no characteristics of autotaxi carriage, and
whereby the service must be calculated on the basis of time unit (hour or
day), and charging is processed through non-cash payment”.
Art. 51 – Special Conditions
“4. The carrier performs the renting of vehicles with the driver as a special
form of carriage exclusively based on a license… and drivers must comply
with conditions prescribed with an [special] ordinance…“.
“5. The [above mentioned] carriage can only be carried out by a carrier
who possesses a valid license for providing domestic carriage of
passengers or a license for autotaxi carriage or a license for special forms
of carriage of passengers in domestic road transport…”.
Relevant articles The following translation only refers to those activities of carriage
–carriage intermediaries relevant for the present study.
intermediary Art. 96 – Agency Service in Road Carriage
“1. Agency service in road carriage, within the context of this Law, are
intermediary activities during employing the carriage capacities of the
carrier in the carriage of passengers and cargo in the name and for the
account of carrier…”.
“2. Agency service in road carriage can be conducted by a legal or
physical person – craftsman that are registered for conducting agency
service in road carriage and who have the license for that service…”.
“3. The office of state administration in a country, or an administrative
body of the City of Zagreb… will issue a license for the beginning of
conducting the agency service in road carriage to a legal or physical
person – craftsman who have good reputation…, registered agency service
in road transport in a court of trade registry, and who have: - business
space with noted firm at entrance, that is adequate for business, completely
separated from resident area and that allows undisturbed provision of
agency service in road transport, and – concluded contract on liability
insurance… [for damage listed in para 4, see below]”.
“4. Agent in road carriage is under an obligation to, with an insurer in the
Republic of Croatia or insurer in EU Member State, conclude and renew
liability insurance for damage that might arise through the conduct of
agency service to the carrier, carriage consignor or third party”.
“5. The lowest insured amount for damage… [listed in para 4, see above] …
cannot be lower than 150.000,00 HRK per damage incident, or 750.000,00
HRK for all damage compensation claims in one insurance year”.
“6. Agent in road carriage in carry-out the agency service must perform
with higher care, in line with the professional standard of conduct and
good business customs”.
Brief summary See below.
Original Pravilnik o posebnim uvjetima za vozila kojima se obavlja javni cestovni
language title prijevoz i prijevoz za vlastite potrebe
Original legal Narodne novine, 50/2018.
source
English Ordinance on Special Conditions for Motor Vehicles used in providing
translation title Public Road Carriage and Personal Carriage
Relevant articles A number of rules regulating taxi service are also applicable to rent-a-car
– taxi services with driver services.
Art. 3. – Vehicles Allocated for Autotaxi Carriage
“Personal M1 category vehicles allocated for autotaxi carriage must
comply with the following special conditions:
– it cannot be older than 7 years, and from 1st January 2021, it cannot be
older than 5 years
– must be equipped with a taximeter of an approved type, certified and
placed in a vehicle on a spot visible to the user, except when the charge
for performed carriage is determined through electronic application
– have an autotaxi services price-list placed in a vehicle on a spot visible
to the user, except when the charge for performed carriage is determined
through electronic application
– have a sign “TAXI” on vehicle’s roof
– have at least four side-doors or three sider-doors out of which the
side-doors in the second row of seats are placed on the rights side of the
vehicle
– have equipped and functional air-conditioning
– have equipped and functional braking system (ABS)
– have equipped third breaking light
– have equipped back-light for fog
– have equipped airbags for at least the driver and co-driver
– have equipped system for simultaneous tripping of all direction cursors
– have on side-flanks highlighted at least the word TAXI and name and
surname and place of residence of a legal person – craftsman, or name
and place of establishment of corporate society, and the height of letters
cannot be smaller than 30 mm
– have equipped safety belts on all seats
– have equipped headrests on all seats”.
Art. 4 – Records on Vehicles Utilized for Autotaxi Carriage
“1. Autotaxi carrier keeps records on vehicles utilized for autotaxi
carriage… in electronic form”.
“2. The records… must at least contain:
– name, surname and place of residence of a legal person – craftsman, or
name and place of establishment of a corporate society
– OIB [personal identification number] of autotaxi carrier
– registry and VIN plated of active vehicle utilized in autotaxi carriage
– the model year of vehicle in accordance with VIN vehicle label and
– producer’s name and vehicle’s model”.
“3. The autotaxi carrier must deliver the first record… to the license
issuance competent body during the first request for license procurement”.
Art. 20, para 9 – Exemption for Technical Inspection
“For personal M1 category vehicles utilized for autotaxi carriage and
rent-a-car with the driver the compliance with special conditions for
vehicles is not determined at technical inspection stations nor is the
certification on compliance with special conditions for vehicles issued”.
Relevant articles As noted above, certain provisions relevant for autotaxi services are
– rent-a-car with additionally relevant for the rent-a-car with driver services (as listed
driver services above), and shall not be repeated here.
Art. 6, para 4, para 5, para 6 – Special Conditions
“Personal M1 category vehicle utilized for rent-a-car with the driver as a
special form of carriage must comply with the following special conditions:
– have the clean and undamaged interior of vehicle and passenger’s cabin
– have tools for cleaning the interior of vehicle and passenger’s cabin
– have equipped navigation system or equipment”.
“Personal M1 category vehicle… cannot be older than 5 years…”.
“Personal M1 category vehicle… must also comply with conditions
determined by special acts regulating the safety of transport on roads and
technical conditions for vehicles in transport on roads”.
Original Pravilnik o početnoj i periodičkoj izobrazbi vozača
language title
Original legal Narodne novine, 50/2018.
source
English Ordinance on Basic and Periodical Training of Drivers
translation title
Art. 18 – Starting Qualification
“The exam for acquiring the starting qualifications for controlling the
autotaxi vehicles and vehicles utilized for rent-a-car with driver service as
a special form of carriage, is carried-out through passing an exam with
regard the knowledge on regulation relevant for autotaxi carriage and
other transport regulation, and which consists only of the theoretical part”.
Original Zakon o obveznim osiguranjima u prometu
language title
Original legal Narodne novine, 151/2005, 36/2009, 75/2009, 76/2013, 152/2014.
source
English Transport Compulsory Insurances Act
translation title
Abbreviation TCIA
Art. 2, para 1, p. 2., p. 2. – Mandatory Insurance in Transport
“Mandatory insurances in transport are:
– insurance of passengers in public transport for accident-related
consequences,
– insurance of owners, or users … of vehicles for liability for damage
caused to third parties (… motor vehicle liability insurance)”.
Art. 17, para 1, para 2, p. 3 – Insurance of Passengers in Public Transport
for Accident-Related Consequences
“The owners of carriage vehicles utilized for carriage of passengers in
public transport are under an obligation to conclude a contract of
insurance of passengers for accident-related consequences”.
“The [insurance] contract … must be concluded by:
– owners of autotaxi vehicles and rent-a-car vehicles when rented with a
driver”.
Art. 19, para 2 – Minimum Insured Sums
“… per passenger…:
– in case of death 40.000,00 HRK,
– in case of permanent disability 80.000,00 HRK”.
Art. 20 – Right to Compensation
“Passenger who experiences the accident, or in accordance with insurance
terms a designated beneficiary in case of passenger’s death, has a right to
seek from the insurance company with whom the insurance has been
concluded to fulfill its contractual obligation directly to that person”.
“If the owner of carriage vehicle, who has concluded a contract of
insurance of passengers in public transport, is responsible for suffered
damage, the sum of money appropriated to the injured person based on
mandatory insurance of passengers in public transport does not include the
sum of money appropriated to the injured person based on the motor
vehicle liability insurance”.
Art. 22, para 2 – Motor Vehicle Liability Insurance
“The contract … [on motor vehicle liability insurance] also covers damage
arising from death, personal injury, health deterioration, complete or
partial damage of goods of passengers in a vehicle that has caused
damage”.
Relevant Case Practice
Due to the fact that the new CRTA has only recently been enacted, there is no
recent case practice based on the new law.
1.2 Basic Summary
In 2018, the Croatian Parliament adopted a new Carriage by Road Transport Act
(Official Gazette (OG), 41/2018, CRTA),1 profoundly changing, liberalizing and
deregulation the taxi market in the Republic of Croatia. In accordance with the old
regulatory regime (OG, 82/2013),2 the taxi services market was partially liberal-
ized, with the regulatory responsibility divided between the state legislature and
acts enacted by the local administration units. In order to provide a taxi service, the
providers needed to obtain a general license, regulated by the old law, and a permit,
regulated by the local administration units’ acts. It should be noted that the old law
provided for a general framework, whereas the acts enacted by local administration
units further regulated the provision of taxi services in detail. The whole Croatian taxi
services market operated on the basis of limited taxi permits per local administration
units’ area, with the carriage price being limited to a maximum amount (determined
by acts enacted by local administration units). The old law only mentioned the rent-
a-car with driver service, stating the necessity of procuring a permit for that service
based on acts enacted by the local administration units. To the author’s knowledge,
no such acts were ever adopted by any local administration units, rendering all rent-
a-car with driver services, well established in the Croatian market, illegal. There
is, however, to the author’s knowledge, no available court practice confirming this
proposition.
With regard new CRTA, it should be noted that the legislator justified the intro-
duction of full liberalization with several grounds, such as inadequate regulation of
certain services (namely, taxi service and rent-a-car services), appearance of new
business model in the market (Uber’s business model and issues associated with it,
such as the noted carriage of passengers without proper licenses and permits), and,
issues with regard the supply-demand nexus during the tourist season (particularly in
the coastal areas). In addition, the legislator noted several projections on the positive
effects of new regulation, such as an increase of (self-)employed persons in the taxi
sector, enhancement of quality, availability and accessibility of taxi carriage price,
opening up of taxi market and incentives to new market entrants (particularly through
eliminating the cap on permits and cap with regard the area where a taxi service can
be provided via the procured permit), and, elimination of noted illegal activities in
the taxi sector.
Albeit several court decisions clearly indicating that Uber drivers violated the
old law by having had performed a service which was not aligned with the regula-
tory framework for taxi and rent-a-car with driver services (non-professional drivers
without licenses and permits), Uber, after having been introduced to the Croatian
market in 2015, continued to provide its services unhindered. The new CRTA, how-
ever, completely overhauled the regulatory framework, incorporating and allowing
all basic premises of new business models such as Uber’s business model, represent-
ing, perhaps, the most liberalized and deregulated national law on the provision of
1 Carriage by Road Transport Act, Official Gazette (OG), 41/2018.

2 Carriage by Road Transport Act, OG, 82/2013.
taxi and rent-a-car services with drivers as of yet, as is analyzed in further text.3 As a
result, in short, Uber’s business model is now incorporated into the taxi service and
Uber partner drivers act as taxi service providers (or rent-a-car with driver service
providers).
1.2.1 Taxi Service
Definition
CRTA defines a taxi service (Article 4) as a public carriage of passengers by road

service rendered with a personal motor vehicle, provided that one passenger or an
associated group of passengers is boarding the motor vehicle in one or several loca-
tions, and exist(s) in only one location [different to that of the pick-up location(s)],
and provided that such carriage is rendered on the basis of one order (realized either
through a call, electronic application or directly with the driver) and one payment
of carriage price determined either by a taximeter or an electronic application (that
must show the maximum price and planned route, based on the established and
known conditions of carriage, prior to the carriage). In addition, a taxi service must
not contain any elements of another carriage of passengers by road transportation
options.
The new definition of a taxi service has several potential issues, one of which is
placed forward. Unlike the pick-up options that allow for the piecemeal collection of
passengers (an associated group of passengers), the drop-off destination is limited to
just one destination spot. This, in practice, creates problems when the members of the
associated group of passengers have different drop-off locations in mind. Should a
taxi service provider comply with such individual wishes, such a service would, from
a legal standpoint, no longer represent a taxi service. Even if a single member of the
associated of group of passengers is to be treated as a single passenger for the purpose
of singular drop-off, this would still not be in line with the aforenoted definition of
a taxi service, as such service requires a singular order and a singular payment,
and cannot accommodate simultaneous carriage of single passengers and associated
group of passengers. If such a service is to be aligned with CRTA provisions, it would
be necessary to make payment and order a new ride each time a singular member of
the associated group of passengers has disembarked, rendering such an undertaking
impracticable, and realistically questionable in cases where the taxi driver is allocated
through a digital platform’s algorithm.
3 CRTA additionally regulates: occasional carriage, shuttle carriage and micro-carriage as recognized
modes of public transportation options.

Taximeter or Electronic Application
It should be noted at the out-start that the old law required the use of tariff models
and taximeters, whereby, among other items, the local administration units were
empowered to set the maximum price limitations. New CRTA abolishes such practice,
allowing different means of calculating the price, including the dynamic charge
increase models. This, in turn, means that the maximum price is no longer guaranteed,
but rather left to the carriers’ decision, based on their profit margins.
During the parliament sessions on the proposed new CRTA, the Government rep-
resentative stated that the electronic application does not serve as a means of charging
the carriage price. Whereas this might be true from some electronic applications uti-
lized by taxi service providers in other jurisdictions, this is certainly not true in case of
Uber’s application4 and new CRTA provisions. CRTA clearly states (in the aforemen-
tioned new definition of a taxi service) that the taxi service provider is to use either a
taximeter or an electronic application. If the electronic application is to be used, then
it must, among other items, serve to determine the carriage price, as the taximeter
cannot be used simultaneously. Unlike the taximeter that requires regular technical
inspection and alignment, new CRTA does not provide for similar mechanisms with
regard the electronic applications. This creates a level of disbalance between new
business models and traditional taxi service providers, whereby the new legal regime
continues to make certain demands with regard the use of taximeters but creates no
complementary demands for the use of electronic applications.5
1.2.2 Licenses and Permits
Licenses
New CRTA, as well as the old law, requires the procurement of licenses (Article 14) in
order to provide public transportation services such as taxi and rent-a-car with driver
service. Whereas the basic requirements for licenses are almost the same, the new
regime introduces several changes with regard to the license procuring procedure.
Unlike the previous law, new CRTA concedes the motor vehicles’ records keeping
to service providers who are obliged to send the data to the license issuing body that
enters such data into the National Registry of Road Carriers. The noted provision
is dubious given the fact that the data present in the National Registry is a public
record, and, therefore, should require an independent data gathering mechanism.
Whereas the old law exempted the taxi service providers from proving finan-
cial capacity (one of the general requirements for license), new CRTA identifies the
financial capacity verification with the presence of valid insurance policy related to
passengers, in line with the relevant regulation on mandatory insurance coverage in
4 Id.
5 As per: Ordinance on Special Conditions for Motor Vehicles used in providing Public Road Car-
riage and Personal Carriage, OG, 50/2018.
transport (more on this issue in later text). It is unclear why the legislator opted for
such a solution, given the fact that the noted insurance coverage primarily serves
to provide compensation mechanisms to citizens in case of transport-related acci-
dents. Furthermore, the noted legislation provides for different kinds of insurance
policies related to transport and passengers specifically, thus adding an additional
layer of uncertainty with regard to the noted provision of financial capacity verifi-
cation. Finally, the insured perils and available insurance compensation funds are
in no way related to the financial status of a taxi or rent-a-car with driver service
provider but serve to secure coverage in cases of third-party liability claims, and,
in the case of motor vehicle liability insurance, to, among other items, fulfill all
conditions necessary to get the motor vehicle registration and procurement of driv-
ing permit. Interestingly enough, no such exemption is available for other modes of
public transportation.
Permits
One of the key aspects of new CRTA is a significant level of permits system’s dereg-
ulation (Article 47), whereby the local administration units are no longer able to
(further) regulate the provision of taxi services (as well as other services, such as
rent-a-car with driver service) in their area through separate acts. In accordance with
new CRTA, the local administration units simply issue a permit (5 years, cannot
be transferred, can be renewed) based on the license issued by another competent
authority. Thus, the permit as such becomes an irrelevant factor, as is discussed in
the further text, and the only relevant activity still residing within the local adminis-
tration units’ competence is the right to enact rules with regard the taxi stands and
the permit issuance fee (amount limited by CRTA).
New CRTA, as noted earlier, eliminates the spatial limitation by excluding the
place of business and place of residence as a criterion for determining the area where
an individual taxi service can be provided. This, in turn, means that a single taxi
driver can get as many permits in as many local administration units as required.
In addition, as new CRTA disables the local administration units to enact special
rules on the provision of taxi services in their area, the taxi service providers are no
longer obliged to carry out a taxi service in the area for which they have procured
a permit. Therefore, the taxi service providers, under the new CRTA, are now in a
position to individually choose when and where they will provide the taxi service.
This can bring upon severe difficulties in practice whereby the taxi service providers,
motivated by profit, acquire as many permits as they like, but provide service only in
such areas and time-frame where the profit margin is the highest. One such example
is the tourist season, where the majority of taxi service providers move to areas with
an abundance of carriage demand, leaving the areas with low demand without proper
taxi carriage coverage (as discussed in the previous chapter).
The further relevant aspect of permits deregulation is the elimination of permit
number limitation. Prior to new CRTA, in practice, just one city (City of Rijeka)
deregulated the market by eliminating the permit limitation, whereas all other local
administration units kept a limited number of permits (based on a certain ratio of a

number of taxis’ permits per number of citizens).
Whereas the noted change allows the current market players and new entrants
to provide taxi service practically anywhere they deem it profitable, the unlimited
number of drivers and motor vehicles on roads may cause severe difficulties to
individual local administration units. The local administration units are no longer
allowed to control the number of taxi motor vehicles in their area, what may bring
issues such as increased traffic congestion (especially during the tourist season, daily
rush-hour migrations, etc.), increased audio and emission pollution, and similar. In
addition, new CRTA allows the taxi service providers to utilize public transportation
services’ stop-areas (for boarding and disembarking of passengers), thus adding an
additional problem, especially in places where the local traffic is already congested
to the point that the public transportation services (i.e., buses, trams, etc.) are already
operating with delays.
1.2.3 Quality Requirements
Professional Qualifications
New CRTA (Article 5, 7 and 9) requires for the taxi and rent-a-car with driver
services’ drivers to acquire a basic qualification (written exam), whereas the same
is, unlike as required in the old law, exempted from the practical exam (driving)
and periodical training.6 As means of supplementing the exempted additional train-
ing and evaluation requirements, CRTA introduces (Article 10) a requirement of
employing qualified persons responsible for transportation (a minimum of one per-
son employed in this position) whose job is to supervise the driver’s quality of per-
formance. Other types of public transportation options (occasional carriage, shuttle
carriage, and micro-carriage) are not exempted from the additional requirements.
The noted exemption does serve to promote the entry of new actors on the market
as it decreases the financial burdens. At the same time, however, and unlike the
other mentioned modes of public transportation, the taxi service drivers, as well as
rent-a-car with driver service drivers, tend to spend a lot of time on the roads, thus
increasing their overall impact on the transport safety and security. Lowering the
standards with regards the qualifications of drivers who tend to spend a lot of time
on public roads may cause a negative impact with regard the previously discussed
public policies of safety and security of citizens in transportation. It is questionable
to what extent a single person, acting as a person responsible for transport in a taxi
company (or several such companies), can influence the overall professional conduct
of all drivers working for that company (or several companies).
6 Further regulated with: Ordinance on Basic and Periodical Training of Drivers (OG, 50/2018).
Special Conditions of Motor Vehicles
Following the logic with regard to the drivers’ professional qualifications, further
exemptions are available for motor vehicles utilized in the provision of taxi services.
In order to financially incentivize the taxi industry, new CRTA significantly lowers the
expected conditions for such motor vehicles.7 With regard to the external outlook of
motor vehicles, the “taxi” sign no longer needs to have the “lighted” option, nor is the
motor vehicle any longer required to contain a registry number. Furthermore, the age
of motor vehicle can no longer surpass 7 years, or 5 years starting from 2021. Finally,
and most importantly, the new regulation significantly lowers the technical standards
of motor vehicles utilized in the provision of taxi services. More concurrently, the
new regulation no longer requires the compliance of various relevant equipment
(safety belts, headrest, ABS brake system, rear fog lights, airbags, etc.) with the
associated relevant standards (i.e., ECE-R standard). Instead, the new regulation
makes it sufficient to insert the required equipment of any quality to satisfy the
general requirements. This, in turn, can make a significant reduction in costs for the
taxi service providers.
Another, perhaps most important change, as opposed to the old regulation, is the
exemption with regard the regular technical inspection and certification of motor
vehicles utilized in the provision of taxi service and rent-a-car with driver service
at the technical inspection stations. The technical inspection stations are no longer
competent for issuing certificates on technical compliance. New CRTA transfers
the competence to public bodies in charge of transport supervision that issue the
certificates based on the information collected from taxi and rent-a-car with driver
services’ providers. This, in turn, means that it is the service providers themselves
who attest to the technical compliance of their own motor vehicles’ fleets, whereas the
previous technical inspection examination is replaced by pure equipment check-list.
As was the case with the drivers’ professional qualification exemptions, the new
regulation with regard to the special conditions for motor vehicles additionally alle-
viates the market entry, but, at the same time, aggravates the overall conditions on
the roads by allowing motor vehicles of potentially far lower standards to freely and
daily operate on public roads providing carriage services. It should be noted that
the new regulation does not provide any concrete mechanisms on how the compe-
tent authorities are able even to assess whether the information provided by service
providers is accurate in the first place. The level of legislator’s good faith towards
the service providers is difficult to understand, particularly having in mind that the
legislator noted significant issues in practice with regard the level of performance of
the noted service providers when introducing and justifying the grounds for a new
legal framework.
7 Further
regulated with: Ordinance on Special Conditions for Motor Vehicles used in providing
Public Road Carriage and Personal Carriage, op.cit.
1.2.4 Rent-a-Car with Driver
New CRTA (unlike the old law whereby the legal formulation of the rent-a-car with
driver service was left to the local administration units to fully regulate, if such
service was required in their area) defines the rent-a-car with driver service (Article
4) as a service whereby a service provider is providing a motor vehicle with a driver
to a client. CRTA emphasizes that this service is different than a taxi service, thus
rendering the rent-a-car with driver service providers unable to utilize the benefits
appointed to the taxi industry (i.e., use of taxi lines, taxi stops, etc.). The client
cannot directly negotiate a specific ride with the service provider but must contact
the following subjects in order to contract a carriage: tourist agency, travel agency,
hotel and road carriage agent (transportation intermediary). CRTA does not further
define the service in detail (unlike some other jurisdictions8 ), but provides a number
of examples of such services, such as the limousine carriage, VIP person carriage,
tourist tours, etc. In order to perform such service, the service provider must only
procure a general license for public transportation.
1.2.5 Transportation Intermediaries
New CRTA (Article 96) follows the basic premises of old law in defining the agent
in road carriage (transportation intermediary) as a person in charge of allocating
carriage options in the name of and for the account of the carrier. What has primarily
been amended is the scope of mandatory insurance coverage, as discussed below,
whereas everything else, including the obligation to procure a license (general CRTA
conditions), has remained the same. In the context of the current study, it could be
argued, pending previously analyzed caveats,9 that the digital component of Uber’s
business model corresponds to the transportation intermediary’s role, thus requiring
Uber, as the provider of digital service, to procure a transportation intermediary
license. No such practice is, however, noted.
1.2.6 Insurance
The Transport Compulsory Insurances Act (TCIA),10 the lex specials regulation in
the insurance and transport field, determines several important features with regard
to the provision of taxi and rent-a-car with driver services.
Article 2 TCIA nominates the insurance of passengers in the public carriage of
passengers by road against the consequences of accidents as mandatory insurance
and Article 17 TCIA stipulates the obligation on the side of owners of motor vehicles
8 For several examples, see in this volume Mudrić et al., Public Interest and Regulatory Approach,
Section 7.2.
9 For more information, see in this volume Mudrić, Nature of Uber Services, Section 6.1.
10 Transport Compulsory Insurances Act, OG, 151/2005, 36/2009, 75/2009, 76/2013, 152/2014.
utilized in such services to obtain this insurance. The same norm specifically points
to the owners of taxi and rent-a-car motor vehicles. Article 20 TCIA stipulates the
passenger’s right to direct action11 against the insurer. The issue of direct action is
regulated by the lex generalis Obligations Act (OA),12 in Article 945 and 965 (OA
regulates the contractual aspects of insurance).
In addition, TCIA regulates the motor vehicles liability mandatory insurance. It
is of relevance to note that in accordance with Article 20. TCIA, the claim based on
the motor vehicles liability insurance does not include the amounts available through
the insurance of passengers’ insurance claim, thus allowing for a separate claim in
each of the noted insurance plans. To exclude possible misunderstanding, Article 22
TCIA specifically nominates the right of passengers to seek redress in accordance
with the motor vehicle liability policy.
With regard the transportation brokers (intermediaries), new CRTA requires (Arti-
cle 96) agents to procure an adequate insurance policy with regard liability for dam-
age, that might arise out of the performance of transportation intermediary services,
to the carrier, consignor or third person. CRTA establishes a minimum cap of insur-
ance coverage, namely, 150,000,00 HRK per harmful event, and, 750,000,00 HRK
per insurance year (the latter sum being increased as opposed to the old law).
2 French Law and Practice
2.1 Basic Report
Primary legislation
Original language title Loi n° 2014-1104 du 1er octobre 2014 relative aux taxis et aux
voitures de transport avec chauffeur
Original legal source JORF n°0228 du 2 octobre 2014 page 15938
English translation title Law n° 2014-1104 of October 1st, 2014 regarding taxis and transport
cars with drivers
Abbreviation ‘Thévenoud Law’
11 For more general information on direct action, see in this volume Mudrić et al., Public Interest
and Regulatory Approach, Section. 4.1.1.
12 Obligations Act, OG 35/2005, 41/2008, 125/2011, 78/2015.
Relevant articles Article L. 3124-13 of the Transport Code

Is punished by two years of imprisonment and a 300 000 e fine the
fact of organizing a system putting in relation customers with people
who engage in the activities mentioned in the Article L. 3120-1
without being neither road transport undertakings which may
perform the occasional services mentioned in Chapter II of Title I of
this Book, or taxis, two or three-wheeled motor vehicles or
chauffeur-driven cars within the meaning of this Title.
Legal persons found criminally liable for the offense provided for in
this article incur, in addition to the fine in the manner provided for in
Article 131-38 of the Penal Code, the penalties provided for in
paragraphs 2 to 9 of Article 131-39 of the Criminal Code. same code.
The prohibition mentioned in 2 ° of the same Article 131-39 relates to
the activity in the exercise or on the occasion of the exercise of which
the offense was committed. The penalties provided for in points 2 to
7 of the said article may be pronounced for a maximum of five years.
Brief summary Law 2014-1104 of October 1st, 2014, also known as the ‘Thévenoud
Law’, which entered into force on January 1, 2015, requires all
drivers who chauffeur paying passengers to have a license and the
appropriate insurance (i.e. a higher level of insurance for chauffeurs
than a normal driver). Whereas UberPOP requires only that a driver
had an insured car in good condition, a driving license since at least
one year and that he is at least 21 years old.
Thus, UberPOP does not meet the requirements of French law as the
chauffeurs are not professionals. Therefore, drivers of UberPOP are
considered to provide illegal transportation services according to the
‘Thévenoud Law’ (‘exercice illégal de la profession de taxi’). Most of
them are workers/employees or do have other lucrative activities
besides providing their transportation services. The income derived
from UberPOP is considered as supplementary income.
Uber initiated many legal procedures in order to challenge the
constitutionality of parts of this law limiting UberPOP. The company
claimed that the ‘Thévenoud Law’ unfairly benefits taxis and should
be repealed. Thus, the company had instructed its drivers to keep
working, which the latter did until the violent protests in France
forced Uber in July 2015 to stop UberPOP.
Décision n° 2015-484 QPC du 22 septembre 2015
Brief summary The Constitutional Council in France upheld on September 22, 2015,
the aforementioned ‘Thévenoud law’ which banned Uber’s low-cost
transportation service UberPOP. The requirement that drivers who
want to provide the latter service need to have a professional license
to pick up paying passengers was considered to conforming to the
Constitution.
2.2 Brief Summary
In February 2014, the American company Uber launched UberPOP in Paris that
allowed almost any individual to become a part-time taxi driver and pick up others
in their own cars. From the beginning, it was clear that this ridesharing service was
going to anger the already angry Paris taxi drivers, who had already gone on strike to
protest about the rise of the private hire cabs in the city. In October 2014, a criminal
court in France (‘tribunal correctionel de Paris’) fined Uber France for running an
illegal transport service that used non-professional drivers. Uber France appealed the
decision.
Following this court decision, there was further pressure from licensed taxi drivers
that accused UberPOP of unfair competition because it used non-professional drivers.
On December 15, 2017, a government spokesman told French media that the service
would be barred from January 1, 2015, under the new provisions of the ‘Thévenoud
Law’, as the French Parliament voted to outlaw UberPOP and other similar services.
Thus, from January 1, 2015, UberPOP drivers, without a professional license to pick
up paying passengers, could be fined under fast track procedures in France. As of
February 23, 2015, about 100 drivers, mostly first-time offenders, had been ticketed.
Furthermore, the national union of taxi drivers and three traditional professional
chauffeur services sued Uber France. As part of its defense, Uber France requested
that constitutional challenges to some provisions of the ‘Thévenoud Law’ be referred
to the Constitutional Council (‘conseil constitutionnel’), the French court in charge
of verifying the constitutionality of laws. In June 2015, Uber France managers were
arrested in France for ‘illicit activity’. Meanwhile, the anti-Uber protests became
more and more violent. Finally, Uber France suspended its service UberPOP in
France on July 3, 2015, in response to violence against Uber drivers.
On September 22, 2015, the Constitutional Council in France upheld the afore-
mentioned ‘Thévenoud law’ which banned Uber’s low-cost transportation service
UberPOP.
Unsurprisingly, in December 2015, the Paris Court of Appeal condemned Uber
France for misleading ‘commercial practice’ in connection with its UberPOP service.
The company was fined 150,000, 50,000 euros more than the sentence handed down
at first instance.
On June 9, 2016, the Paris Criminal Court sentenced Uber France to a fine
of 800,000 euros for the start-up and promotion of UberPOP, half of which was
suspended. Uber France managers were also sentenced to a fine of 20,000 and
30,000 euros respectively, half of which was suspended. On the other hand, the
court did not prohibit the managers from running the company. Uber France and its
managers appealed the decision.
3 German Law and Practice
3.1 Basic Report
Primary legislation
Original Personenbeförderungsgesetz
language title
Original legal First published 21.03.1961, recast 08.08.1990 (Bundesgesetzblatt I, 1990,
source pp. 1690)
English Act on the Transport of Passengers
translation title Federal Law Gazette I, 1990, pp. 1690), last amended by Art. 2 para. 14,
Law of 20.07.2017 (Federal Law Gazette I, 2017, pp. 2808),
Abbreviation PBefG
Relevant articles § 1 PBefG (Substantive Scope)
– taxi services (1) This law covers the legal framework for the transport of persons with
trams, trolley busses, and motor vehicles, performed for valuable
consideration or businesslike.
A valuable consideration also includes seeking indirect commercial
advantages to support the economic viability of a passenger transport
business.
(2) This law does not cover the transport of passengers:
No. 1: with motor vehicles if it is performed free of charge or if a final
charge does not exceed the operational costs of the ride;
[…]
No. 1 also applies to business-like transport of passengers.
§ 2 PBefG (Mandatory Authorization)
(1) Pursuant to § 1, para. 1, anyone who transports passengers
[…]
No. 3: with motor vehicles performing liner services (§§ 42 and 43) or
No. 4: with motor vehicles performing occasional services (§ 46)
must be in possession of authorization. Such a person is a commercial
operator under this law.
§ 3 PBefG (Commercial Operator)
(1) An authorization is issued for the commercial operator to perform a
specific transport of passenger service (§ 9) and authorizing the person as
such (natural or legal person).
(2) The commercial operator or the person charged with the executive
operations of the business must be the one performing the passenger
transport services under his name, with individual responsibility and for
his own account. […]
§ 6 PBefG (Prohibition of Circumvention)

The legal obligations imposed on a commercial operator under this law are
not affected by any transactional or commercial arrangements or apparent
facts which could be designed to circumvent this law.
§ 9 PBefG (Scope of the Authorization)
(1) An authorization is issued for
[…]
No. 3: in case of a liner service of passenger transport performed with
motor vehicles: for the establishment, the layout of the line and the
operation,
[…]
No. 5: in case of occasional passenger transport performed with motor
vehicles: for the form of performing these occasional services and
operations with specific motor vehicles, including an indication of their
official license plates.
§ 10 PBefG (Administrative Decision in Case of Doubt)
The designated public body under the state law of the federal state where
the commercial operator is incorporated will issue an administrative
decision in any case of doubt
whether the transport of passengers is covered as a service under this law
or
how a specific mode or form of transport services is to be categorized or
who is categorized as a commercial operator pursuant to § 3 paras. 1 and
2 of this law.
§ 11 PBefG (Designated Public Bodies)
(1) An authorization is issued by a public body as designated by the
competent federal state government of the state.
(2) Competency lies with:
[…]
No. 2: […] in the case of occasional passenger transport services with
motor vehicles, the designated public body of the district where the
commercial operator has its seat of commercial operations or is
incorporated under the rules of the Commercial Code.
§ 13 PBefG (Requirements for Authorization)
(1) An authorization is issued only if
No. 1: the safety and viability of the operation is guaranteed,
No. 2: there are no facts which would indicate that the applicant is
unreliable as a commercial operator or that persons charged with
executive operations by the commercial operator are unreliable,
No. 3: the applicant commercial operator or persons charged with
executive operations by the applicant commercial operator are functionally
unfit
and
No. 4: if the applicant and operators charged with performing transport
services by him have a domestic seat or are incorporated domestically
under the rules of the Commercial Code.
[…]
(4) when performing transport services with taxis, an authorization shall

be denied if public transport services interests are negatively affected in a
way which would functionally threaten the exercise of local taxi services.
Taking into account the district where the locally designated body is
competent to act, special consideration will be paid to
No. 1: the demand for transport of passengers by taxis,
No. 2: the concentration of taxis,
No. 3: the development of revenue and expense, taking into account specific
operating times,
No. 4: the number and reasons for cessations of business.
The designated public shall introduce a period of observation to determine
the effects of prior authorizations in relation to public transport services
interests. As a maximum, the period of observation shall be one year after
the last authorization has been issued.
[…]
§ 46 PBefG (Forms of Occasional Transport Services)
(1) Occasional transport services is the transport of passengers with motor
vehicles which does not fall under liner transport services pursuant to §§
42, 42a and 43.
(2) Any occasional transport of passengers is only lawful in the form
1. transport services provided by taxis (§ 47),
2. holiday (day) trips and holiday trips with a specific holiday destination
(§ 48),
3. transport services provided by rented trolley busses or rented motor
vehicles (§ 49).
§ 47 PBefG (Transport Services with Taxis)
(1) Transport services with taxis is the transport of passengers with motor
vehicles
which are provided by the commercial operator at publicly authorized
locations and
by which the commercial operator performs rides to a specific destination
as designated by the client. The commercial operator may also accept
requests for transportation services during a ride or at his seat of
commercial operations.
(2) Taxi services may only be provided within the district where the
commercial operator is incorporated and where he has his seat of
commercial operations. Pre-requested rides may also be performed by
starting in other districts. […]
[…]
(5) It is prohibited to rent taxis to self-driving clients.
Relevant articles § 49 PBefG (Transport Services with Rented Trolley Busses or Rented
– rent-a-car Motor Vehicles)
services […]
(4) Transport services performed with rented motor vehicles includes the
transport of passengers with rented motor vehicles which are entirely
rented to perform transport of passengers services and which are utilized
by the commercial operator for rides where the objective, purpose, and
sequence is completely directed by the hirer and which are not taxis
pursuant to § 47.
It is only allowed to perform passenger transport services with rented
motor vehicles where the request has been received at the seat of
commercial operations or at the private home of the commercial operator.
As soon as the passenger transport service has been executed, the rented
motor vehicle has to return without undue delay to the seat of commercial
operations,
provided that the commercial operator has received at his seat of
commercial operations, at his home or during the ride – by telephone call –
a new request for passenger transport services.
The receipt of the request to perform passenger transport services at the
seat of commercial operations or at the home of the commercial operator
has to be recorded in accordance with accounting standards and the
records have to be kept for one year.
The acceptance, provision of intermediate services and the performance of
transport of passenger services requests and keeping a rented motor
vehicle ready for transport of passenger services as well as any advertising
for transport of passenger services with rented motor vehicles are not to be
designed in a way which could lead – either solely or in combination with
each other – to confusion with taxi transport services.
Signs and marks exclusively reserved for taxis may not be utilized. […]
Relevant articles § 1 PBefG establishes a strict typology of passenger transport services,
– ride-sharing resulting in an “all or nothing approach” (“Typenzwang”): As a result,
either the relevant services are covered by the PBefG (and thus subject to
all administrative rules, including § 49 PBefG) or they are not covered,
unregulated and thus free to perform.
There is no specifically applicable German law on ride-sharing. In fact, any
private ride-sharing is explicitly excluded from the scope of application of
the PBefG under the conditions of § 1 para. 2 No. 1: “This law does not
cover the transport of passengers with motor vehicles if it is performed free
of charge or if a final charge does not exceed the operational costs of the
ride […].”
As a result, under German law, ride-sharing with motor vehicles (cars) is
generally categorized as a non-commercial activity to serve a common
cost-saving benefit, usually among private persons. Nevertheless, some
entities operate on that basis in Germany (so-called “Mitfahrzentralen”) at
an alleged break-even level of operational costs, while highlighting that the
activity of facilitating ride-sharing does not generate any commercial profit.
Based on the relevant decisions of the locally competent public bodies for
authorization of passenger transport services, German administrative courts
have rejected any attempt of all Uber-services to be categorized under
non-commercial ride-sharing (see further details below).
Relevant articles The activity of intermediaries for passenger transport services is not
– carriage explicitly covered by applicable German law. The PBefG applies a strict
intermediary typology approach, as already introduced above.
There is only one single sentence which mentions the activity of
intermediaries in relation to passenger transport services, i.e., the fifth
sentence of § 49 para. 4 PBefG – representing a provision to regulate the
internal German market of taxi services and designed for consumer
protection. This provision is at the core of the legal proceedings in relation
to scrutinizing the legality of Uber services under German law:
“The acceptance, provision of intermediate services and the performance
of transport of passenger services requests, and keeping a rented motor
vehicle ready for transport of passenger services as well as any advertising
for transport of passenger services with rented motor vehicles are not to be
designed in a way which could lead – either solely or in combination with
each other – to confusion with taxi transport services.”
Based on the relevant decisions of the locally competent public bodies for
authorization of passenger transport services, German administrative courts
have rejected any attempt of Uber to be categorized as offering merely
intermediary services which are not covered by the PBefG. Rather, all
Uber-services are categorized as representing the actual providers of
passenger transportation services, thus falling under all restrictive
requirements of the PBefG, including its competition-oriented provisions.
The Uber-service “UberTAXI” causes no problems in this regard because
only officially licensed taxis (which are clearly visible as such) are offered
via this service. In contrast, both “UberPOP” and “UberBLACK” have
been held to lead to “confusion with taxi transport services” pursuant to §
49 PBefG (see further details below).
Brief summary The applicable German law (as materialized by the PBefG already since
1961, recast in 1990 and continuously amended since then) serves two
major purposes:
First, the law is designed to assure the safe and comprehensive provision of
passenger transport services. Second, the law seeks to protect the existence
and functional viability of the internal market of transport of passenger
service providers (which explicitly includes privately operated, yet publicly
authorized, taxi services).
For this reason, German law follows – at the outset – an uncompromising
strict approach which only allows two options (so-called “Typenzwang”):
Either all Uber-services would fall completely outside the scope of
application of the existing law and would thus be unregulated, in the
absence of any other specifically applicable legal act.
Or, alternatively, all Uber-services are entirely subject to the protracted
system of the PBefG, thus legally categorizing Uber as a provider of
passenger transportation services and necessitating public authorization
under the applicable rules in order for all Uber-services to operate lawfully.
Taking into account a general prohibition to circumvent the rules (§ 6
PBefG), German courts have strictly opted for the latter approach, thus
avoiding a situation of legal limbo. As a legal consequence, according to §
46 PBefG, occasional transport of passengers designed for commercial
benefits, is only lawful in three exhaustively-listed forms, two of which are
relevant for Uber-services (taxis and rented motor vehicles)
Some details why the legality of two Uber-services (UberPOP and
UberBLACK) has consistently been denied by competent public bodies
and why this legal view has been confirmed by both civil courts as well as
by administrative courts is provided further below.
The current version PBefG may be criticized for being partially outdated.
For example, crucial legal provisions of the Act (§ 47 PBefG, on taxis, and
§ 49 PBefG, on rented motor vehicles) still refer to transport services
requests which are transmitted by clients to the passenger transport service
provider (utilizing rented motor vehicles) exclusively “by telephone call”
(“fernmündlich”). In addition, those requests have to be recorded and
archived in accordance with accounting standards – which basically still
refers to a physical (book-based) approach.
Nevertheless, any technical updates of the law in the future will – most
probably – not result in any changes in relation to its general stance, i.e. the
major ratio and justification of the PBefG rules: This is to establish and
uphold the highest standards of passenger safety and – inter alia – to
explicitly protect the functionality of the private market of passenger
transport services.
Original Gesetz gegen den unlauteren Wettbewerb
language title
Original legal Gesetz gegen den unlauteren Wettbewerb in der Fassung der
source Bekanntmachung vom 3. März 2010 (BGBl. I S. 254), das zuletzt durch
Artikel 4 des Gesetzes vom 17. Februar 2016 (BGBl. I S. 233) geändert
worden ist
English The Act Against Unfair Competition
translation title Federal Law Gazette I, p. 254, of 03 March 2010.
The translation includes the amendment(s) to the Act by Article 4 of the
Act of 17 February 2016 (Federal Law Gazette I, p. 233)
Abbreviation UWG
Brief summary German civil courts have held Uber to violate § 3a UWG (the provision is
entitled “Breach of Law”, formerly covered under § 4 No. 11 UWG).
§ 3a UWG states that: “Unfairness shall have occurred where a person
violates a statutory provision which is also intended to regulate market
conduct in the interest of market participants and the breach of law is
suited to appreciably harming the interests of consumers, other market
participants and competitors.”
As a legal consequence of § 3a UWG, any view of German administrative
courts holding that the two Uber-services UberPOP and UberBLACK are
not in compliance with the market-based rules of the PBefG automatically
triggers a “breach of law” and thus “unfairness” pursuant to § 3a UWG.
This has resulted in German civil courts to issue a number of injunctive
reliefs, i.e., ordering Uber to discontinue any commercial activity which is
not in compliance with the PBefG (i.e. UberPOP and UberBLACK).
The current legal reasoning under the PBefG and the UWG is inextricably
interlinked. Whether UberPOP and/or UberBLACK could also represent
“unfair” competition if they were held to be legal (i.e. under amended
administrative rules of the PBefG) is currently untested.
Original Straßenverkehrs-Zulassungs-Ordnung
language title Verordnung über den Betrieb von Kraftfahrunternehmen im
Personenverkehr
Original legal (StVZO) 26. April 2012 (BGBl. I S. 679), die zuletzt durch Artikel 1 der
source Verordnung vom 20. Oktober 2017 (BGBl. I S. 3723) geändert worden ist.
(BOKraft), 21. Juni 1975 (BGBl. I S. 1573), die zuletzt durch Artikel 483
der Verordnung vom 31. August 2015 (Bundesgesetzblatt I, 2015, S. 1474)
geändert worden ist.
Abbreviation StVZO
BOKraft
Brief summary Both StVZO and BOKraft represent administrative ordinances which
mainly provide technical specifications for motor vehicles which are
factually utilized for the transport of passengers.
Both ordinances presuppose due authorization under the rules of the
applicable primary law, i.e. the PBefG, and are thus not discussed in further
detail.
1. Major Appeals Stages:

– LG Frankfurt/Main, 25.08.2014 - 3 O 329/14
– LG Frankfurt/Main, 18.03.2015-8 O 136/14
– OLG Frankfurt, 09.06.2016-6 U 73/15
– BGH - I ZR 182/16
(STILL PENDING, status: 02/2019)
2. Major appeals stages:
– LG Berlin, 09.02.2015 - 101 O 125/14
– KG, 11.12.2015-5 U 31/15
– BGH, 18.05.2017 - I ZR 3/16
– BGH, 29.03.2018 - I ZR 3/16
– EuGH, 12.04.2018 - C-371/17
– BGH, 13.12.2018 - I ZR 3/16
(FINAL DECISION)
In addition:
– VG Berlin, 26.09.2014 – 11 L 353.14
– OVG Berlin-Brandenburg, 10.04.2015 - OVG 1 S 96.14 (final)
– AG München, 31.03.2016 - 1117 OWi 254 Js 225568/15 (final)
– VG Hamburg, 27.08.2014-5 E 3534/14
– OVG Hamburg, 24.09.2014 - 3 Bs 175/14 (final)
The legal proceedings in Hamburg have led to a complaint of Uber to the German Constitutional
Court (“BVerfG”) based on an alleged violation of the basic right to exercise a profession
(Article 12 of the German Basic Law). The BVerfG has rejected this request in preliminary
proceedings, without further legal reasoning in substance: BverfG, 1. Senat 2. Kammer,
13.11.2014 - 1 BvR 2861/14. For all Docket no. and specific dates of judgments, see above.
“AG” stands for “Amtsgericht” = “Local District Court”,
“LG” stands for “Landgericht” = “High Court”,
“VG” stands for “Verwaltungsgericht” = “Administrative Court”,
“OVG” stands for “Oberverwaltungsgericht” = “Higher Administrative Court”
“OLG” stands for “Oberlandesgericht” = “Court of Appeals”,
“KG” stands for “Kammergericht” which is the “Court of Appeals in Berlin”,
“BGH” stands for Federal Supreme Court (Civil Law and Criminal Law)
“EuGH” stands for “Europäischer Gerichtshof” = “Court of Justice of the European Union
(CJ)”
It is not possible to predict when the Federal Supreme Court will issue its final judgment in the
proceedings BGH - I ZR 182/16 (in relation to the Frankfurt-based appeals stage).
Brief summary Proceedings in relation to the legality of both UberPOP and UberBLACK
(i.e. not covering UberTAXI)
See below for more details.
3.2 Brief Summary
3.2.1 Procedural Background of Several Proceedings in Germany
As a result of the competency of designated public bodies in the different German

federal States to authorize the legality of passenger transport services (see § 11
PBefG) and subsequent denials of authorization for Uber (for legal reasons discussed
further below, resulting in Uber failing the requirements of § 13 PBefG), different
legal proceedings have been introduced by Uber to locally competent courts in four
major German cities:
The Frankfurt-based appeals stages (case details as stated above) have led to the
discontinuation of UberPOP services in Germany since 2015. The Frankfurt-based
appeals stages did not result in a final decision of the Supreme Court (BGH) by the
beginning of 2019.
The Berlin-based appeals stages have led to the discontinuation of UberBLACK
services in Germany since 2015. These proceedings have resulted in a final decision of
the Supreme Court (BGH) in late 2018, confirming the unlawfulness of UberBLACK
under the currently applicable rules of the PBefG and based on prior rulings of the
CJ in largely comparable proceedings as also held in France and Spain.
This overall procedural picture results in a strong presumption that the German
Supreme Court will finally also confirm the unlawfulness of UberPOP services as
already held by all lower courts in the Frankfurt-based appeals stages. Further legal
proceedings in Hamburg (in 2014) and Munich (in 2016)—which have primarily
focused on UberPOP—did already confirm this view.
All German court proceedings do not treat UberPOP and UberBLACK in complete
isolation from each other. Rather, they largely cover legal issues arising in relation to
the legality of both of these services because taxi services are specifically regulated
and subject to a number of restrictive (protective) requirements. Consequently, it is
often not possible to completely differentiate between UberPOP and UberBLACK
because the market-based legal reasoning under the PBefG—the central legal act
governing all related Uber services—is largely interlinked.
3.2.2 Material Substance and Key Legal Findings Under German Law
Scope of Application and Exemptions
Under the strict typology approach of the PBefG (“Typenzwang”), both UberPOP
and UberBLACK have been held to generally fall under the regulatory regime of the
PBefG. Exemptions would only apply for “rides free of charge” or “if a final charge
does not exceed the operational costs of the ride” (§ 1 para. 2 No. 1 PBefG). The
related attempts of Uber to qualify valuable considerations of clients as “voluntary
contributions” have been held to fall under the general prohibition of circumvention
of the rules (§ 6 PBefG). A valuable consideration does not even have to be a spe-
cific monetary remuneration under German law. Rather, any desire to designate a
professional activity as a consistent and repeating part of life would suffice.
In relation to quantifying the exact operational costs of a single ride, the Higher
Administrative Court of Hamburg has held an upper threshold of 0.35 EUR per km
to constitute an appropriate benchmark. As a result, Uber had—only temporarily—
tried to establish a general “cost cap” of that kind in Berlin. Uber thus aimed to
escape the regulatory applicability of the PBefG via this specific exemption rule.
However, it is generally doubtful whether such a cap is economically viable at all. In
any case, § 1 para. 2 No. 1 PBefG relates to individual singular rides. The provision
envisions a reasonable (non-commercialized) compensation payment among private
persons, such as work colleagues or acquaintances. In contrast to UberPOP, general
ride-sharing agreements and related facilitation services are legal and are known as
“Mitfahrgemeinschaften” or “Mitfahrzentralen” in Germany. However, the related
exemption provision is not designed to apply for multiple rides of the same driver
within a certain area and it is generally not meant to be part of any business calculation.
In cases of doubt and as a frequently repeating regulatory approach, the general
prohibition of circumvention is also relevant here again (§ 6 PBefG).
In addition, Uber has argued to perform just as an intermediary—both in relation
to UberPOP and to UberBLACK—and would thus not to act as an actual provider of
passenger transport services. This view would result in Uber being able to escape the
personal scope of applicability of the PBefG. Thus, Uber would not be categorized as
the “commercial operator” (§ 3 PBefG) who has to apply for authorization (i.e. living
up the requirements of § 13 PBefG), regardless whether it is a natural person or a legal
person. In contrast, all activated German courts have consistently identified Uber to be
the “commercial operator” because Uber reserves a number of key responsibilities
in relation to all commercially relevant decisions, for example, exercising control
over the advertisement, the conclusion of contracts, dispatch of drivers as well as
their specific terms of remuneration.
Uber’s terms of use which state differently in German, labeling Uber services
itself as intermediary services (“Vermittlungsdienstleistungen”) have been held to
be a legally irrelevant “falsa demonstratio”, i.e., a wrongful self-categorization. The
same notion of an irrelevant “falsa demonstratio” applies for any attempt to categorize
Uber drivers as independent commercial operators. Again, the non-circumvention
concept applies. As a result, Uber is identified and confirmed as the commercial
operator who has to be publicly authorized under the PBefG regime.
Authorization Issues and Protection of German Taxi Market
The authorization itself is subject to regulatory restrictions under §§ 46 para. 2 No.

3, 49 para. 4 PBefG which results in a legal incompatibility of both UberPOP and
UberBLACK under the currently applicable, market-oriented rules:
First, UberTAXI, as well as both UberPOP and UberBLACK, could be catego-
rized as occasional transport of passenger services pursuant to § 46 para. 2 PBefG.
This provision lists – applying a strictly exhaustive approach of (only) three accepted
forms of transport services – all lawful passenger transport services within Germany.
UberTAXI is governed by §§ 46 para. 2 No. 1, 47 PBefG and has not caused severe
legal issues because that business approach simply makes use of officially licensed
taxis – which have to be also clearly visible as such for any potential client. Uber-
TAXI also has several competitor applications on the German market, for example,
“myTaxi”.
In stark contrast to UberTAXI services, both UberPOP and UberBLACK cause
severe legal problems resulting in their illegality under German law: Under the strict
typology of the PBefG, these Uber services can only be lawful as occasional transport
of passenger services pursuant to § 46 para. 2 No. 3 PBefG (“transport services
provided by rented trolley busses or rented motor vehicles“). This specific provision
includes a direct reference to § 49 PBefG (entitled “Transport Services with Rented
Trolley Busses and Rented Motor Vehicles”). At the heart of many Uber-related legal
proceedings is a legal construction of the fourth paragraph § 49 PBefG. This quite
protracted paragraph states specifically:
Transport services performed with rented motor vehicles includes the transport of passengers
with rented motor vehicles which are entirely rented to perform transport of passengers
services and which are utilized by the commercial operator for rides where the objective,
purpose, and sequence is completely directed by the hirer and which are not taxis pursuant
to § 47. It is only allowed to perform passenger transport services with rented motor vehicles
where the request has been received at the seat of commercial operations or at the private home
of the commercial operator. As soon as the passenger transport service has been executed, the
rented motor vehicle has to return without undue delay to the seat of commercial operations,
provided that the commercial operator has received at his seat of commercial operations, at his
home or during the ride – by telephone call – a new request for passenger transport services.
The receipt of the request to perform passenger transport services at the seat of commercial
operations or at the home of the commercial operator has to be recorded in accordance with
accounting standards and the records have to be kept for one year. The acceptance, provision
of intermediate services and the performance of transport of passenger services requests,
and keeping a rented motor vehicle ready for transport of passenger services as well as
any advertising for transport of passenger services with rented motor vehicles are not to be
designed in a way which could lead – either solely or in combination with each other – to
confusion with taxi transport services. Signs and marks exclusively reserved for taxis may
not be utilized.
Many of the different legal requirements of § 49 para. 4 PBefG have been construed
in most of the cases as stated above, arguably with a varying focus, depending on the
exact nature of the legal proceedings. At the outset, the legal obligation as established
by the second sentence of para. 4, i.e., to receive requests for passenger transportation
“at the seat of commercial operations or at the private home of the commercial
operator” stands in contrast to the business model of Uber. The Administrative Court
Berlin has examined whether the receipt of transport requests at a (Dutch) server
could be comparable with a receipt at a (physical) “seat of commercial operations”.
However, to receive, process, forward and archive transport requests—directly—by
utilizing online servers and via an online smartphone application has been held to
be incompatible with the legal necessity of receiving orders at a (physical) “seat
of commercial operations” first. In other words: Only when utilizing taxi services
may passengers give direct orders to a taxi driver to execute a specifically desired
transport service, regardless of which technical means these orders are transmitted by
passengers. However, if such an order is issued to the driver of a rented car, directly
via the UberBLACK application, this results in circumvention of the requirement of
§ 49 para. 4, second sentence PBefG. This view has been finally confirmed by the
Federal Supreme Court in late 2018 (initiated by the Berlin-based appeals stage). As
a result, provided the wording of the law itself is not updated in the future (which is
currently not in sight), UberBLACK will remain illegal in Germany.
The reasoning is confirmed and gets a lot more persuasive when taking into
account further requirements of the fourth paragraph of § 49 PBefG: The driver
of a rented car has a general legal obligation to return to the seat of commercial
operations, and the driver has to return there without undue delay (“unverzügliche
Rückkehrpflicht”). Where should the UberBLACK (or UberPOP) driver return to?
To the location of a server (presumably in the Netherlands but may be located some-
where else)? This seems technically impossible. Should the Uber driver return (from
Germany) to a postal address where Uber is registered in the Netherlands? This also
seems absurd. In contrast to § 49 PBefG, the business model of Uber exactly pre-
supposes a number of Uber drivers to be generally available in a wider (city) area,
for the client to choose the closest driver available, as indicated by the operation and
visualization as provided by the smartphone application.
Finally, a specific exception in relation to the driver’s general obligation to return
to the seat of commercial operations is possible if the commercial operator receives
(again: first) at his “seat of commercial operations” or “during the ride – by a tele-
phone call – a new request for passenger transport services”. The German expression
“fernmündlich” has been translated here to mean “by telephone call”. However, Ger-
man courts were generally open to construe that expression in the emerging era of
smartphone applications. German courts have accepted that a call could—in gen-
eral—also be received via smartphone application transmission, without necessitat-
ing any oral talk over the phone. However, in all legal proceedings (particularly in the
appeals stages based in both Berlin and Frankfurt), the wider policy considerations
of clearly differentiating between taxis services and rent-a-car services were placed
at the center of the legal construction of the courts, in particular of the administrative
courts of Berlin.
The taxi-related provision of § 47 PBefG and the rent-a-car-related provisions of §
49 PBefG mutually exclude each other. The legal consequences are that UberBLACK
services result in an unlawful “blurring” of two materially distinct passenger transport
services which the German legislator seeks to differentiate clearly by the force of law:
On the one hand, taxis and, on the other hand, rented cars which are only occasionally
utilized for the transport of passengers. Or to put it even more bluntly: Under German
law, rented cars must not “transform” into “de facto taxis”.
This specifically intended differentiation of the German legislator is exactly oblit-
erated if the UberBLACK application silently transfers “calls” (i.e. smartphone-based
transportation requests of potential clients) to Uber drivers. It does not matter whether
these calls are received during rides (with passengers onboard) or while an Uber driver
is seeking new business (waiting or driving without passengers). What matters legally
is that such service (and all associated activities) is exclusively reserved for publicly
regulated taxis.
Influence of CJ Decisions (Spain and France)
As indicated above, a final decision of the German Supreme Court in relation to the
illegality of UberPOP is still pending; however, the result will not differ from the gen-
eral protective market-based reasoning as already applied in relation to UberBLACK.
If rented cars with professional drivers must not transform into “de facto taxis”, pri-
vate drivers with rented or private cars will—all the more—definitely not be allowed
to transform into “de facto taxis”.
Ultimately outlawing UberBLACK services under German law has been acceler-
ated by the parallel proceedings in France and Spain which had been referred earlier
to the CJ. The German Supreme Court had referred questions to the CJ in 2017 which
are very comparable in substance to questions referred to the CJ earlier by French
and Spanish courts.
On 10 April 2018, the CJ Grand Chamber delivered a judgment confirming that
UberPOP is a “service in the field of transport” within the meaning of Article 2(2)(d)
of Directive 2006/123 of 12 December 2006 on services in the internal market (the
“Services Directive”) (CJ, 10 April 2018, Case C-320/16, Uber France SAS v. Nabil
Bensalem). Article 2(2)(d) of the Services Directive excludes transport services from
the Directive’s scope. In relation to the legal classification of the service provided,
the CJ had followed the earlier reasoning of 20 December 2017 in Case C-434/15,
Asociación Profesional Élite Taxi v. Uber Systems Spain SL (“Uber Spain”).
As part of that earlier case, the CJ had already held in “Uber Spain” that Uber’s
commercial offering consists of more than an intermediary service and its service is
“inherently linked” to the offer of transport services. Like domestic courts in several
European countries (including Germany) had done before, the CJ noted specifically
that Uber is involved in the selection of drivers (non-professionals for UberPOP) and
that Uber would provide them with the smartphone application required to connect
with potential passengers. Moreover, Uber would exercise a decisive influence over
the conditions under which services are provided by the drivers.
As a result, in “Uber Spain”, the CJ concluded that Uber’s intermediation service
has to be regarded as forming an integral part of an overall service the main component
of which is a transport service. Accordingly, Uber offers a “service in the field of
transport”. In the French-related decision of the CJ, the court identified UberPOP
services as essentially identical to the service provided in Spain. As a consequence,
the French UberPOP service was also generally categorized as a “service in the field
of transport” requiring Uber to comply with the domestic rules for taxis and other
transport companies.
The German Supreme Court has taken note of both CJ decisions and had thus
already actively withdrawn its request for a preliminary ruling. This withdrawal
decision was explicitly based on the earlier CJ reasoning in “Uber Spain”. In par-
ticular, the German Federal Supreme Court specifically held in its judgment of 13
December 2018 that there was no legal obstacle at all to apply the reasoning of the
CJ (rendered in relation to UberPOP) and the domestic rules of the PBefG also in
relation to UberBLACK because these services “do no materially differ” under Ger-
man law. The incompatibility of UberBLACK (and UberPOP) with § 49 PBefG also
triggers an automatic violation of § 3a of the Act on Unfair Competition, resulting
in a prohibition of these services and in confirmation of respective injunctive reliefs.
Finally, as also evidenced by the 2014 rejection order of the German Constitu-
tional Court (indicated in the table above), the regime of the PBefG is traditionally
recognized and accepted to reflect constitutionally justified terms of how to objec-
tively regulate and exercise a specific profession. It is thus unrealistic to challenge the
protective thrust of the PBefG in the future because this law is specifically designed to
protect the existence and functionality of the German taxi market. As long as the Ger-
man legislator does not change the applicable rules of the PBefG, both UberBLACK
and UberPOP will remain illegal in Germany. In 2019, the competent German Min-
istry of Transport and Digital Infrastructure (BMVI) initiated the first steps for future
legal reform of the PBefG. This legal reform will potentially result in a future legal-
ization of the passenger transport services in question. Thus, any legal reform of the
PBefG will face heavy criticism and active resistance by “traditional” German taxi
service providers (who argue, in essence, that the commercial impact of the proposed
reforms will result in abolishing their profession).
4 Italian Law and Practice
4.1 Basic Report
Primary legislation
Original language title Legge 15 gennaio 1992, n. 21 - Legge quadro per il trasporto di
persone mediante autoservizi pubblici non di linea.
Amendments:
Legge del 4 Agosto, n. 124, art. 1, comma 170;
Decreto Legge del 24 gennaio 2012, n. 1, come convertito dalla
Legge del 24 marzo 2012, n. 27;
Decreto Legge del 30 dicembre 2008, n. 207, come convertito dalla
Legge del 27 febbraio 2009, n. 14;
Decreto Legge del 4 luglio 2006, n. 223, come convertito dalla Legge
del 4 agosto 2006, n. 248.
Original legal source Gazzetta Ufficiale 23 gennaio 1992, n. 18.
English translation title Law 15th January 1992, no. 21 - Framework Law on non-scheduled
public road transport of passengers.
Amendments:
Law 4th August 2017, no. 124, art. 1, paragraph 170;
Law Decree 24th January 2012, no. 1, converted by Law 24th March
2012, no. 27;
Law Decree 30th December 2008, no. 207, converted by Law 27th
February 2009, no. 14;
Law Decree 4th July 2006, no. 223 converted by Law 4th August
2006, no. 248.
Abbreviation Law 21/1992
Relevant articles Definitions:
Article 1 - Non-scheduled public road transport services
“1. Non-scheduled public road transport services are defined as those
which provide for the collective or individual transport of persons,
with a complementary and integrative function compared to
scheduled public rail, road, maritime, lacual and air transport, and
which are carried out at the request of one or more passengers, in a
non-continuous or periodic way, on itineraries and according to
schedules established from time to time.
2. The non-scheduled public road transport services are:
a) the taxi service by car, motorbike, small boat, and animal-powered
vehicles;
b) the rental car with driver services and car, sidecar, cycles, small
boat, and animal-powered vehicles”.
Article 2 - Taxi service
“1. The taxi service has the aim to meet the needs of individual
transport or small groups of people; it is addressed to an
undifferentiated user; the stationing takes place in a public place; the
fares are determined administratively by the competent authorities,
which also establish the ways the service shall be performed; the
user’s pick-up or the start of the service takes place within the
municipal or district area.
2. Within the municipal or district area referred to in paragraph 1, the
performance of the service is mandatory. […]”.
Article 3 - Rental car with driver services.
“1. Rental car with driver services is addressed to a specific user who
makes a specific request, at the car shed, for a specific time and/or
travel service.
2. The stationing of the vehicles shall take place inside the car shed
or at the wharf.
3. The headquarters of the carrier and the car shed shall be located
exclusively in the territory of the municipality that issued the
authorization”.
Article 4 - Regional competencies.

“1. The Regions exercise their competences in the field of transport
of passengers using non-scheduled public road transport services
according to the Decree of the Republic President of July 24, 1977,
no. 616, and within the framework of the principles established by
this Law.
2. The Regions, established the criteria to be followed by the
municipalities in drafting the regulations on the operation of
non-scheduled public road transport services, shall delegate to
local authorities the exercise of administrative functions of
implementation referred to in paragraph 1, in order also to achieve
an integrated vision of public transport not in line with other ways
of transport, in the context of economic and territorial planning.
3. In compliance with regional regulations, local authorities
delegated to perform the administrative functions referred to in
paragraph 1, shall regulate the exercise of non-scheduled public
road transport services by means of specific regulations, also
uninformed on a general basis to obtain greater rationality and
efficiency. […]”
Article 5 - Municipal competences.
1. Municipalities, in preparing the regulations on the operation of
non-scheduled public road transport services, establish:
a) the number and type of vehicles and small boats to be used for
each individual service;
b) the methods for carrying out the service;
c) the criteria for determining taxi fares;
d) the requirements and conditions for the licensing of the taxi
service and the authorization to operate the rental service with driver.
Article 6 - Register of drivers of vehicles or boats used for public
non-scheduled public services.
1. The register of drivers of vehicles or small boats used for
non-scheduled public road transport services are kept at the
Chambers of Commerce, Industry, Crafts, and Agriculture.
[…]
5. The registration in the register is a prerequisite for the issuance of
the license to operate the taxi service and for the authorization to
operate the rental car with driver services […]”.
Article 8 - Procedures for issuing licenses and authorizations.
1. The license for the performance of the taxi service and the
authorization to operate the rental car with driver services are
issued by the municipal administrations, through a public
competition announcement, to individuals who have the
ownership or availability by means of leasing of a car or small
boat, which can handle them in single or associated form.
[…]
3. In order to obtain and maintain the authorization for the rental car
with driver services, the availability, on the basis of a valid legal
title, of a registered office, a car shed or a wharf located in the
territory of the municipality which issued the authorization is
mandatory […]”.
Brief summary Law 15th January 1992 no. 21 regulates only taxi and rental car with
driver services (so-called “NCC”).
The regime of access to the market of these two types of services,
taxi, and NCC, is different:
– rental car with driver services are not subject to public service
obligations;
while
– taxi service is part of the local public transport services, but,
however, non-scheduled.
The taxi service shall ensure:
– the duty and mandatory nature of the service;
– territorial capillarity of the supply and accessibility of the taxi
service;
– public determination of the fares and of the ways of service:
– taxi station in a public place and the picking-up of the passenger or
start of the service within the municipal area or the relevant area.
According to Law n. 21/1992, the provider of taxi driver services
cannot take the legal form of a company, unlike the NCC, and the taxi
driver can hold only one license.
Law no. 21/1992 has delegated to the Regions and local Authorities
the detailed regulation concerning the management of the services,
therefore the regulation of taxi and NCC licenses is governed by the
municipal authority.
Municipal regulations shall take into account the following criteria:
– number and type of vehicles to be used for each individual service;
– requirements and conditions for the issuing of taxi licenses;
– methods for carrying out the service;
– criteria for determining taxi services’ fares.
Original language title Decreto Legge 30 dicembre 2008, n. 207 – Proroga di termini
previsti da disposizioni legislative e disposizioni finanziare urgenti -
convertito in legge, con modificazioni, dall’art. 1, Legge 27 febbraio
2009, n. 14.
Decreto Legge 25 marzo 2010, n. 40 convertito in legge, con
modificazioni, dall’art. 1, comma 1, L. 22 maggio 2010, n. 73.
Legge 4 agosto 2017, n. 124 - Legge annuale per il mercato e la
concorrenza.
Original legal source Gazzetta Ufficiale 31 dicembre 2008, n. 304.
Gazzetta Ufficiale, 26 marzo 2010, n. 71.
Gazzetta Ufficiale 14 agosto 2017, n. 189
English translation title Law Decree of 30 December 2008, no. 207 - Extension of deadlines
provided for by legislative provisions and urgent financial provisions
- converted into Law, with amendments, by Art. 1, Law 27 February
2009, no. 14.
Law Decree of 25 March 2010, no. 40 converted into law, with
amendments, by Art. 1, paragraph 1, Law 22 May 2010, no. 73.
Law 4 August 2017, no. 124 - Annual law for the market and
competition.
Abbreviation L.D. 207/2008
L.D. 40/2010
L. 124/2017.
Brief summary Law 21/1992 has been amended by Art. 29, paragraph 1-quarter,
L.D. 207/2008. The Article extended the scope of the requirements to
be fulfilled by the drivers of the rental car with driver services,
introducing some limitations for the performance of them.
In particular:
– prior self-certification for the access to the territories or other
municipalities;
– new methods for issuing authorizations, with mandatory
availability, on the basis of a valid legal title, of a registered office,
a car shed, or a wharf located in the territory of the municipality
that issued the authorization;
– the obligation to start and to end each individual rental car with
driver service at the car shed;
– the obligation to complete a “service sheet”;
– ban on parking in public parking areas in municipalities where
there is a taxi service.
The entry into force of the regulation was suspended by Article 7-bis
of the Law Decree 5/2009, in consideration of the fears related to a
significant limitation of the freedom of competition in the sector.
Then, Article 2, paragraph 3, Law Decree no. 40/2010 provided the
issuance of a Decree by the Minister of Infrastructures and Transport,
in agreement with the Minister of Economic Development, for the
reformulation of the basic principles of Law 21/1992, in order to
counter the unauthorized performance of taxi and rental car with
driver services.
This Decree should also regulate the above-mentioned provisions
concerning rental car with driver services contained in the Law
Decree no. 207/2008.
The deadline for issuing the Decree was deferred to 31st December
2018 by Law no. 205 of 2017.
The Annual law for the market and competition (Article 1,
paragraphs 179-182 of Law 124/2017) has delegated the Government
to issue a Legislative Decree for the overall reorganization of the
non-scheduled public transport sector and, in particular, of the
legislation relating to taxi services and rental car with driver services.
The deadline for the issuance of this Legislative Decree was 29
August 2018.
The criteria to be respected are:
– to provide a framework for non-scheduled public road transport
services which provide for the collective or individual transport of
passengers in order to guarantee the right to the mobility of all
citizens and to ensure them a complementary role with respect to
public transport by railways, automotive, maritime, lake, and air;
– to adapt the offer to new forms of intermediation that are carried
out through web applications using technological platforms for the
interconnection of passengers and drivers;
– to promote the competition, ensuring the consumer protection;
– to harmonize regional and local authorities’ competences in order
to define national standards;
– to adapt the system of penalties.
– Tribunale di Milano, ordinanza del 25/5/2015 e 2/07/2015;

– Tribunale di Torino, sentenza 1 marzo 2017;
– Tribunale di Roma, ordinanze del 7 aprile 2017 e del 26 maggio 2017;
– Justice of the Peace of Milan, Judgement 6th June 2018.
4.2 Brief Summary
4.2.1 Court of Milan
Taxi drivers’ associations of Milan, Genoa, and Turin appealed before the Court of
Milan asking for precautionary measures against Uber company, in order to forbid
the use of the app named UBER POP and the services offered by UBER company.
According to these associations, Uber engages to recruit private drivers, managing
the phase of putting in touch users and drivers and receiving payments directly,
paying the driver only with a small percentage. In this manner, UBER proposes the
same service offered by traditional taxi drivers but at lower rates, with consequent
misuse of customers. There is, therefore, an unfair competitive advantage and an
unauthorized exercise of the taxi services.
According to UBER company, the relationship established between passengers
and drivers through the UBER POP app should be qualified as an atypical contract,
expression of the principle of contractual freedom provided for in Article 1322 of
the Italian Civil Code.
By ordinance of 25 May 2015 and, then, by the Ordinance of 2 July 2015 which
has decided to reject the appeal filed against the first ordinance, the Court of Milan
recognized that UBER committed an act of unfair competition pursuant to Article
2598 no. 3 of the Italian Civil Code.
The Court found that the activity carried out by Uber was “interfering with the
taxi service” because “the transport request transmitted from the user through the
UBER POP app, besides being a technical modality already used by the taxi drivers’
cooperatives, appears completely comparable to the radio taxi service”.
Furthermore, unlike taxi drivers, the service offered by UBER is performed by
drivers who do not hold any administrative authorization and/or license. Therefore,
the Court has forbidden the use of the app named UBER POP as well as the perfor-
mance of the service that the company provides and promotes within the national
territory.
The app is not only a tool that facilitates contact between users and drivers but also
represents the essence of the service itself and constitutes its organizational structure.
Although the service is rendered by the drivers, Uber’s role does not appear to be
merely intermediation.
In conclusion, UBER POP app has violated the regulation in the field of non-
scheduled public road transport of passengers through conduct “capable to affect the
market while creating damage to the claimants”.
4.2.2 Court of Turin
The Court of Turin (Judgement 22 March 2017), after elaborated analysis considered
that “…the drivers managed and organized by Uber, unlike all the operators of the
non-scheduled public road transport sector, do not comply with the aforementioned
primary and secondary source regulations guaranteeing the rights of citizens and
their safety as regards the requirements, verifications, conditions and rules of taxi
service”. The ordinance emphasized that drivers recruited by Uber are operating:
– without possessing the so-called CAP (certificate of professional competence);
– without having carried out any public exam;
– without being registered in any register of non-scheduled public road transport drivers;
– without having received any municipal license;
– without applying pre-determined tariffs and applying those freely imposed by UBER;
– without issuing any Italian tax receipt;
– using private means of transport while not being a subject of rigorous control required
for the taxi service and not being covered by insurance for vehicles dedicated for public
use.
In these terms, the Court found that the activity carried out by Uber is an unau-
thorized activity violating fair competition principle.
4.2.3 Court of Rome
By Ordinance of 7 April 2017, the Court of Rome at first admitted the claim pursuant
to Article 700 of Italian Civil Procedure Code, forbidding UBER the performance,
promotion and commercialization of non-scheduled public road transport by using
UBER BLACK app or similar Apps: Uber Lux, Uber SUV, Uber Xl Uber Select and
Uber Van.
As stated in the Ordinances issued by the Court of Milan, Uber services were
defined as an act of unfair competition pursuant to Article 2598 no. 3 of the Italian
Civil Code.
Uber apps do not constitute only tools of intermediation between drivers and
users. Indeed, Uber company carries out a profit-making activity, performing a public
road transport service failing to comply with the requirements provided by the Law
21/1992.
Then, the Court of Rome, by Ordinance of 26 May 2017 revoked the decision of
7 April 2017.
The Court analyzed the phenomenon from a different legal perspective and stated
that Law no. 217 of 1992 does not provide that the operators performing the rental
car with driver services have to receive the reservations at their respective car shed,
to start and terminate every single service at the car shed and the corresponding
prohibition to park in public parking areas in municipalities where there is a taxi
service.
These limitations imposed on drivers were not introduced, as a consequence of
the suspension of the entry into force of Article 29, paragraph 1quater, of the Decree
Law No. 207/2008 that would have amended Law no. 21/1992.
Due to the aforementioned suspension, the legislation was not applicable in this
case.
4.2.4 Justice of the Peace of Milan
The Justice of the Peace of Milan (Judgement 6th June 2018) has followed the
interpretation of the Court of Rome stated in the Ordinance of 26th May 2017,
concluding that the limitations imposed on the operators performing the rental car
with driver services are not in force, due to the suspension of the entry into force of
Article 29, paragraph 1quater, of the Decree Law No. 207/2008.
Therefore, for these operators is not compulsory to start and terminate every single
service at the car shed and to receive reservations there.
4.2.5 Final Remarks
Following the critical issues related to the diffusion of the phenomenon of intermedi-
ation in the transport of persons and the analysis of the legal discipline and case-law,
it is possible to affirm that the activities carried out by UBER constitute a different
typology from those governed by Law no. 21 of 1992.
Now, the Italian legal system is waiting for the Legislative Decree implement-
ing the Enabling Law no. 124 of 2017, which aims to reorganize the overall non-
scheduled public road transport sector and to regulate the requirements to be fulfilled
by UBER and by UBER’s drivers.
5 Spanish Law and Practice
5.1 Basic Report and Brief Summary
Primary legislation
Original Ley 16/1987, de 3o de julio, de Ordenación de los Transportes Terrestres
language title (modificada por última vez por el Real Decreto-ley 13/2018, de 28 de
septiembre)
Original legal Boletín Oficial del Estado núm. 182, de 31 de julio de 1987, pp. 23451 y ss.
source
English Act No 16/1987, of 30 July, on the Administrative Organisation of Land
translation title Transport (as amended for the last time by Royal Decree-law No 13/2018,
of 28 September)
Abbreviation LOTT
Relevant articles Art. 42 (1) LOTT
– taxi service The provision of passenger […] transport services which are offered to the
public shall be subject to the possession of a licence issued by the
competent body of the General Administration of the State or, as the case
may be, by that of the Autonomous Community in which the license is
domiciled, provided that such power has been delegated by the State.
Art. 91 (1) LOTT
Licenses to offer transport services to the public allow for the provision of
services throughout the national territory, without any limitation based on
the origin or destination of the service.
As an exception, licenses for the transport of passengers in passenger cars
and for rent-a-car with driver services shall only enable the licensee to
carry out interurban passenger transport. For these purposes, a transport
service will be considered to be an interurban service when the itinerary
goes beyond the territory of a single municipal area or zone for the joint
provision of public transport services, as defined by the competent body for
this purpose.
– rent-a-car with The provision of passenger […] transport services which are offered to the
driver public shall be subject to the possession of a licence issued by the
competent body of the General Administration of the State or, as the case
may be, by that of the Autonomous Community in which the license is
domiciled, provided that such power has been delegated by the State.
Art. 48 LOTT
1. The granting of licenses to offer transport services to the public may
only be denied when the relevant conditions are not met.
2. However, according to the European legislation and other legal rules
that may exist, where the supply of public passenger transport services in
passenger cars is subject to quantitative restrictions at the regional or
local level, statutory limitations may be established for the granting of […]
licences for the provision of rent-a-car with driver services.
3. Without prejudice to the provisions of the previous paragraph, in order

to maintain a proper balance between the offer of both modalities of
transport, the granting of new licenses for the rental of passenger cars with
driver shall be denied when the proportion between the number of licenses
already existing in the territory of the Autonomous Community in which the
new license is pretended to be domiciled and that of licenses for public
transport in passenger cars domiciled in the same territory is greater than
one of those for each thirty of the latter.
However, those Autonomous Communities that, by a delegation of the
State, have assumed powers in respect of licenses to rent vehicles with
driver, may modify the proportionality rule established in the previous
paragraph, provided that the one applied is less restrictive.
Art. 91 LOTT
1. Licenses to offer transport services to the public allow for the provision
of services throughout the national territory, without any limitation based
on the origin or destination of the service.
As an exception, licenses for the transport of passengers in passenger cars
and for rent-a-car with driver services shall only enable the licensee to
carry out interurban passenger transport. For these purposes, a transport
service will be considered to be an interurban service when the itinerary
goes beyond the territory of a single municipal area or zone for the joint
provision of public transport services, as defined by the competent body for
this purpose.
2. Rent-a-car with driver services must have their origin in the territory of
the Autonomous Community in which the corresponding license is
domiciled. For this purpose, it shall be understood that the origin or start
of the service lies at the place where the passenger is effectively picked up.
With respect to the obligation to take origin in the Autonomous Community,
the following provisos are established:
1.- Services that imply the picking up of passengers in ports and airports
and that have been previously and expressly hired by the latter may be
provided under licences for the rental of vehicles with driver domiciled in
Autonomous Communities other than that in which the port or airport is
located, provided that the destination of such services is in the territory of
the Autonomous Community in which the license is domiciled.
2.- In those cases in which the number of rent-a-car with driver licenses in
one Autonomous Community is not sufficient to attend a conjunctural
increase of the demand for such services in its territory, the body
competent for interurban transport may establish, following a report from
the affected municipalities, a specific regime that allows vehicles covered
by rent-a-car with driver licences domiciled in other Autonomous
Communities to temporarily perform services with origin in all its territory
or in certain parts thereof.
Art. 99 (4) LOTT
Apart from the situations of collaboration [among carriers] provided for in
this Act, only passenger cars may be employed for the provision of
rent-a-car with driver services.
The rental of passenger cars with driver constitutes a mode of passenger
transport and its provision will be conditional on obtaining the
corresponding license, in accordance with the provisions of Articles 42 and
43 (1) and other regulations that specifically refer to the said modality of
transport.
Relevant articles Not regulated. However, Art. 101 LOTT establishes the following:
– ride-sharing 1. Particular private transports are those that simultaneously meet both of
the following requirements:
a) They have to be dedicated to meet the personal or domestic travel needs
of the owner of the vehicle and his or her relatives.
Except for the assumption of per diem or travel expenses, particular
private transport may in no case give rise to direct or indirect monetary
remuneration.
b) They have to be carried out in vehicles whose number of seats, or load
capacity, does not exceed the limits established by regulation.
2. Particular private transports are not subject to administrative
authorization, and the regulating activity of Public Administrations shall
only be applicable thereto in relation to precepts that envisage the use of
open infrastructures and those applicable to ensure safety and security in
their performance. […]
– carriage A license for the provision of passenger transports offered to the public
intermediary allows to both carry out this type of transport […] and to intermediate in
its hiring.
BUT
The Memorandum that accompanies Act No 9/2013, of 4 July, states that,
by amending the 1987 Administrative Organisation of Land Transport Act,
“[o]perational barriers are reduced, fully liberalizing intermediation
activities in the hiring of passenger transport services, without prejudice to
the regulation of travel agencies in the tourism sector […]”.
Accordingly, the new wording of Art. 22 (2) LOTT establishes that:
[… t]he intervention of travel agencies and other intermediaries in the
hiring of whatsoever modality of passenger transport shall be governed by
the specific legislation on tourism. Notwithstanding this, cooperatives of
carriers and marketing companies may, in any case, intermediate in the
hiring of occasional passenger transport services to be provided by those
of their partners who hold a license for the provision of passenger
transport services.
Brief summary When the 1987 Administrative Organisation of the Land Transport Act was
passed, it requested a license for the provision of most services in the field
of passenger transport by road. The situation began to change when the
Constitutional Court decided in 1996 (see infra) that the competence for
the regulation of transport services that are entirely provided within the
territory of one single Autonomous Community lies, not with the Spanish
State, but with the Autonomous Communities (i.e. the seventeen regions in
which the Spanish territory is divided, with a high degree of
self-government). Additionally, the regulation of urban transport services in
passenger cars (taxi) has traditionally been entrusted to town councils. As a
consequence, most urban and interurban transport services in passenger
cars are not subject to the regulation in the Act, but rather to provisions
enacted by the Autonomous Communities, which is why it is impossible to
offer even a rough overview of the regulation of taxi services in Spain.
On the contrary, the rental of vehicles with a driver does count on a
—summary— regulation in the Act, which is developed by the Regulation
that accompanies the LOTT, enacted by Royal Decree No 1211/1990, and
by the Order of the Ministry of Transport No 36/2008 (for both legal texts
see infra). Prior to the modifications of the act in April and September
2018, the Act mainly stated that rent-a-car with driver services are
transport services, thus requiring the corresponding administrative
authorization and that such licenses may be subject to statutory limitations
where taxi licenses are limited in their number. As of today, it expressly
envisages the possibility to limit the number of authorizations in order to
maintain a proper balance between taxi and rent-a-car with driver licenses;
a rule that was previously contained in the Regulation developing the act
and has been “upgraded” by Royal Decree-law No 3/2018, of 20 April, in
order to prevent a possible adverse ruling on its compatibility with legal
rules by the Spanish Supreme Court (which, however, eventually confirmed
its validity in its judgment of 4 June 2018: see infra). The balance is
presumed to be fair if it does not exceed the proportion of one rent-a-car
license for every thirty taxi licenses. However, the Regulation refers the
determination of the exact proportion to the Autonomous Communities,
who may alter the 1/30 rule, “provided that the [rule] applied is less
restrictive”, i.e., that they allow for more than one rent-a-car license for
every thirty taxi license (Art. 48 (3) LOTT).
Furthermore, Royal Decree-law No 13/2018, of 28 September, introduced

a far-reaching limitation as regards the scope of rent-a-car with driver
licenses: their bearers are now only entitled to carry out interurban
passenger transport. However, as a “compensation”, a transition period of
at least four years is established during which also urban transports may be
performed, in order to allow the licensees to amortize their investments.
Once the transition period ends, the issuance of licenses for the
performance of urban transport will entirely depend on the legal framework
in force in the different Autonomous Communities and municipalities. In
case the latter fails to adopt any rules on this issue, holders of rent-a-car
with driver licenses will not be able to perform urban transport any more
after the expiration of the transition period.
Ride-sharing as such is not envisaged by the act, although it contains some
few provisions on “particular private transport”, which refers to the
transportation of “relatives” of the vehicle owner. The concept of “relative”
is defined in Article 156 of the Regulation developing the LOTT (see
explanation hereunder).
The Act also refers, incidentally, to the intermediation in the hiring of
passenger transport services, although – unlike what happens with the
intermediation in the hiring of carriage of goods – there are no specific
provisions on this issue. Furthermore, when amending the LOTT in 2013,
the legislator declared in the Memorandum accompanying the Act that he
aimed at reducing the operational barriers and pursued the full
liberalization of such activities. Accordingly, he modified Article 22 LOTT,
the new wording of which now refers to the regulation of intermediation
activities in the hiring of passenger transport to the legislation on tourism.
Article 165 (1) of the Regulation that develops the Act (infra), pursuant to
which such intermediation activities may only be carried out by travel
agencies, would then have to be considered, probably, as tacitly repealed.
However, that does not mean that no authorization is required; but the
legislation on tourism falls within the competence of the Autonomous
Communities so that the regulation is far from being uniform. Be that as it
may, at least one of the online platforms operating in Spain, Cabify, is in
possession of a travel agency license.
Original Reglamento de la Ley de Ordenación de los Transportes Terrestres,
language title aprobado por Real Decreto 1211/1990, de 28 de septiembre (modificado
por última vez por Real Decreto-ley 13/2018, de 28 de septiembre)
Original legal Boletín Oficial del Estado núm. 241, de 8 de octubre de 1990, pp. 29406 y
source ss.
English Regulation developing the Act on Administrative Organisation of Land
translation title Transport, enacted by Royal Decree No 1211/1990, of 28 September (as
amended for the last time by Royal Decree-law No 13/2018, of 28
September)
Abbreviation ROTT
Relevant articles Art. 123 ROTT

– taxi service The granting of licenses that allow for the provision of occasional
interurban transport services in passenger cars shall be conditional upon
the possession by the applicant of a municipal license that qualifies for the
provision of the same class of services in the urban area.
Licenses for the provision of interurban transport services must be
domiciled in the same municipality that has granted the urban transport
license.
The loss or withdrawal, due to any legal cause, of the urban transport
license will result in the cancellation of the license to perform interurban
transport services, unless the circumstances in [Article 124] are met.
Relevant articles Art. 180 ROTT
– rent-a-car with 1. Apart from the situations of collaboration [among carriers] provided for
driver in this Act, only passenger cars may be employed for the provision of
rent-a-car with driver services. Such services shall be considered transport
services for all administrative purposes.
2. To provide rent-a-car with driver services, it will be necessary to obtain
the corresponding license for each vehicle that is intended to be dedicated
thereto.
Art. 181 ROTT
2. [… U]ndertakings providing rent-a-car with driver services shall at all
times own, as a proprietor or a lessee, at least seven vehicles dedicated to
this activity […].
However, this provision has been declared contrary to superior legal rules
and annulled by the Decision of the Spanish Supreme Court
(Administrative Chamber) of 4 June 2018 (ECLI: ES:TS:2018:1913).
Art. 182 ROTT
1. Where the vehicles covered by the license to supply rent-a-car with
driver services are occupied by persons alien to the undertaking holding
the license, they may only circulate if it can be proved that they are
providing a service that has been previously hired by the passenger.
For this purpose, the contract for the rental of a vehicle with a driver has to
be concluded prior to the commencement of the service hired. Documental
proof of such contract has to be carried on board the vehicle […].
The vehicles covered by a license for the provision of rent-a-car with driver
services cannot, under any circumstances, circulate on public roads in
search of customers or encourage the recruitment of passengers who have
not previously hired the service, remaining parked for that purpose.
2. [repealed by Royal Decree-law No 13/2018, of 28 September; the

provision established that “Licences for the provision of rent-a-car with
driver services enable for both urban and interurban services to be
performed throughout the national territory, provided that the service has
been previously hired in accordance with the provisions in paragraph 1”].
3. [… R]ent-a-car with driver services shall not be subject to tariffs
established by the public administration, although their providers are
bound to inform the public on the fees they apply.
4. Vehicles engaged in rent-a-car with driver activities are not allowed to
carry external identification signs which may lead to confusion with the
activity of taxi undertakings.
Nonetheless, those Autonomous Communities that, by a delegation of the
State, have assumed powers with respect to rent-a-car with driver services
may require that vehicles covered by the corresponding license are to be
identified on their outside by means of a distinctive sign.
[…]
6. The undertaking shall be obliged to cover, by means of one or more
insurance policies or other financial guarantees, its civil liability for
damages suffered by passengers as a result of such transportation.
Relevant articles Not regulated. However, Article 156 ROTT establishes the following:
– ride-sharing 1. Particular private transports, as defined in Article 101 LOTT, shall serve
the personal needs of the owner of the vehicle and his or her relatives. It
shall be understood that “relatives” are the family members of the owner
or other people who live with him or her or have with him or her a
relationship of personal or labor dependence of a domestic nature, as well
as those whose transport is performed on the basis of a social relationship
of friendship or equivalent. […]
2. Particular private transports of passengers have to be carried out in
passenger cars. […]
Relevant articles Art. 165 (1) ROTT
– carriage Intermediation activities with respect to national and international
intermediary passenger transport can only be performed by travel agencies, except for
the legally envisaged cases of collaboration between carriers.
BUT
The provision has to be considered, probably, as tacitly repealed since the
LOTT has been modified in 2013 (lex superior derogat legi inferiori).
Furthermore, the project of a Royal Decree amending the ROTT, of 25 May
2017, eliminates Article 165 of the Regulation.
Brief summary The Regulation develops some of the matters envisaged by the LOTT,
although it has not yet been adapted to the wording of the Act that resulted
from its last major modification in 2013. Certainly, the Ministry of
Transport presented a project for a Royal Decree amending the Regulation,
but it has not yet been passed, so the latter has to be interpreted in the light
of the LOTT as modified in 2013.
As indicated above, taxi services fall within the legislative competence of
the municipalities and the Autonomous Communities, since they usually
do not circulate on the territory of more than one Community. Nonetheless,
Article 123 ROTT establishes that the provision of interurban passenger
transport services shall be conditional on the possession of a license for the
supply of urban services so that there are no undertakings who only
provide interurban services in passenger cars.
The Regulation does contain some more detailed provisions on car rental
with driver services, which have been thoroughly amended from 2015
onwards. As has been pointed out, prior to the amendment of the LOTT in
2018, it expressly envisaged the possibility to limit the number of
authorizations in order to maintain a proper balance between taxi and
rent-a-car with driver licenses. This rule has disappeared from the
Regulation and is now contained in Article 48 (3) ROTT. The Regulation
also established that the license could only be granted if the applicant
owned seven or more vehicles (although there was a transitional provision
for undertakings who already held a license when the 2015 amendment
came into force); a limitation that has been annulled by the Spanish
Supreme Court in a Decision of 4 June 2018. Pursuant to Article 182 (1) of
the Regulation, which is still in force, the provision of transport services
with vehicles covered by a rent-a-car with driver license is subject to the
prior celebration of the corresponding contract of carriage. As a
consequence, the vehicle may not circulate on public roads in search of
customers or encourage the recruitment of passengers who have not
previously hired the service. Finally, the Regulation also establishes the
obligation to count on adequate liability insurance or an equivalent
financial guarantee.
With respect to ride-sharing, the Regulation does not contain any specific
rules, but it defines the concept of “relatives” contained in Article 101
LOTT in order for a transport to be considered of a particular private
nature, not subject to authorization. These are “family members of the
owner or other people who live with him or her or have with him or her a
relationship of personal or labor dependence of a domestic nature, as well
as those whose transport is performed on the basis of a social relationship
of friendship or equivalent”. Although it is debatable whether ride-sharing
agreements are based on a relationship equivalent to that of friendship, the
Judgment of the Commercial Court No 2 of Madrid No 30/2017, of 2
February (infra), considers the activity of drivers who offer ride-sharing
services through the platform BlaBlaCar to be covered by this rule, so that
no administrative license is required.
As regards the intermediation in the hiring of passenger transport services,
Article 165 ROTT still reserves this activity to travel agencies, but, as has
been indicated above, the provision has to be considered, probably, as
tacitly repealed and will be formally abolished if the 2017 project for the
amendment of the Regulation comes into force with the proposed wording.
Intermediation in the hiring of passenger transport rather remains subject to
the legislation on tourism, that falls within the legislative competence of
the Autonomous Communities.
Original Real Decreto 1076/2017, de 29 de diciembre, por el que se establecen
language title normas complementarias al Reglamento de la Ley de Ordenación de los
Transportes Terrestres, aprobado por Real Decreto 1211/1990, de 28 de
septiembre, en relación con la explotación de las autorizaciones de
arrendamiento de vehículos con conductor
Original legal Boletín Oficial del Estado núm. 317, de 30 de diciembre de 2017,
source pp. 130799 y ss.
English Royal Decree No 1076/2017, of 29 December, establishing complementary

translation title rules to the Regulation of the Administrative Organisation of Land
Transport Act, enacted by Royal Decree No 1211/1990, of 28 September,
in relation to the exploitation of rent-a-car with driver licenses
Relevant articles Art. 1. Transmission of rent-a-car with driver licenses
– rent-a-car with Licenses that allow for the rental of passenger cars with a driver may not
driver be transmitted until two years have elapsed since their original issuance by
the body responsible for land transport, except in cases of transmission in
favor of heirs in the cases of death, retirement due to age or physical or
legal disability of the licensee.
The vehicle to which the license that has been transmitted is to be attached
must comply, in all cases, with the technical conditions indicated in Article
181 (2) [ROTT].
Art. 2. Control measures
For control purposes, the holders of rent-a-car with driver licenses must
inform the Administration, by electronic means, of the information
established in Article 24 of Order FOM/36/2008, of 9 January […], before
the commencement of each service performed under such licenses.
Brief summary The Royal Decree establishes two special rules related to rent-a-car with
driver services. On the one hand, it contains a prohibition to convey the
license during the first two years since its issuance, except for the cases
envisaged by the rule. On the other hand, it obliges the holders of such
licenses to send a journey form (as established in Art. 24 or Order
FOM/36/2008, see infra) to the Administration prior to the performance of
the service.
Original Orden FOM/36/2008, de 9 de enero, por la que se desarrolla la sección
language title segunda del capítulo IV del título V, en materia de arrendamiento de
vehículos con conductor, del Reglamento de la Ley de Ordenación de los
Transportes Terrestres, aprobado por Real Decreto 1211/1990, de 29 de
septiembre (modificado por última vez por la Orden FOM/2799/2015, de
18 de diciembre)
Original legal Boletín Oficial del Estado núm. 19, de 22 de enero de 2008, pp. 4283 y ss.
source
English Order of the Ministry of Transport No 36/2008, of 9 January, establishing
translation title rules in relation with section two of chapter IV of title V, with respect to
rental services of vehicles with driver, of the Regulation of the
Administrative Organisation of Land Transport Act, enacted by Royal
Decree No 1211/1990, of 28 September (as amended for the last time by
Order of the Ministry of Transport No 2799/2015, of 18 December)
Relevant articles Art. 1. Mandatory authorization
– rent-a-car with To carry out the activity of rent-a-car with the driver, it is necessary to
driver obtain, for each vehicle that is to be dedicated to such activity, a license
that allows doing so, in accordance with Article 180 [ROTT].
Art. 3. Body in charge of the issuing of licenses
The license to provide rent-a-car with driver services will be granted by the
State or by a body of the corresponding Autonomous Community that,
directly or by delegation, has power for the granting of licenses for
occasional interurban transport at the place where the license is to be
domiciled.
Art. 4. Scope of licenses

Licenses for the provision of rent-a-car with driver services allow for the
supply of both urban and interurban services throughout the national
territory, provided that the vehicle has been previously hired in accordance
with the provisions of this Order.
BUT
This rule has to be considered as tacitly repealed since the modification of
the LOTT by virtue of the Royal Decree-law No 13/2018, of 28 September
(see supra).
Art. 5. Conditions for the granting of licenses
The granting of licenses for the provision of rent-a-car with driver services
shall be conditional upon the applicant undertaking attesting to the
fulfillment of the requirements indicated in sections 1 and 2 of Article 181
ROTT in accordance with the provisions of this Order.
Art. 14. Granting of licenses
Provided that all the conditions set out in Article 5 are fulfilled, the
competent body may only refuse the granting of the licenses requested if
the circumstances provided for in Article 181 (3) ROTT are met.
BUT
Since the modification of the ROTT by virtue of Royal Decree-law No
3/2018, of 20 April, the circumstances that allow refusing the granting of a
license are now to be found in Article 48 (3) LOTT and not in Article 181
(3) ROTT
Art. 20. Transmission of licenses
1. Licenses to provide rent-a-car with driver services may be transferred to
other owners, provided that the Administration makes this possible by
carrying out a subjective novation of the license in favor of their
purchasers. In no case, the subjective novation may give rise to the
domiciliation of the license in an Autonomous Community other than the
one in which it was originally obtained. Such novation shall be conditional
on the acquirer fulfilling all the requirements established for the granting
of the license or being a holder of a previous license for the rental of
vehicles with driver domiciled in the same Autonomous Community.
BUT
The transmission of licenses has subsequently been limited by virtue of No
1076/2017, of 29 December (see supra).
Art. 23. Conditions for the rental of vehicles with driver
In accordance with Article 182 (1) ROTT, the contract for the rental of
vehicles with driver must have been celebrated before the commencement
of the hired service, and either a copy of the contract, provided that it
contains all the particulars required by Article 24, or the journey form
referred to in that Article must be carried on board the vehicle.
The rental service must, in any case, refer to the total capacity of the vehicle
to be used. It is not possible to rent seats separately to different passengers.
In any case, the rental of vehicles with driver must comply with the other
conditions provided for in Article 182 (1) ROTT.
Art. 24. Journey form
1. For the purpose of administrative control, the holder of a rent-a-car with

driver license must complete a journey form for each service, which must
be kept at the disposal of land transport inspection services for a period of
one year, counted from the date of conclusion of the contract.
Each journey form shall include the name and number of the national
identity document or tax identification code of the lessor and the lessee; the
place, date and time at which the service is to start and the place and date
on which it is to be concluded; the registration number of the vehicle; as
well as the other circumstances that may be established, where appropriate,
by the Administration or that are freely agreed upon by the parties.
Notwithstanding the provisions of the previous paragraph, the
identification of the place of termination of the service may be omitted
when the contract expressly states that said place will be freely determined
by the client during the provision of the service.
2. In those cases in which, according to the provisions of the previous
section, the copy of the contract contains the same data as those required
for the journey form, it shall not be necessary to fill in the latter.
In any case, the lessor must keep the lease contract for each service at the
disposal of land transport inspection services, for a period of one year
from the date of its celebration.
Brief summary The Order further develops the provisions on the supply of rent-a-car with
driver services envisaged by the LOTT and ROTT. It does not introduce too
many new issues that might be of interest for the present overview, but it is
worth noting that, on the one hand, it contains details on the documentation
that has to be carried on board the vehicle (contract of carriage or journey
form) and, on the other hand, it establishes some rudimentary rules on the
transmission of the license, which is conditional on the Administration
allowing for a “subjective novation” thereof (i.e., the replacement of the
seller by the acquirer). However, it should be taken into account that, as has
been indicated above, the transmission is, in principle, not possible during
a period of two years from the granting of the license (Royal Decree No
1076/2017, of 29 December).
Sentencia del Tribunal Constitucional núm. 118/1996, de 27 de junio (Boletín Oficial del
Estado núm. 182, de 29 de julio de 1996, pp. 32 y ss.)
Brief summary The issue discussed in the judgment refers to the competence to enact legal
provisions that apply, inter alia, to urban and interurban transport. In its
decision, the Constitutional Court held that, whenever such transport
services are performed entirely in the territory of one single Autonomous
Community (which should always be the case as regards urban transport),
legislative power lies with the Autonomous Communities and not the State,
whenever they have effectively assumed competences in this regard.
Accordingly, the regulation of taxi and, although to a lesser extent, of
rent-a-car with driver services is decentralized, and virtually all
Autonomous Communities have assumed competences in this matter.
Sentencia del Tribunal Supremo (Sala de lo Contencioso-Administrativo, Sección 3ª) núm.
921/2018, de 4 de junio (ECLI: ES:2018:1913)
Brief summary The Spanish Competition Authority (Comisión Nacional de los Mercados y
la Competencia – CNMC) filed recourse for the guarantee of the unity of
the market in 2016, directed against certain rules contained in the
Regulation of the Administrative Organization of Land Transport Act
(ROTT), as amended by Regulation No 1057/2015. Uber BV, Unauto VTC,
and Maxi Mobility Spain, S.L.U., joined the proceedings. The claimants
hold that the requirements imposed on rent-a-car service providers are
unnecessary and disproportionate, specifically, as regards the quantitative
limitations to obtain a license (i.e. the so-called 1/30 rule); the rule that the
services have to have their origin in the Autonomous Community where
the license is domiciled; the obligation to count on a fleet of at least seven
vehicles; the requirements with respect to the vehicles that make up the
fleet; and the restrictions as regards the activity carried out by the drivers
(who may only circulate if it can be proved that they are providing a service
that has been previously hired by the passenger).
The Supreme Court thoroughly examines all aspects of the recourse, but
only annuls the section that imposed a minimum fleet of seven vehicles. In
particular, it expressly validates the 1/30 rule, although by the time the
judgment was handed down it did not appear in the Regulation any more
since it had previously been “upgraded” and incorporated into the
Administrative Organization of Land Transport Act.
Sentencia del Juzgado de lo Contencioso-Administrativo nº 15 de Barcelona, núm. 179/2016,
de 18 de julio (ECLI: ES:JCA:2016:1565)
y
Sentencia del Juzgado de lo Contencioso-Administrativo nº 17 de Barcelona, núm. 287/2016,
de 5 de octubre (ECLI: ES:JCA:2016:1739)
Brief summary By filing separate claims with the Administrative Courts of Barcelona,
Uber B.V. pursued the annulment of two fines imposed by the Catalonian
Ministry of Territory and Sustainability for allegedly carrying out transport
activities lacking the mandatory license or authorization.
On both occasions, the application was eventually granted and the
decisions to impose a fine were quashed. According to the Court, the owner
of the online platform does not provide an intermediation service in the
sense of the 1987 Act on Administrative Organisation of Land Transport,
since the latter only envisages the intermediation in the hiring of the
carriage of goods but not passengers. It holds that Uber B.V. provides an
information society service, which is not subject to authorization.
81/2018, de 24 de enero (ECLI: ES:TS:2018:117)
y
87/2018, de 25 de enero (ECLI: ES:TS:2018:120)
Brief summary The judgments rule on the appeals filed by the Catalonian Government
against the decisions of the Administrative Courts of Barcelona cited
above, which are quashed. The Supreme Court applies the doctrine
established in the CJ’s Elite Taxi ruling (CJ 20 December 2017, case
C-434/15) to the cases at hand and holds that the service provided by Uber
B.V. is not an information society service but a service in the field of
transport. Accordingly, it establishes that the provider of the intermediation
service is subject to the prior obtention of the authorization envisaged by
Article 42 (1) LOTT. The cases are remanded to the Administrative Courts
for a final decision.
Sentencia del Juzgado de lo Mercantil nº 2 de Madrid, núm. 30/2017, de 2 de febrero (ECLI:
ES:JMM:2017:6)
Brief summary The decision settles a claim filed by an association of bus undertakings
against the entity in charge of the application “BlaBlaCar”, that
intermediates between passengers and private persons who plan to perform
a certain itinerary and who are willing to share their car with others.
According to the plaintiff, the defendant commits an act of unfair
competition since he does not hold the mandatory license or authorization
required for the provision of intermediation services in the field of
passenger transport by road. Furthermore, the plaintiff claims that the
drivers, who also lack a license, obtain a profit and not only the (partial)
reimbursement of expenses, so that their activity has to be considered as
public passenger transport, apart from the fact that they do not satisfy the
mandatory value added tax.
The court dismisses the claim because it considers 1) that the activity
carried out by the drivers is not public but private transport, since they do
not obtain any profit but only the (partial) reimbursement of their travel
expenses, so that no license or authorization is required for the driver; and
2) that the intermediation activity carried out by BlaBlaCar is not a service
in the field of passenger transport (since the relevant legislation does not
refer to the intermediation with respect to private transport), but a service
of the information society, which is not subject to authorization. Since no
legal rules are infringed (the tax issue is not addressed by the court), the
activity carried out by the defendant does not constitute an act of unfair
competition.
Sentencia del Juzgado de lo Mercantil nº 12 de Madrid, núm. 159/2017, de 13 de junio (JUR
2017, 163178)
Brief summary In 2015, an association of taxi drivers filed a claim against the entity in
charge of the application “Cabify”, that intermediates between passengers
and carriers that hold a license for the provision of rent-a-car with driver
services, on the basis of an alleged violation of the Spanish Unfair
Competition Act. In particular, it considered that Article 15 (2) of the Act
had been infringed, which considers the violation of legal rules that aim at
regulating the competitive activity in the market to be unfair per se. The
provision that, according to the plaintiff, had been infringed by Cabify,
giving rise to an act of unfair competition, is Article 182 ROTT, pursuant to
which the holders of a rent-a-car with driver license are not entitled to
circulate in search of customers or to encourage the recruitment of
passengers without having been previously hired to perform the service.
The court dismisses the claim, mainly because such violations, in case they
did exist (which had not been proved by the claimant), would have been
committed, not by Cabify as an intermediary, but by the drivers holding a
rent-a-car with a driver license. It further declares that the plaintiff had also
failed to prove that the defendant had obtained a competitive advantage by
such violations with respect to its competitors, and such competitors are
not the holders of taxi licenses, but other undertakings that compete with
Cabify in the market of electronic intermediation of passenger transport
services.
Sentencia del Juzgado de lo Mercantil nº 12 de Madrid, núm. 159/2017, de 13 de junio (JUR
2017, 163178)
Brief summary In 2015, an association of taxi drivers filed a claim against the entity in
charge of the application “Cabify”, that intermediates between passengers
and carriers that hold a license for the provision of rent-a-car with driver
services, on the basis of an alleged violation of the Spanish Unfair
Competition Act. In particular, it considered that Article 15 (2) of the Act
had been infringed, which considers the violation of legal rules that aim at
regulating the competitive activity in the market to be unfair per se. The
provision that, according to the plaintiff, had been infringed by Cabify,
giving rise to an act of unfair competition, is Article 182 ROTT, pursuant to
which the holders of a rent-a-car with driver license are not entitled to
circulate in search of customers or to encourage the recruitment of
passengers without having been previously hired to perform the service.
The court dismisses the claim, mainly because such violations, in case they
did exist (which had not been proved by the claimant), would have been
committed, not by Cabify as an intermediary, but by the drivers holding a
rent-a-car with a driver license. It further declares that the plaintiff had also
failed to prove that the defendant had obtained a competitive advantage by
such violations with respect to its competitors, and such competitors are
not the holders of taxi licenses, but other undertakings that compete with
Cabify in the market of electronic intermediation of passenger transport
services.
Sentencia del Juzgado de lo Mercantil nº 3 de Barcelona núm. 38/2018, de 10 de abril (ECLI:
ES:JMB:2018:38)
Brief summary The judgment resolves the case that gave rise to the CJ’s Elite Taxi decision
(CJ 20 December 2017, case C-434/15). The claimant, a taxi association
based in Barcelona, had filed a claim against Uber Systems Spain, S.L., for
infringement of Articles 15 (violation of legal rules), 5 (deceit) and 4
(violation of good faith) of the Spanish Unfair Competition Act. As regards
the first two acts of unfair behaviour, the claim is dismissed due to the fact
that the alleged infringements —i.e. the violation of legal rules in the field
of passenger transport by car and allegedly false information on Uber’s
website— cannot be attributed (only) to the defendant (Uber Systems
Spain, S.L.), who does neither own nor administer the website and,
probably, does not benefit from the alleged violation of legal rules. Finally,
as regards Article 4 of the Unfair Competition Act, that —by way of a
general clause— sanctions behaviours in violation of good faith, the court
holds, in line with a consolidated jurisprudence in Spain, that the cited
precept can only be invoked if the activity of the defendant can be
considered an autonomous unfair behavior, disconnected from the specific
acts of unfair competition envisaged by the Act (here, Arts. 15 and 5),
which had not been proven by the claimant.
Sentencia del Juzgado de lo Mercantil nº 3 de Barcelona de 19 de junio de 2018 (ECLI:
ES:JMB:2018:1090)
Brief summary The Commercial Court had to decide on the possible infringement by the
application for mobile phones MyTaxi, operated by MyTaxi Iberia, S.L., of
Article 17 (2) (c) of the Spanish Unfair Competition Act. Pursuant to this
rule, the setting of prices below acquisition or production costs to eliminate
competition (predatory pricing) is considered to be unfair. MyTaxi
intermediates between taxi drivers and passengers and, on occasions, offers
discounts to the latter with respect to the official tariffs set by the local
Administration. The claimant, an association of taxi drivers, therefore held
that the application offered below-cost prices for transport services to
eliminate competition by drivers who do not operate through the platform,
thus incurring in unfair commercial behaviour.
However, the court dismissed the claim for the reason that the discounts are
entirely borne by the application and funded through the fees it collects
from the drivers (0,99 euros for every successful service and 1,9% of the
total price as a commission if payment is made through the application,
plus 0,09 euros for transaction costs).
A second issue that was initially raised by the claimant, the possible
infringement of Article 15 of the Unfair Competition Act (violation of
legal rules) due to the fact that MyTaxi operates as a “taxi radio station”
without a permission or licence to do so, was left without substance after a
pre-trial hearing (although the judgment does not specify the reasons).
6 Swiss Law and Practice
6.1 Basic Report
Primary legislation
Original language title Verordnung über die Arbeits- und Ruhezeit der berufsmässigen
Führer von leichten Personentransportfahrzeugen und schweren
Personenwagen vom 6. Mai 1981
Original legal source Systematische Sammlung des Bundesrechts (SR), SR 822.222
English translation title Federal Ordinance on the Working and Resting Time of Professional
Drivers of Automobiles of Mai 6, 1981
Abbreviation ARV 2
Relevant articles Art. 3, para. 1bis :
The term ‘professional driving services’ is defined as follows: the
transportation has to be offered regularly, i.e. at least twice within
16 days, by the driver and targets an economic success, i.e. the fare
exceeds the costs of the car and the out-of-pocket expenses.
Art. 3 para. 1ter :
On a par with ‘professional driving services’ are transports of persons
with a rental car including a chauffeur.
Brief summary If transportation is not considered as a ‘professional driving service’,

then simply a Swiss driving license of the category B (‘ordinary car
driving license’) is sufficient. However, if a transportation offer is
considered as a ‘professional driving service’, additional
requirements have to be fulfilled by the driver like the necessity to
install a special trip recorder (also called ‘tachograph’) that
chronicles the driving time and rest periods (Cf. art. 100, para. 1, let.
b-c and para. 2-4 of the Swiss Federal Ordinance of the Technical
Requirements of Road Vehicles of June 19, 1995). These trip
recorders have to be verified and repaired by specific licensed legal
entities (art. 101 of the aforementioned Ordinance). Furthermore, the
vehicles have to be verified once a year (art. 33, para. 2, let. a (1) of
the aforementioned Ordinance). If a vehicle is used for professional
transportation of persons, then this has to be mentioned in the vehicle
registration certificate (art. 80, para. 2 of the aforementioned
Ordinance).
Furthermore, drivers need in addition to the Swiss driving license
with the category ‘B’ a special authorization in order to conduct
‘professional driving services’ for transporting other persons, which
requires an additional practical and theoretical exam. Such an
authorization is only issued if the following requirements are
fulfilled: (i) at least one year of driving practice under the category
‘B’ without a revocation of the driving license (art. 8, para. 4-6 of the
Swiss Federal Ordinance of the Admission of Persons and Vehicles
for the Traffic of October 27, 1976), (ii) higher medical minimum
requirements (art. 7, para. 1, and addendum 1, Group 2 of the
aforementioned Ordinance), (iii) a medical exam (art. 11b, para. 1,
let. a of the aforementioned Ordinance), (iv) the passing of an
additional theoretical exam with regard to the driving time and rest
periods (art. 25, para. 3, let. a of the aforementioned Ordinance),
(v) the passing of an additional practical driving exam (art. 25,
para. 3, let. b of the aforementioned Ordinance). Furthermore, it is
necessary to redo the medical exam up to the age of 50 every 5 years
and after the age of 50 every 3 years (art. 27, para. 1, let. a [2] of the
aforementioned Ordinance).
In addition to the Swiss Federal Ordinance on the Admission of

Persons and Vehicles for the Traffic of October 27, 1976 and the
Swiss Federal Labor Act of March 13, 1964, the numerous provisions
of the Swiss Federal Chauffeur Ordinance of June 19, 1995 with its
maximum driving time and minimum resting periods and the special
duties of an employer (e.g., quarterly reports of over-timing) have to
be taken into account (art. 71 let. of the Swiss Federal Labor Act).
Particularly, the control of the working and driving time and of the
rest periods are subject to the Swiss Federal Traffic Control
Ordinance of March 28, 2007.
Based on art. 106, para. 2 of the Swiss Federal Road Traffic Act of
December 19, 1958, the compliance of all of the aforementioned
provisions has to be verified by the Cantonal authorities (e.g.,
Cantonal Department of Motor Vehicles, Cantonal and Municipal
Police Forces and the Swiss Federal Chauffeur Ordinance
Enforcement Authorities). Furthermore, the enforcement is
coordinated within Switzerland by the Intercantonal Association of
the Enforcement of the Swiss Federal Chauffeur Ordinance, the
Association of the Cantonal Departments of Motor Vehicles and the
Consortium of the Heads of the Traffic Police Forces in Switzerland
and Liechtenstein.
However, in practice it is very difficult to check by the
aforementioned authorities whether private individuals respect the
conditions set by the law as the vehicles, with which the
UberPOP-services are provided, are not specially labeled and it is
difficult to prove that an UberPOP-driver exceeds the legally set
threshold for professional driving services.
Original language title Bundesgesetz gegen den unlauteren Wettbewerb vom 19. Dezember
1986
Original legal source Systematische Sammlung des Bundesrechts (SR), SR 241
English translation title Swiss Federal Law on Unfair Competition of December 19, 1986
Abbreviation UWG
Relevant articles Art. 2:
Under Swiss law, any behavior or business practice that is deceptive
or that in any other way infringes the principle of good faith and
which affects the relationship between competitors or between
suppliers and customers shall be deemed unfair and unlawful.
Brief summary The Swiss Federal Law on Unfair Competition of December 19,
1986, has the purpose to ensure fair and undistorted competition in
the interest of all concerned. The ‘natural’ course of competition has
to be respected (Cf. the decision of the Swiss Supreme Court
4C.139/2003 of September 4, 2003, Consideration 5.1. with
additional explanations). Someone who creates with his innovation a
new business model does not act per se in an unfair manner as the
Swiss legislation is aiming at an effective competition. Consequently,
innovation is encouraged and therefore Sharing Economy as a
business model like the one used by Uber is in line with the unfair
competition legislation in Switzerland. Thus, the Swiss Federal
Council held in its report of January 17, 2017, that there is no need to
change anything in the Swiss legislation on the unfair competition
with regard to ICT-platforms that broker direct transactions between
users and providers.
Original language title Bundesgesetz über den Binnenmarkt vom 6. Oktober 1995
English translation title Swiss Federal Law on the Internal Market of October 6, 1995
Abbreviation Binnenmarktgesetz, BGBM
Relevant articles Art. 1, para. 1:
This law guarantees that persons with a domicile or the legal seat in
Switzerland do have for their business activities free and equal access
to the market in the whole area of Switzerland.
Art. 2, para. 1:
Each person is entitled to offer goods, services and work in the whole
area of Switzerland, if the exertion of the respective business activity
in the Canton or Municipality, where it has its domicile or legal seat,
is allowed.
Art. 3, para. 1, let. a-c:
Generally, it is not possible to refuse the free access to the market to
nonlocal offerors. However, limitations have to be in the form of
stipulations or conditions and are just permitted, if they also apply to
locals, they are necessary to ensure a predominant public interest and
they are proportionate.
Brief summary According to the Swiss Federal Law on the Internal Market of
October 6, 1995, it is possible that services can be offered beyond
Cantonal and Municipal borders in Switzerland (so-called
‘cross-border freedom of services’) (Swiss Federal Competition
Commission Recommendation of February 27, 20012 regarding the
access to the market for nonlocal taxi service providers, in: RPW
2012/2). Thus, a service provider is allowed to render its services
elsewhere according to the legal provisions of its ‘place of origin’.
However, if the legal provisions with regard to the access to the
market at the ‘place of origin’ and the destination are not considered
as equal, then it is possible to limit the access if it is proportional and
necessary in order to ensure a predominant public interest.
With this in mind, it can be held that an Uber-driver is generally
allowed to provide transportation services in every Swiss Canton if he
is allowed to provide the same services at his ‘place of origin’.
However, if a Canton or a Municipality wants to limit the market
access for nonlocal drivers, it would be necessary to prove that a
limitation is proportionate, non-discriminatory and indispensable for
ensuring the protection of the predominant public interest.
Original language title Verordnung über die Arbeits- und Ruhezeit der berufsmässigen
Führer von leichten Personentransportfahrzeugen und schweren
Personenwagen vom 6. Mai 1981
Bundesgesetz über die Alters- und Hinterlassenenversicherung vom
20. Dezember 1946
Systematische Sammlung des Bundesrechts (SR), SR 831.10
English translation title Federal Ordinance on the Working and Resting Time of Professional
Drivers of Automobiles of Mai 6, 1981
Swiss Federal Law on Old-age and Survivors’ Insurance of
December 20, 1946
Abbreviation ARV 2
AHVG
Brief summary In the last months, there was an ongoing discussion in the Swiss news
whether Uber has to be considered by the Swiss Federal Employment
and Social Security Legislation as an employer or simply as an
intermediary. Ultimately, it is the question of whether or not
Uber-drivers are self-employed or employed and therefore the answer
has quite an impact on the insurance coverage and the duty to pay
social security contributions.
The Swiss National Accident Insurance Fund (SUVA, the
abbreviation of ‘Schweizerische Unfallversicherungsanstalt’, which
is a public-sector insurer and leading provider of health care coverage
for employees in case of accidents in Switzerland; it was founded
1912 and for a long time held a monopoly for compulsory coverage
for employees in high-risk professions.) qualified on behalf of the
Social Security Agency of the Canton of Zurich in May 2016 that
drivers, who get hired by a client via the Uber-mobile app software,
are considered as employees of Uber and thus the latter has to pay
social security contributions.
SUVA justified its assessment as it compared Uber with an ordinary
taxi dispatch service: the drivers are subordinated to Uber, because
they depend on a work organization point of view entirely on the
latter, they have not to bear a business risk themselves, they have no
influence on the price and the way of payment for the service
rendered, and if they do not respect the requirements set up by Uber,
then there will be ramifications. Not surprisingly, Uber objected and
subsequently SUVA upheld its verdict. However, Uber announced
that if no solution can be found then it would file for recourse to the
courts.
About the same time, a Swiss union called ‘UNIA’ hired a Swiss law
professor named Kurt Pärli of the University of Basel to write a legal
opinion in which he came to the same conclusion. Uber as an
employer of the Uber-drivers is obliged to pay social security
contributions and the Uber-drivers are subject to the Swiss Federal
Labor Act of March 13, 1964, and the Swiss Federal Chauffeur
Ordinance of June 19, 1995. Subsequently, Uber mandated also a
Swiss law professor, Prof. Bettina Kahil-Wolff of the University of
Lausanne, who presented on July 5, 2017, her legal opinion in a
media conference. It is not surprising that she came to the opposite
conclusion and held that Uber-divers have to be considered as
self-employed contractors and thus no social security contributions
have to be paid by Uber.
On March 19, 2018, the Swiss State Secretariat for Economic Affairs
(SECO) has clearly indicated that Uber-drivers should be classed as
employees rather than self-employed.
The criteria in order to distinguish a self-employed from an employed
activity are slightly different in employment law and social security
law. However, the issue of subordination is probably the decisive
criterion. Thus, the various Cantonal and Federal administrations
perform a case-to-case assessment. In a dispute, a court will have to
decide on this issue. It seems that at the moment several cases are
pending in the Swiss court system.
Original language title Strassenverkehrsgesetz vom 19. Dezember 1958
Verkehrsversicherungsverordnung vom 20. November 1959

English translation title Swiss Road Traffic Act of December 19, 1958
Swiss Federal Traffic Insurance Ordinance of November 20, 1959
Abbreviation SVG
VVV
Brief summary The success of these new forms of transportation services, especially
of UberPop, calls for answers to the questions whether or not the
passengers are sufficiently protected by the mandatory vehicle
liability insurance.
The Swiss Road Traffic Act of December 19, 1958, stipulates that
every vehicle, which is engaged in the public traffic, has to have a
vehicle liability insurance. The vehicle insurance company has to
provide at least a coverage of CHF 5’000’000.00 per incident for
physical injuries and damages to property for up to nine passengers.
However, usually, an insurance coverage up to CHF 100’000’000.00
is guaranteed on a contractual basis. If the insurance claim by a
passenger is justified, then the insurance company has to pay to the
injured party.
Objections based on the insurance agreement (e.g., the driver of the
vehicle does not have a driving license for transporting clients
professionally) have no impact on the amount a client can ask.
However, the insurance company will try to recover some of the
amount that has been paid (so-called ‘regress’). Even if a vehicle
(which is very unlikely if the car has Swiss number plates) is not
covered by vehicle liability insurance, there will be no gap in
coverage. In such a case, the Swiss National Guarantee Fund will
indemnify the insured third party and try to recover the paid
indemnification from the vehicle owner.
Thus, it is recommended that an Uber-driver clarifies the car liability
insurance coverage before he starts offering transportation services. It
is possible that the insurance contract only covers the private use of
the vehicle. If so, it is possible that the vehicle owner, who offers
transportation services on a professional level, will be facing
recovery claims.
However, the Swiss Federal Council held in its report of January 17,
2017, that there is no need to change anything with regard to vehicle
liability insurances in the field of transportation services.
Original language title Bundesgesetz über die direkte Bundessteuer vom 14. Dezember 1990
Bundesgesetz über die Harmonisierung der direkten Steuern der
Kantone und Gemeinden
Bundesgesetz über die Mehrwertsteuer
English translation title Swiss Federal Income Tax Act of December 14, 1990
Swiss Federal Cantonal and Communal Income Tax Harmonization
Act of December 14, 1990
Federal Act on Value Added Tax
Abbreviation DBG
StHG
Mehrwertsteuergesetz, MWSTG/Value Added Tax Act, VAT Act
Brief summary Generally
The business model of Uber consists of the development and
operating of a mobile app software with which drivers, who offer
transportation services, and clients, who are looking for such
services, are brought together. Thus, there are two potential tax
subjects: Uber and the driver, who offers to drive the client. These tax
subjects can be liable to direct taxation (income and profit tax) as
well as indirect taxation (VAT).
Direct Taxation
Legal entities are subject to taxation based on personal affiliations if
their registered office or place of effective management is located in
Switzerland or they maintain permanent establishments in
Switzerland (art. 50 and 51 of the Swiss Federal Income Tax Act of
December 14, 1990 as well as art. 20 and 21 of the Swiss Federal
Cantonal and Communal Income Tax Harmonization Act of
December 14, 1990). If the legal entity in question is not affiliated to
Switzerland, then it is not possible to tax its profits. However, if a
legal entity like Uber is subject to Swiss taxation, then all the profits
it generates from its services are subject to taxation (art. 57 of the
Swiss Federal Income Tax Act and art. 24, para. 1 of the Swiss
Federal Cantonal and Communal Income Tax Harmonization Act).
In order to fix the tax basis of a legal entity like Uber, it is necessary
to determine the exact status of the drivers: Are the employees of
Uber or considered as self-employed drivers? In practice, it would be
possible to take a similar approach like the one for transportation
based on a credit basis by taxi dispatch services. However, due to the
tax secrecy in Switzerland, it is not possible to comment on the exact
tax situation of Uber by the Swiss Federal, Cantonal and Municipal
tax authorities.
The income that an Uber-driver gets from the transportation services
is subject to the income tax. These revenues have to be stated in the
tax declaration together with possible other income. The way the
Uber-driver is taxed depends whether the latter is considered as an
employee or as a self-employed driver (art. 57 of the Swiss Federal
Income Tax Act and art. 24, para. 1 of the Swiss Federal Cantonal
and Communal Income Tax Harmonization Act).
Indirect Taxation
There are different ways to tax ICT-platforms abroad, which offer via
mobile app software transportation services. Unfortunately, due to the
tax secrecy in Switzerland, it is not possible to comment on the exact
tax situation of Uber with regard to VAT by the Swiss Federal Tax
Administration. The VAT is a tax that has to be declared by the
taxable subjects themselves. This means, that Uber and the driver
have the duty, to determine themselves their domestic turnover, the
VAT that they have to pay and to declare it themselves to the Swiss
Federal Tax Administration, which will verify then if the taxable
persons fulfill their duties as taxpayers.
There are four different kinds of taxation models possible for a
business model like the one of Uber:
(i) Uber as the operator of the ICT-platform is considered as the sole
provider of the transportation services: The Uber-drivers are not
considered as the providers of the transportation services. Thus, Uber
as an operator of the ICT-platform is responsible for the provision of
the services and is subject to VAT, if the domestic services exceed a
turnover of CHF 100’000.00.
(ii) Direct representation: The Uber-drivers are considered as the
providers of transportation services. However, Uber as an operator of
the ICT-platform receives for the ‘electronic mediation services’ a
fee. In such a case, the Uber-driver has to pay VAT if the domestic
turnover from the transportation services exceeds the amount of
CHF 100’000.00. If the driver is taxable in Switzerland, then the
operator of the ICT-platform, which is domiciled abroad, is taxable on
the fee that he receives from the driver (so-called ‘reverse charge’).
(iii) Indirect representation: Uber as an operator of the ICT-platform
provides a service for the client, which the latter acquires from the
driver, who acts as a self-employed person. In this case, Uber has to
pay VAT, if the domestic turnover from the rendered services exceeds
the amount of CHF 100’000.00. Furthermore, the Uber-driver is
liable for VAT, if the domestic turnover of his services exceeds the
amount of CHF 100’000.00.
(iv) Uber as the operator the ICT-platform is only considered as the
provider of the ‘electronic mediation services’: The Uber-driver, who
is providing the transportation service, has to pay VAT on it if his
domestic turnover exceeds the amount of CHF 100’000.00. Uber as
an operator of the ICT-platform is also subject to VAT for the
‘electronic mediation services’ if the domestic turnover exceeds the
amount of CHF 100’000.00 on it, even if the Uber-drivers are not
liable for VAT.
In Switzerland, taxi services are subject to many provisions on a Cantonal or Municipal level.
Therefore, it is impossible to make a general valid statement about the legal situation for all of
Switzerland. Thus, we will have a closer look at the legal situation for transportation services
and the enforcement in the Cantons of Geneva and Zurich. However, the following two ‘case
studies’ show that the local authorities observe the changes in the market of transportation
services very closely and make adjustments if necessary.
Canton of Geneva
Original language title Loi sur les taxis et les véhicules de transport avec chauffeurs du 13
octobre 2016
Original legal source Receuil systématique genevois, H 1 31

English translation title Cantonal Act on Taxis and Vehicles with drivers of October 13, 2016
Abbreviation LTVTC
Brief summary In the last years, there has been quite a turmoil in the ‘transportation
market’ in the Canton of Geneva inter alia because of Uber-drivers,
which entered into competition with traditional taxi and limousine
services.
Already when Uber informed the competent Cantonal authority of
Geneva (‘Service du commerce de la République et canton de
Genève’) in August 2014 about their plan to offer transportation
services in Geneva, the latter told them that they will need to respect
the legal requirements of the Cantonal legislation or their activities
will be deemed to be illegal. However, Uber discarded this and has
been active in Geneva since September 2014. Based on the former
Cantonal Law on Taxis and Limousines of January 21, 2005, the
competent authority of the Canton of Geneva considered Uber to be a
taxi dispatch center, which had no authorization for providing the
dispatch services according to art. 9, para. 1, let. d and art. 13 of the
aforementioned law. In order to obtain such authorization, Uber
would have to fulfill the following conditions: a fixed address, a
general phone number, a 24/7-service, a sufficiently big carpool in
order to offer transportation services during the night, on the weekend
and on holidays as well as enough parking lots for the drivers. As
Uber did not meet these requirements, the competent Cantonal
Authority prohibited Uber on March 30, 2015, with immediate effect
to offer professional driving services and ordered them to pay a fine
of CHF 35’000.00. Uber appealed to the competent Cantonal Court
(‘Cour de justice’) and asked for a suspensive effect. Like this, Uber
would have been allowed to offer its services in the meantime.
However, the Cantonal Court awarded only a suspensive effect to the
fine, but not to the rest of the judgment. Thereinafter, Uber went to
the Swiss Federal Supreme Court, which refused on formal grounds
to examine the issue of the suspensive effect (Swiss Federal Supreme
Court 2C.547/2015 of January 1, 2016). In addition, the Cantonal
authorities sentenced several Uber-drivers to pay a fine as they did
not have the proper permits, which they challenged in spring 2015.
As the Cantonal administrative court did not judge these cases within
a reasonable period of time, the Uber-drivers filed legal actions for
denial of justice to the Swiss Federal Supreme Court. The latter ruled
in March 2017 against the Cantonal authority and ordered the Canton
of Geneva to pay to each of the Uber-drivers the amount of
CHF 500.00. Regardless of these events, the decisions on the main
issues by the competent Cantonal administrative court are still
pending.
In the meantime, the Traffic Commission of the Cantonal Legislative

verified a draft for a Cantonal Act on Taxis and Vehicles with drivers
(‘Loi sur les taxis et les véhicules de transport avec chauffeurs
[LTVTC]’), which has been published on August 26, 2015. The main
idea of this draft was to settle the differences between the taxis and
limousine services and Uber. Thus, the so far under the law of 2005
existing two different categories of taxis have been consolidated in
order to give them the same privileges like the common use of the
taxi stands and the use of bus lines in certain streets. Furthermore, a
new category called ‘transport vehicles with chauffeur’ has been
created for Uber-drivers and others. These chauffeurs need to have a
special license, have no privileges in traffic and are not allowed to call
their vehicles taxis. This draft has been approved by the Great
Council of the Canton of Geneva on October 13, 2016, and entered
into force on July 1, 2017, after the Administrative Chamber of the
Cantonal Court rejected on June 30, 2017, three appeals against the
law. Uber informed its’ drivers about these changes in the law so that
they are able to put themselves in conformity with it.
Canton of Zurich
Original language title Verordnung über das Taxiwesen vom 8. Juli 2009
Original legal source Amtliche Sammlung der Stadt Zürich, AS 935.460
English translation title Taxi Ordinance of the City of Zurich of July 8, 2009
Abbreviation Taxiverordnung
Brief summary In the Canton of Zurich, there is no Cantonal legislation with regard
to taxi services. Thus, the latter is (with the exception of the Swiss
Federal Road Traffic Regulations) regulated on the Municipal level.
Some Municipalities integrated the provisions on taxi services in their
‘Police Ordinances’ (e.g. the city of Kloten) others made specific
‘Taxi Ordinances’ (e.g. the city of Zurich). The ‘Taxi Ordinance of
the City of Zurich’ defines a taxi as a vehicle, which provides
transportation services for persons and goods based on a tariff without
a specific schedule or route. These vehicles need to have a special taxi
sign on their roof. Furthermore, the taxi-drivers need not only a taxi
permit, but also a special operating approval, which allows the holder
to offer taxi services in the city of Zurich. The taxi services are under
the control of the police. UberBlack, UberX and UberGreen are not
problematic in view of the police as long as the drivers have a license
for professional transportation services, they respect the working and
driving time as well as the resting period provisions of the Swiss
Federal Chauffeur Ordinance and the vehicles have a trip recorder.
Generally, UberPOP-drivers do not need to have special license and a

trip recorder. However, if the UberPOP-driver is offering his
transportation services on a regular basis (i.e., at last two transports in
less than 16 days) and the client has to pay a fee that exceeds the cost
for the vehicle and the out-of-pocket-expenses, then these transports
aim at obtaining an economic success and thus the UberPOP-driver
has to get a special license in order to offer such professional
transportation services.
In 2016, the Cantonal police of Zurich has taken action against 139
UberPOP-drivers, and the Municipal police of the city Zurich 79
UberPOP-drivers for driving without the appropriate licenses and
permits. Fines could be as high as CHF10’000.00.
On June 7, 2017, the Government of the Canton of Zurich published
a statement in which it was held that UberPOP-drivers are operating
illegally. The Government of the Canton of Zurich stated inter alia
that UberPOP-drivers have to meet the requirements, which are
mentioned in II.2. ‘Road Traffic Regulations and Organization of the
Enforcement’, in order to be allowed to perform ‘professional driving
services’ in order to perform ‘professional driving services’ legally.
As a result, Uber cancelled the UberPOP-service in Zurich on
August 10, 2017 following the controversy over its legality. Zurich
UberPOP-drivers have three months to get the proper permits that
will allow them to chauffeur passengers for pay under the more
expensive UberX, UberBlack or UberGreen services.
6.2 Brief Summary
Digitization has affected virtually every sector of the economy and changed the
world of work. New information and communication technologies (ICT) as well as
more powerful computers and network infrastructures are the technical backbone
of this change. While the initial stages of digitization mainly served to automate
repetitive business processes with the help of ICT, the digital transformation, which
has been progressing rapidly since 2008, means basically the ‘Digitization of Every-
thing’. Innovative technological developments such as Cloud Computing, Mobile
Computing, Big Data and the Internet of Things, facilitate new products, services
and business models like the Sharing Economy.
Uber owns probably one of the most known and controversial ICT-platforms
worldwide in the field of the Sharing Economy, as it develops, markets and operates
car transportation services via a mobile app software in over eighty countries. Core
elements of the Sharing Economy are usually platforms that broker direct transac-
tions between users and providers; these transactions include the temporary use of
resources and associated services. However, Sharing Economy is not a fundamen-
tally new way of doing business. The developments of the Sharing Economy are at a
first glance positive from an economic point of view because resources are used more
efficiently, and competition is intensified. However, versatile laws on the Federal as
well as on the Cantonal level complicate the analysis of the legal situation with regard
to Sharing Economy in the field of transportation services in Switzerland.
In Switzerland, transportation services are distinguished as follows:
a. transportation from a specific location (e.g. taxi stand);
b. transportation initiated by a hand signal; or,
c. transportation based on a special request (e.g. phone call or via a mobile app
software).
Usually, transportation from a specific location or initiated by a hand signal are
conducted only by licensed taxis. Whereas transportation based on a special request
cannot just be made by a licensed taxi or professional drivers of a limousine service,
but also by private individuals. However, the aforementioned limousine services or
transportation services provided by private individuals are (contrary to taxi services)
very often not regulated in ‘Cantonal/Municipal Taxi Regulations’. Nevertheless,
professional transportation services in the category ‘Business-to-Customer (B2C)’
are more regulated than the transportation services in the category ‘People-to-People
(P2P)’.
In this context, it has to be mentioned that Uber offers in Switzerland the following
types of services, which are not available in every city and are all based on a special
request by the client via the Uber-mobile app software:
a. UberBlack uses professional drivers operating high-end sedans;
b. UberX uses an intermediate range of cars;
c. UberGreen uses electric cars; and,
d. (iv) UberPop, at the lower end of the scale, is operated by an individual with a
four-door car who signs up on the company’s website.
UberX, UberBlack and UberGreen are not that different from traditional limousine
services and thus they fall in the category of ‘B2C’. However, UberPop connects
clients with non-professional drivers and thus the involved persons fall in the category
‘P2P’ in Table 1.
Table 1 Uber: B2C v P2P

P2P B2C
Transportation based on a special UberPOP Limousine services
request UberX
UberBlack
UberGreen
Transportation from a special location Taxi services
Transportation initiated by a hand signal
Transportation based on a special
request
Uber declared on December 13, 2017, to stop UberPop in the course of the year
2018 in Switzerland and to focus mainly on its services UberX, UberBlack, and
UberGreen. Uber has made this decision mainly due to the legal situation on the
Federal level and the specific laws in the various Cantons.
Regulation and Competition of Taxi
Services
Siniša Petrović and Tomislav Jakšić
Abstract Throughout the world, the taxi market is generally considered a heav-
ily regulated market. Such regulation refers primarily to establishing market entry
restrictions, establishing taxi fares schemes, setting up of minimal passenger safety
and protection standards, as well as ensuring that certain universal service require-
ments are adhered by respective taxi operators. Market regulation is normally justified
where externalities prevail that ultimately harm competition and go to the detriment
of overall consumer wellbeing. Regulation of taxi markets resulted in the creation
of closed market structures. This eventually led to the establishment of a monopoly
or an oligopoly of a limited number of taxi operators that enjoyed significant eco-
nomic protection, normally denied to other entrepreneurs. The need for such severe
restriction of competition generally invoked upon the necessity of establishing a
valid consumer protection environment. The appearance of Uber demonstrated how
a strong-willed participant can stir the pot. Uber was generally being denied market
entry on such restrictive regulatory grounds. Appearance of Uber revived interest
in the dormant taxi market and raised the unpleasant issue of whether such strin-
gent regulation can still be justified. This chapter will elaborate on the fundaments
of regulatory intervention in a market, the current taxi market structure, the Uber
business model and ultimately on the adequacy of grounds used to justify institution
and enforcement of such regulatory measures in the taxi market.
1 Introduction
Very generally speaking, competition is perceived as the best mechanism of the

market to maximize growth and ensure that the economy is efficient. Undertakings
which are not efficient disappear as the result of intrinsic market rules and only the
fittest survive the market competition. At the same time, this process is beneficial for
S. Petrović · T. Jakšić (B)

e-mail: tomislav.jaksic@pravo.hr
S. Petrović
e-mail: sinisa.petrovic@pravo.hr
https://doi.org/10.1007/978-3-030-31535-1_5
154 S. Petrović and T. Jakšić
consumers. They may choose among the products or services that have proved to be
the best in this market competition. Competition among competitors is considered
to be the best instrument for both: the efficiency of the economy and the wellbeing
of the consumers. However, there are instances when market structure and types of
products and services are such that some intervention is necessary. Intervention is
employed with the explanation of being necessary to safeguard some economic or
social goal.
This article is not aimed at dealing with general considerations of the relationship
between competition law and regulation but only to explore the historical develop-
ment of taxi service regulation in the context of the present situation on the market.
Whatever was its background, it has been argued that regulation aims to protect the
consumers. In many instances, though, this regulation resulted in the consumer dis-
satisfaction. On the other hand, emergence of alternative service providers, including
Uber, brought competition to the dormant taxi market and provided the consumers
with the possibility to choose a different service provider.
The starting point of the discussion is the factual evolution of the market and
the current situation. It is then explored whether the traditional level of regulation
is indispensable to guarantee the safety and quality of taxi services, are there other
ways to achieve those goals and what role is therein for Uber and similar service
providers.
2 Meaning of “Regulation”
Competition between market participants is one of the main proponents of economic

growth and wellbeing since it fuels productivity and innovation which in turn bene-
fits the consumers. On the other hand, closed market structures oppose competition.
Participants have less incentive to innovate and be more productive and efficient,
having little to no risk of losing their market shares. However, when there is no bal-
ance between the charged price and the true costs (negative externality) or benefits
(positive externality) of a service, externalities prevail which ultimately harm com-
petition and lead to market failure. The effects are similar to those on monopolistic
markets. In such a situation, regulation could help restore the balance or correct
the negative effects of a monopoly notwithstanding the negative effects on compe-
tition, which would under such circumstances also diminish, be flawed or lacking
(Swedish Agency for Economic and Regional Growth 2017; Defossez 2017). With
this in mind, market regulation could be considered both an adversary and a friend
to the competition.
Although the meaning of the mere word is well known and commonly used, the
determination of the legal concept of “regulation”, as is used throughout this work,
Regulation and Competition of Taxi Services 155
is somewhat harder.1 The concept of regulation considered was originally contem-

plated in US legal literature and judicial practice while it only later came to focus in
Europe.2 Regulation should occur when there is an economic and legal justification
for such intervention. For example, when due to failing or absent market (regula-
tory) improvement of economic efficiency and consumer protection is required.3 In
other words, when the market operation would cause harm to public interests and
consumers, regulation might be necessary to establish a healthy framework for the
normal functioning of the market. This is usually undertaken by controlling access to
that market, setting up of price fixing schemes and establishing service quality stan-
dards to protect the consumers, etc. (Blanco and van Houtte 2017; Defossez 2017;
Wyman 2017; Swedish Agency for Economic and Regional Growth 2017; Produc-
tivity Commission Australia 1999). Implementation, oversight, and enforcement of
such rules are generally undertaken by independent administrative agencies, the so-
called “regulators”. They are normally set up by the government for one or more
regulated markets (e.g. the energy, the telecommunications or the transport sector).
So generally, regulation could be defined as setting up of regulatory mechanisms and
regulator’s oversight over the proper functioning of a regulated market. At the same
time, when the objectives of regulation are achieved, and the market may function
without these types of regulatory ex-ante interventions, there is no more need for reg-
ulation and classical competition rules and standards would apply. However, purely
economic reasons are not the sole causes for regulatory interventions and a state’s
economic policy is influenced by various social, political and even populist consider-
ations as well. That being so and depending on various circumstances, including the
level of a state’s economic development, political situation, the power of different
political and social groups and even historical legislation, it is quite possible that the
particular market is overregulated, even though there is no need for regulation at all.
Misuse of regulatory measures in situations when there is no actual need for
such measures could severely hinder market growth, development, and competition
(Swedish Agency for Economic and Regional Growth 2017). Whether such omission
is the result of poor judgment of the public authority, lack of necessary information
on the market and its participants, corruption and self-preservation aimed at building
1 For example, Online Cambridge Dictionary (2019) provides that regulation is an official rule or
the act of controlling something. On the other hand, Merriam-Webster Online Dictionary (2019)
provides several meanings to the word, e.g. the act of regulating: the state of being regulated and
an authoritative rule dealing with details or procedure.
2 See: The decision of the US Supreme Court in Nebbia v New York from 1934 where the court
concluded that the 14th Amendment prohibited any governmental regulation of economy, unless
such regulation is required by the public interest (e.g. where market participants enjoyed monopolies
as in the public utilities market). While regulation was set up in the US progressively to restrain
effects of the free market, in Europe regulation was used to curb the existing state monopolies and
open such markets to other competitors (Blanco and van Houtte 2017).
3 It can be argued that market regulation, including market entry restrictions, can be used as an
austerity measure in times of economic insecurity. Historically examples for such regulatory inter-
vention can be found in the USA during the 1930s crisis (New Deal cartelization) and Japan in the
1980s (Gorecki 2012).
up or maintenance of the public bureaucracy, such failure ultimately goes to the detri-
ment of the consumers and the overall economic wellbeing. It is also not uncommon
that regulators become protectors of existing market participants, their business prac-
tices and resulting profits which they should be regulating in the first place (Swedish
Agency for Economic and Regional Growth 2017). Similar effects can be observed
by overregulation or going beyond what is necessary to protect public interests. For
example, by restricting market entry to ensure certain quality standards of service
(e.g. through restrictions based on population numbers and distance between shops)
when the same effect could be attained naturally by supply and demand side of
the economy (e.g. increased supply will lower profits and eventually deter others
from entering the overpopulated market). It is therefore important to strike the right
balance between regulation and competition to ensure that such restrictions do not
go beyond what is necessary to protect the public interest (proportionality test for
regulatory measures) (Swedish Agency for Economic and Regional Growth 2017;
Defossez 2017). However, the deregulation of a market could result in negative side
effects, e.g. the increase of prices, confusing and unpredictable fare price schemes
and scarcity of taxi service in low-density areas of the urban environment. Therefore,
according to the market failure theory, the market should primarily be self-regulated
and only when that is not a possibility, public authority should step in and establish
external regulatory measures (Defossez 2017).
Regulation is often compared with measures aimed at preserving competition as
they both seem to share a similar function, i.e. the maintenance of sound market oper-
ation and promotion of market competition. However, there are several differences
between the two as well. For example, competition rules are normally applied after
distortion to the competition is observed (e.g. when a cartel whose activities dis-
tort market competition is discovered). The regulation aims to ensure that initially,
all conditions for healthy market operation exist. In addition, while competition
observes the whole market, regulation is generally market sector specific (Blanco
and van Houtte 2017).
3 Analysis of Taxi Market and Uber Business Model

as Disruptive Element
Taxi service generally involves the urban transportation of passengers between two
different locales within a smaller geographical area for monetary remuneration
(Geradin 2015a, b; Aarhaug and Skollerud 2014). Such on-demand transportation
service is a more expensive but also more flexible form of public transportation ser-
vice than the service that operates on predetermined and scheduled traffic lines like
public buses, subways or trams.4 Generally, taxi service can be divided into three
4 Suchservices normally enjoy all the benefits of mass public transportation, i.e. taxi operators can
use parking designated for public transportation, they can park in locations where parking is not
allowed for private vehicles, they can use bus and tram lanes to provide faster transit through the city,
types: (1) hail on the street service, (2) taxi rank service at predetermined places
and (3) pre-booked service (OECD 2018; Lynch 2016; Aarhaug and Skollerud 2014;
European Commission 2016b). The distinction is based on the way a passenger orders
each respective taxi service. However, the third segment distinguishes between pre-
booked taxi service and private hire vehicles (PHV), both enabling advance booking
and pick up of passengers on a predetermined place via telephone, website or mobile
application. The difference between the two being strictly regulatory, i.e. that PHV
is precluded from providing passengers with the other two types of taxi services.5 In
other words, the starting and the ending point for each provision of service generally
need to be the designated PHV base station (i.e. return to garage/depot rule).6 This,
however, does not affect consumers as it does the PHV operator’s ability to provide
services in the market because it is denied access to the street hailing and the taxi
rank segment of the market. This affects the consumers in a lesser manner since they
must organize the transport in advance by contacting the PHV operator and arranging
the details of the service that is to be provided at the later date (e.g. the time, pickup
and destination location). However, the PHV service is developing in a way that the
time difference between the arrangement of the service and its provision decreases
(e.g. to under an hour). Such service is even further made convenient and accessible
to the consumer with modern communications technology (e.g. mobile apps and
internet). Use of such technologies paved the way for technological modernization
and development of traditionally unchangeable and stagnant taxi market.
In recent years, a relatively new concept of “sharing economy” or “collaborative
economy” emerged in the passenger transportation market. Sharing economy is a
method of organizing activities by sharing available resources between willing par-
ticipants (Kozik 2017). In other words, the concept is based on utilizing available
resources to the maximum possible degree by sharing them between willing partici-
pants, i.e. those with such resources at disposal and those in need of such resources.
Such a concept, besides enabling a higher rate of resource utilization, normally also
brings reductions in relating transaction costs thereby furthering the principles of
sustainable growth (Defossez 2017; Kozik 2017). In the passenger transport market,
there are several types of sharing economy services, namely the ride-sharing, car-
sharing service, and ride-sourcing. The rationale of the ride-sharing service is to share
a cost of travel between several passengers where one is the actual driver (regularly
the owner as well) of the car (European Commission 2016a; OECD 2018). This can
be undertaken on a private basis between passengers that are acquainted with each
other (e.g. coworkers traveling to another city for work) or those that were previously
unfamiliar but share a common interest to travel and thus share resulting costs (e.g.
prearranged sharing facilitated by an application or a website). The car-sharing is a
etc. For example, that is the situation in Brussels, France, Germany and the Netherlands (Noguellou
and Renders 2018). Private hire vehicles are normally precluded from using such privileges.
5 For example, it cannot pick up passengers on the street or queue up for passengers in the taxi rank
(OECD 2018).
6 For example, such regulation of PHV service is present in Germany (Noguellou and Renders 2018).
service where an owner gives full car access to another person for monetary compen-
sation. This enables the utilization of a vehicle in the off-peak time when the owner
has no need for it and when others have a short-term need for the vehicle (European
Commission 2016a). Finally, ride-sourcing service can be defined as an intermedi-
ary service that connects passengers and drivers (professional and non-professional)
and normally facilitates payment and feedback between the two on the quality of
service provided (OECD 2018). Such service providers use the intermediary nature
of the service to claim that they are not providing a regular taxi service but only
connect passengers and drivers who provide that service in order to circumvent reg-
ulatory measures applicable to taxi market participants.7 However, from the position
of the consumer, it should be noted that it generally does not distinguish between the
intermediation for and the actual provision of the service requested. To the regular
consumer, it is only relevant that the requested service is provided (e.g. taxi trans-
portation from one location to another).8 The main reasons cited for success of such
intermediary passenger transport service is usually lower fares than those charged by
traditional taxis while maintaining a passenger safety standard that is comparable to
traditional taxis, increased availability of service, better quality of service and most
notably consumer convenience (e.g. accessibility of the service, supervision of the
service before and during transportation and ease of payment for the service) (OECD
2018). Uber is one of the most prominent and internationally known providers of
such service, but recently the market has seen a steady stream of new participants
(e.g. Go-Jek in Indonesia and mytaxi in Germany). However, this paper will hereafter
focus only on the Uber phenomenon.
Uber business model was developed and then utilized by Uber Technologies, Inc.
established in San Francisco, USA. Soon after starting in the United States, Uber
Technologies established subsidiaries in Europe and other parts of the world. Cur-
rently, Uber provides its services in many major metropolitan areas throughout the
world.9 Its business model is based on an application for mobile phones. This appli-
cation acts as an intermediary between individual and independent drivers providing
a transport service from point A to point B and passengers in need of such service.
In other words, Uber does not employ its drivers, it only offers to connect them with
customers in need of transportation service. To acquire such service, a passenger
needs to start the app on its phone which then triangulates passenger’s current loca-
tion, its desired destination and available drivers in the vicinity that can accommodate
7 See: Respondent’s arguments in the Opinion of AG Szpunar in the Case C-434/15

(EUCLI:EU:C:2017:364) and the Opinion of AG Szpunar in the Case C-320/16
(EUCLI:EU:C:2017:511).
8 For more on the distinction between such ICT intermediary service (“information society service”)
and the traditional taxi service see Sect. 4.

9 However, it should be noted that Uber provides a range of services and dependent on the applicable
regulatory framework, it provides all or some of its registered services. For example, in Berlin it
provides UberX, UberTaxi, UberTaxi Van service, in Rome it provides UberBlack, UberLux, and
UberVan service and in Zagreb, it provides UberX and Select service. In some countries (e.g. China
and Denmark), because of the regulatory framework, Uber pulled out after it was unsuccessful in
changing the regulatory framework disabling it to operate legally.
its request. Before sending the request to Uber, a passenger is given an estimate of
the fare price for the desired trip. The fare is calculated on the basis of a dynamic
algorithm that matches the supply and demand of the service. In other words, when
supply is low—and demand is high, the regular starting fare will be multiplied by
a factor dependent on the difference ratio between actual supply and demand (i.e.
surge pricing). Such price algorithm acts as indirect encouragement and incentive for
Uber drivers to throw themselves into the market for the possibility of gaining higher
fares than regular ones. During the trip, the passenger can monitor the actual route
taken by the driver compared to the one suggested by the application as the most effi-
cient one. After completion of the requested trip, the payment is normally facilitated
digitally through the application by charging the passenger’s registered credit card.
The fare fee is initially transferred to Uber which then withholds a percentage (ca.
20–25% of the fare charged) for the service rendered to the driver. The remainder is
then transferred to the driver’s bank account.10 After completion of the trip, both the
passenger and the driver can evaluate the other. This establishes a ranking system
and feedback to both the person being ranked and to Uber. Passengers and drivers
with lower ranking will eventually be excluded from using the Uber application.
Initial impression is that the described model does not offer anything extraordi-
nary considering we are living in the ICT age. The incorporation of such technology
has, however, made quite an impact on the traditional and stagnant taxi market.
Such an impact can mostly be attributed to the outcry of the consumers wishing
for a consumer-friendly change. In addition to the welcome change of pace and
lower prices of fares, consumers saw in the Uber business model a possibility to
connect with the taxi-like service in a more flexible and user-friendly manner. This,
in turn, provided them with not only all the required information before commit-
ting to a trip (e.g. like the fare price), but also enabled them to rate the driver. On
the other hand, Uber opened a traditionally closed and selective taxi market to a
wider range of willing participants that were now competing with the licensed taxi
drivers. The most notorious segment of the Uber service line, the UberPOP ser-
vice, enabled non-professionals to drive customers in their free time (e.g. after their
regular working hours or during weekends) to boost their personal finances.11 In
this way, unlicensed taxis and non-professional drivers came into direct competition
with the licensed taxis and professional drivers. This resulted in the uproar of the
licensed taxis operators against Uber’s business model. The resulting turmoil is best
10 In some markets, Uber made possible cash payments directly to drivers out of which the driver
is then required to pay a percentage of the fare fee to Uber (e.g. in Croatia). However, since this is
only a possibility, between Uber and the driver will probably stand several outstanding monetary
claims and counter-claims which will be set off with the remaining amount being transferred either
to Uber or the driver.
11 For example, in the Netherlands, although the taxi market was significantly liberalized in early
2000 (e.g. no market entry restrictions and ability to participate in all segments of the taxi market),
the introduction of UberPOP service triggered strong opposition from other market participants
(Noguellou and Renders 2018).
evidenced by the number of protests and lawsuits undertaken with the vigorous
energy of the opposition against Uber’s business model.12
4 Determination of Relevant Market for Uber’s

Intermediary Service
It has been debated whether the intermediary service provided by Uber could be
qualified as a taxi service, thus falling under the scrutiny of various national regula-
tory measures. Namely, Spanish and French national courts have filed applications
for preliminary rulings before the Court of justice of the European Union (ECJ) con-
cerning Uber’s intrusion in their national taxi markets. What they are asking ECJ is
to determine the nature of Uber’s service and thus the relevant market that Uber is
competing in and is a participant of. In other words, whether Uber’s service should
be classified as a taxi service or as an information society service. If Uber’s service is
qualified as an information society service, then there is a possibility that Uber will
be able to avoid generally stringent regulatory measures imposed on the taxi market
participants.13 Namely, if Uber business model is regarded as a composite platform
which has the basis of an information society service but also provides some other
underlying services, then there is a possibility that such service, irrespective of its
information society service characteristics, could fall under the scrutiny of national
regulation (e.g. business authorization and licensing requirements). Whether such
underlying services are provided or not depends primarily on whether the platform
holds any control or influence over the provider of such services (e.g. determina-
tion of the fare price for the service paid by the user of the platform, setting of
other contractual terms which influence the quality of the service provided to the
final recipient and ownership of key assets) (European Commission 2016a). In other
words, it is important to determine whether Uber exercises significant control over the
transportation service provided through the app (Kozik 2017; Barainsky et al. 2016).
Therefore, even if Uber is to be qualified as an information society service, it does
not necessarily mean that it will be able to escape national regulatory measures. If it
is, however, qualified as a taxi service, then Uber violates the incumbent national taxi
12 For example, taxi drivers’ protests against Uber in Greece in 2018, Spain in 2018, Prague in 2018,
Mexico Cancun area in 2018, Bogota in 2017, Croatia in 2017, Santiago in 2017 and France in
2016. These examples are only metaphorical and some kind of protest of taxi drivers was visible
basically in any city where Uber started operating.
13 See: Article 3 para. 2 Directive 2000/31/EC of the European Parliament and of the Council
of 8 June 2000 on certain legal aspects of information society services, in particular, electronic
commerce, in the Internal Market. That Article provides that the Member States may not, for
reasons falling within the coordinated field, restrict the freedom to provide information society
services from another Member State unless one of the reasons determined in Article 3 para. 4
exists.
market regulation. Only information society services that do not provide other (non-
information society) underlying services, could benefit from the protection provided
by the respective provisions of the Directive on electronic commerce.
The circumstances of the two applications before ECJ are similar and generally
come down to the following: the proceedings are initiated by the participant of the taxi
market or the public regulatory authority against Uber in relation to its commercial
activities on the taxi market that allegedly infringe applicable national legislation
and amount to misleading practices and thus represent acts of unfair competition.
On the other hand, Uber denies such allegations and claims that it is merely acting
as an intermediary, matching supply (drivers) and demand (passengers).14 In other
words, Uber states that it is not actively participating in the taxi market nor does it
provide the transport service. It only helps those willing to provide such service and
those wishing to receive such service through its user-friendly platform.
In this regard, AG Szpunar in his two opinions (Opinion of AG Szpunar in the
Case C-434/15; Opinion of AG Szpunar in the Case C-320/16) concluded that Uber
provides a composite service, i.e. the service which comprises of both electronic
and non-electronic elements. That is because Uber, not only provides a service that
connects passengers with drivers but also exercises decisive influence over conditions
under which such service is provided by the driver. In such a situation, according to the
advocate general, the main component of the service provided should be determined.
If an electronic component of the composite service is economically independent of
the non-electronic component or if it is a principal service in the overall composite
service provided, then such a composite service may be qualified as an information
society service. However, the advocate general concludes that Uber exerts control
over all relevant aspects of the transport service in question. For example, it sets the
fare price, minimum safety requirements as to the drivers and the vehicles, increases
accessibility of the transport service through encouragement of drivers to provide the
service when demand is high and supply is low and exercises control over the conduct
of the drivers through possible exclusion from the platform when their user ratings
drop under a certain threshold. Since Uber controls these economically significant
elements of the transport service, the advocate general concludes that Uber is not
a mere electronic intermediary of an end service provided, but a genuine organizer
and operator of urban transport service.
Along the line of the advocate general’s opinion, the ECJ in Case C-434/15 con-
cluded similarly that the service Uber provides is more than intermediary service.
That is because Uber platform, besides connecting passengers and drivers, also ren-
ders accessible and organizes urban transport in a way that the drivers and passengers,
without that platform, would not provide or use such service. Besides, through its
platform Uber also exercises decisive influence over conditions under which that ser-
vice is provided to passengers. Example by fixing the maximum fare and collecting a
percentage of such price, setting up of minimum requirements that drivers and their
14 See: Under circumstances of the case in the Opinion of AG Szpunar in the Case C-434/15, the
Opinion of AG Szpunar in the Case C-320/16, the Judgement in the Case C-434/15, the Judgement
in the Case C-320/16.
vehicles need to comply with, thus exercising a level of control over the quality of
the vehicles, drivers and, ultimately, even their conduct. Therefore, ECJ concludes
that, although intermediation service forms an integral part, the main component of
overall service is the provision of transport. As a result of such a conclusion, the
service that Uber provides cannot benefit from the protection of the Directive on
electronic commerce.
Referring directly to the legal classification of service Uber platform provides
handed in the Case C-434/15, ECJ in the Case C-320/16 infers that such interme-
diary service meets the criteria for classification as an information society service.
However, the service Uber platform provides is more than intermediary service since
it creates the demand and supply for the underlying transport service. In addition,
such a platform exercises decisive influence over conditions of such end service
provided to the passengers (e.g. maximum fare price determination, conditions for
the provision of the quality of service and control over the conduct of the drivers).
Therefore, the ECJ concludes that although intermediation forms an integral part of
the overall service, the dominant component is the transport service. This qualifies
the service Uber platform provides as a service in the field of transport and not as an
information society service. Thereby, excluding such intermediary service from the
scope of the respective EU legislation on information society services. This seems
to be logical from the point of view of the passenger as a consumer. Its reason for
requesting Uber service was ultimately to be transported from one location to the
other and not to use some information technology service. The latter is only the
means to achieve the primary goal of being transported.
Considering the above, at least from the position of the EU law, the service that
Uber provides is not considered as an information society service since the dominant
component of the overall service is the transport service. Having in mind that the
applicable EU legislation regarding the provision of transport service, at this moment,
did not enact a common transport policy pursuant to Articles 90 and 91 para. 1 of
the Treaty on the Functioning of the European Union, the regulation of intermediary
service Uber platform provides is left to the regulation of each respective Member
State. The qualification of the service Uber provides as a transport service also
qualifies Uber as a participant and competitor in the overall taxi market. When looking
from the position of the service the passenger receives from the Uber platform, the
conclusion is more than justified. In the end, it seems that what matters is the purpose
of the service provided to the final consumer, i.e. the taxi service from one urban
location to another. The fact that such service is made accessible and possible through
an online platform at a distance and at recipient’s request (information society service)
is not of significance when the overall service that platform provides contains other
elements over which the provider of the integral information society service exercises
decisive influence (e.g. setting up of fare price, quality standards of transport service,
oversight over the conduct of drivers and even passengers). Therefore, to qualify
an intermediary service as a pure information society service, it is important that
the provider of such service focuses completely on the electronic (intermediary)
element of the overall service provided to the final recipient. Thus, the provider of
the service effectively leaves the quality, price and other significant elements of the
non-electronic element of the overall service in control of the immediate provider

of that service (a provider that does not provide the intermediary part of the overall
service). Such is the case with the booking platforms (e.g. for hotel accommodation
and airline tickets). The platform only connects the supply and demand side of the
economy, while the exact conditions of the service provided are dictated by the actual
supply side of the economy (e.g. the hotel and the airliner as a service provider).
5 The (Over)Regulation of the Taxi Market
The taxi market is traditionally considered one of the more heavily regulated markets
throughout the developed countries. Such regulation generally resulted in the creation
of sanctioned monopolies (Noguellou and Renders 2018). The reasons behind such
regulation are mostly argued to be justified on the grounds of the need to ensure
the proper functioning of the taxi market, provide adequate protection to consumers
and ensure certain minimum standards of public safety for the service offered. The
regulatory efforts can be universally divided into several segments of regulation,
namely: (a) the market entry, (b) taxi fare, (c) passenger (consumer) safety and
protection and (d) the universal service requirements.15
Since the advent of the modern-day passenger transportation service taxi market
was susceptible to regulation. The first extensive regulation was introduced in London
with the hackney carriage regulation dating back to the early 17th century and then
in France in the mid-19th century. This regulation later served as a legal framework
for the regulation of the taxi market in England and Wales and France. The practical
justification for such early regulation was seen in the need for prevention of traffic
congestion and excessive and superfluous use of coaches on the city roads. At the very
end of the 19th century in Paris coaches and carriages were quickly replaced firstly by
the electric-powered and then by gas-powered taxis. Major US east coast cities saw
the appearance of taxi services in the early 20th century and gained full momentum
by the mid-1920s when private automobiles became widely available to the public.
This resulted in increased competition, especially during the great depression when
many of the unemployed turned to provision of taxi services to earn for their living.
As a result of the sudden oversupply of taxi operators, the older taxi companies
revolted and demanded protection from the public authorities. This was requested
and eventually provided under the premise of the need to protect public safety and
public transportation. Therefore, the first regulatory efforts focused on restricting
new competitors from entering the taxi market (Rahel 2016; Toner 1992; Geradin
2015a).
15 This division is not as clearly established but one can universally come to such a conclusion when
considering various areas of regulation that are observed in various jurisdictions (Wyman 2017;
Toner 1992; Ndlovu 2017; Aarhaug and Skollerud 2014; Geradin 2015a).
Market entry (quantity and quality) restrictions are widely present to this day in
many national taxi markets.16 Such restriction serves to control the number of taxi
operators in the market. This is normally undertaken through a quantity-based licens-
ing mechanism enabling only a limited number of those holding such licenses (e.g.
medallions) to freely provide taxi services in a set geographical area (normally a city
or a wider metropolitan area).17 Besides the licensing system, there is another possi-
bility to condition entry on the market. For example, this is through the introduction
of stringent qualitative requirements systems that dissuades or makes it significantly
hard for a new participant to enter the market. For example, by the introduction of
a time consuming and demanding knowledge test of the set geographic area and
demonstration of the ability to navigate the city based on the driver’s own merits. It
is not uncommon that both mechanisms coexist as barriers at the same time, making
market entry even more difficult. The exact number of licenses, conditions for grant-
ing them and other qualitative requirements are normally determined discretionary
by the regulatory authority. This is normally a local (municipal) authority. However,
some general aspects of regulation are also set up nationwide (e.g. the right of the
local authority to determine the exact number of available licenses that are to be
deployed to the respective market) (European Commission 2016a). As justification
for such restriction one can generally extract one or more of the following: prevention
of traffic congestion and excessive demand for rank space at the most popular urban
locations (e.g. in the airports or the downtown), enabling easier control of the quality
of service provided, lower taxi fares, economic hardship for market participants as a
result of ruinous competition between them in oversupplied market and, ultimately,
the loss of value for investment in the previously acquired taxi license (Wyman 2017;
Aarhaug and Skollerud 2014; Toner 1992; OECD 2018).
Taxi fare regulation is another common aspect of regulatory efforts in the taxi mar-
ket.18 This form of regulation is normally justified on consumer protection grounds,
i.e. in order to mitigate the existing asymmetry of information between taxi opera-
tors and passengers. Namely, in situations where passengers are not aware of all the
relevant information regarding the required service before its provision commences,
they might find themselves in an inferior and inequitable position compared to the
party providing that service. That forces them to accept the service although they do
not have all the necessary information and although they would normally not have
16 Herein the notion “national taxi market” serves only as a reference and not a notion of competition
law. This is because taxi markets are often and even regularly only local and there is no “national”
taxi market. Normally the applicable legislation in various local areas greatly differ. At the same
time, it is true that national legislation does influence all the local taxi markets, irrespective of how
they are regulated by the local legislation. This is discussed further below in the text.
17 For example, geographic restrictions are established in Brussels, Denmark, China and Spain
(Noguellou and Renders 2018). Geographical restrictions are observed in other markets as well, e.g.
the pharmacy market. Besides other market entry restrictions (e.g. that only a licensed pharmacist
can own and operate a pharmacy), the establishment and operation of pharmacies are restricted to a
certain service area. The area is normally determined by population number and distance between
two pharmacies (e.g. 2500 inhabitants and 5 km distance).
18 For example, the taxi fare is regulated in Brussels, China, Germany, Netherlands and Spain
(Noguellou and Renders 2018).

done so. Typically, such asymmetry naturally exists in the traditional taxi market
segments, i.e. the hail on the street service and even the taxi rank service. In these
segments, imperfect information normally relates to the price of the taxi service being
provided. For example, when the customer hails a taxi on the street, he is inclined to
accept the service from the first taxi that stops and picks up the customer’s hail, even
though the customer is not aware or informed about the actual price of the service.
That is because the customer is not inclined to reject the proposed service, although
able to do so, in fear of being forced to waste precious time waiting for another taxi
to come by. Even if the customer decides to reject the offering taxi service wanting
to compare it to the next taxi service to come by, there is no guarantee that the next
taxi will offer a lower price or the equivalent service as the previous one. The same is
generally applicable to the taxi rank service as well since the consumer is regularly
not able to cherry pick between several taxis standing in the line, on the contrary he
is being forced to accept the service of the first operator in the line. Such search costs,
caused by the existing asymmetry of information between the parties involved, are
the principal reason behind fare regulation. For example, by fixing the taxi fare or by
setting the maximum fare cap, such asymmetry is eliminated or at least alleviated for
the consumers. Regarding the pre-booked service market segment, before ordering
the service consumers can shop the market and cherry pick the operator whose terms
of service (pricing) suits them the best. Therefore, it seems that at least for that market
segment, fare regulation cannot be justified on the mentioned reason of asymmetry.
Nevertheless, economies of scale may beg to differ on this since economies of scale
may enable domination of one or more companies in the pre-booked service mar-
ket segment. Consequently, a company may impose fares through the abuse of the
power it wields based on its overall market share. An additional ground for justifi-
cation of fare regulation is found in the need to limit the ability of taxi operators to
overcharge their customers because of the “monopoly” they hold in the respective
market (Wyman 2017; Toner 1992; Ndlovu 2017; OECD 2018).
Regulation of the taxi market is also commonly undertaken to ensure passenger
safety. Such regulation enables only drivers and vehicles that meet the prescribed
requirements to provide taxi services. This varies from denying market access to
drivers with previous criminal records and those that do not satisfy certain health of
psychophysical requirements, then to vehicles without proper accident insurance for
passengers and vehicles that do not meet certain specifications regarding the vehicle
age, size, carbon emissions, etc. Besides ensuring minimum safety and service quality
standard, such restrictions also help in preventing fraudulent practices and illegal
access to the market. For example, by prescribing that only certain recognizable
vehicle types are permitted to operate in the city streets as taxis (e.g. yellow medallion
cars in New York City) with visibly marked license numbers on their sides, etc.
Minimum quality standards are also ensured by further subjective requirements.
Namely, all drivers must undergo certain vocational training for taxi operators, pass
a special knowledge test of the city topography and its roadways, demonstrate a
certain level of driving ability and have knowledge of the national language and even
certain (regularly minimum) proficiency of at least one other international (regularly
English) language etc. (Wyman 2017; Ndlovu 2017; Aarhaug and Skollerud 2014;
European Commission 2016a; OECD 2018; Noguellou and Renders 2018).
Ultimately, it an important principle that all passengers in the transportation mar-
ket (e.g. bus, railway and taxi market) must be afforded the equal possibility to receive
the same level of service provided by the operator (Wyman 2017; European Commis-
sion 2016a). However, discrimination based on a customer’s race, personal disability
and destination is not an uncommon occurrence. Based on such prejudice, traditional
taxis are even in a better position to deny service to certain types of customers, either
by ignoring customer’s hail based on race or visible disability or by refusing to offer
the requested service once the customer provides intended destination to the driver
(Wyman 2017). Unfortunately, regulatory efforts in this regard are lacking or are not
uniformly applied to all transport services. Existing regulatory efforts are normally
qualified as ex-post (e.g. monetary penalty) and not ex-ante measures (e.g. denying
a license to drivers that have discrimination related offenses on their record). This
raises the question of whether the provision of taxi service could and should be more
effectively regulated to prevent discrimination and ensure the universal provision of
service to all customers.
6 Justification of the Grounds for (De)regulation

of the Taxi Market
As stated above, regulatory efforts can be divided into several segments of regu-
lation. The first, most significant and most implicative for the competition is the
market entry restriction based on quantitative and/or quality grounds. Quantitative
restrictions severely limit market entry. The total number of market participants is
predetermined and new entrants are excluded until some of the existing participants
leave the market or before the cap of the total number of participants is increased.
Quantitative restrictions are normally combined with qualitative restrictions, restrict-
ing market entry even further (e.g. by employing an elaborate knowledge and driving
ability test).
One of the most cited justifications behind market entry restrictions, the need to
reduce traffic congestion (fewer taxi vehicles—less congestion), cannot be accepted.
Namely, it is unlikely that taxi vehicles are the main cause or that they contribute
significantly to traffic congestion in major urban areas (Toner 1992). It is more likely
that all other participating vehicles, as well as population and job growth, contribute
more to the overall congestion than the taxi vehicles (Wyman 2017; OECD 2018).
Moreover, taxis might even help mitigate congestion (e.g. through a taxi pooling
service) when public transportation is non-existent, underdeveloped or deficient.
However, it is also a possibility that people might substitute well developed public
transportation with taxis which might ultimately lead to increased congestion.19
19 For example, when taxi fares are low and comparable to the price of public transportation service
it is more likely that passengers will prefer the use of a more private and quiet space taxis can
Nevertheless, the restriction of the number of taxis cannot guarantee the reduction
of traffic congestion. It might alleviate (more or less) the congestion, but could also
lead to a higher rate of private vehicles on the street. Therefore, it cannot be used
as justification for regulation. Moreover, even if you would restrict a total number
of taxis navigating the streets, this might not mean that certain (popular) parts of
the urban environment would not be congested with taxis. Therefore, it is more
prudent to rather restrict the number of taxis in certain areas of the city (e.g. at
airports and in the downtown area) and/or in certain times of day (Wyman 2017). In
addition, the new digital technologies (ICT), like the platform employed by Uber,
might prove helpful in this regard as well. The surge pricing algorithm employed by
the Uber platform is an example of how fare prices can be automated depending on
the supply and demand side of the economy. The same could be done with congestion.
For example, higher fare prices when the taxi route takes the passenger through the
congested streets and highways and lower when it takes them through non-congested
urban areas. Revenues from such prices should belong to the municipal authorities to
discourage taxis to use congested roadways (Wyman 2017; OECD 2018). They might
also be used to incentivize taxis to use less congested urban parts by subsidizing the
difference between a regular fare and the charged lower fare because a less congested
route was taken.
Another cited justification, which closely relates to the traffic congestions, is an
oversupply of taxis at the popular taxi rank spots (e.g. at airports and in downtown
areas). Such oversupply could be curtailed in the same manner as with the solution
provided regarding congestion. Namely, the new digital technology (ICT) could be
used to let taxi operators examine whether there is some space left at the specific taxi
rank and what is the usual queue time at that rank for the provision of service. This
might reduce the number of cruising taxis waiting for space at the taxi rank to be
freed and incentivize them to seek for another, less populated taxi rank spot. Besides,
an additional charge might be imposed on the taxis using the most popular taxi ranks
similarly to the congestion model.20 However, one should take care that the increased
demand for the most popular taxi spots does not spill over into congestion in the
surrounding areas. The solution might be the use of this model in combination with
the congestion model previously described.21 Also, one can hope that the oversupply
at the specific taxi rank will incentivize taxi operators to seek other less crowded
taxi spots or to rely on the provision of service based on predetermined pickup of
passengers via online platforms or dispatching call centers.
In addition, market entry cap is often justified on the grounds of easier maintenance
of certain quality standards of the taxi service provided by the regulator. In other
provide than the crowded or shared one that one can usually find in the bus, subway or a tram.
However, in such situation taxis might also contribute to the overall use of public transportation
because passengers might combine public transportation between predetermined stops and taxis
from such stops to the final destination (Wyman 2017).
20 For example, such a levy could be paid to the airport or the bus station operator.
21 For example, if the congestion around the most popular taxi rank spots is high, then additional
charges could be levied upon taxi fares when a service is provided from the taxi rank or in the
congested area of the popular taxi rank spot.
words, with market entry restrictions in place, it is easier for the regulator to ensure
that prescribed quality standards are upheld by the limited smaller number than by
an unlimited larger number of market participants. The further indirect effect of a
smaller number of participants is the impact on the overall reduction of regulatory
costs (Toner 1992). However, the argument of easier regulation and lower costs of
regulation cannot be justified solely on the ground that it is easier for the regulator to
effectively oversee a smaller and limited number than a larger and varying number
of market participants. Such justification would be more easily accepted if another
stronger argument for such restriction would exist. For example, if it would not be
possible to oversee a larger and varying number of market participants. That is not
the case with the taxi market. Such a market is normally geographically anchored to a
certain national jurisdiction whose participants are known and available to the public
authorities.22 It might be harder for a regulator with limited resources to effectively
regulate a larger market, but that can be said for every regulated market. Therefore,
it is upon the regulator to conform to the market circumstances at hand and make
the best of the available resources. Moreover, fewer regulatory measures lower the
scope and the number of individual regulatory activities undertaken by the regulatory
authority.
Another commonly cited reason for introducing and maintaining market entry
restriction is the prevention of an economic hardship for existing taxi operators
caused by the increased competition between the higher number of taxi operators
(new and old) in the market. This normally relates only to the existing participants that
are not used to competition caused by the liberalization of market entry restrictions.
Namely, entry of new taxi operators will force the already established participants
in the market with previously small levels or no competition at all to start competing
with the new eager entrants. The new entrants are prepared and willing to fight for
their share of the market. As a result of lower levels of willingness and readiness to
compete with the new entrants, the new competitive situation on the market might
lead to lower revenue and economic hardship for existing participants. Namely, the
justification for restricting market entry is that otherwise, liberalization might distort
the delicate balance between the taxi fare price and the quality of the service provided.
This would result in an oversupply of the market that could lead to decreased numbers
of customers per taxi.23 Such situation might in turn lead to the increase of the taxi
fare prices since taxi operators will look to offset the resulting loss of revenue. It
22 Normally, the taxi market comprises a certain urban area. However, PHVs have been observed to
operate in several jurisdictions (e.g. between two countries). There have also been regular instances
where traditional taxis have been hired to transport passengers between two major urban areas that
are close to each other but belong to different national jurisdictions (i.e. Vienna and Bratislava). It
is common that every participant (be it a traditional taxi service provider or a PHV) must register its
business activity to be able to undertake such activity in a certain national jurisdiction. This applies
to both local and foreign participants (e.g. through registration of a branch office or establishment
of a subsidiary company). Freedom to provide services only exempts from such registration when
activities are undertaken occasionally and on a one-time basis.
23 In response to such justification, it should also be noted that it is hard to see how market entry
restrictions make taxi operators more compliant with passenger’s needs for a lower price, a better
quality of service and safety (OECD 2018). Moreover, it is equally possible that such operators will
could also negatively affect passenger safety as less investments are made to improve
or maintain minimum safety standards.24 However, new entrants will aspire to offer
lower taxi fare prices and better quality service to the passenger. They need to win
over a certain percentage of the market share held by the existing taxi operators. This
might in turn result in a further reduction of price (e.g. when the initial taxi fare price
was set well above operating costs) and even provision of a better service. Existing
operators aspire to curtail the entrants’ attempt at decreasing their initial market share
(Productivity Commission Australia 1999). As stated above, there is also a possibility
that liberalization might lead to increased taxi fare prices and lowering of service
quality standards because of the higher numbers of new participants. However, this
might generally present a problem if the overall economy is not flexible enough
to enable individual taxi operators to change their core business activity (e.g. in
times of economic crisis when the unemployment rate rises and there is generally
less demand for workforce in the overall labor market). Such extreme economic
situations might give an argument for a certain level of regulation. Aim of such
regulation should be achieved by regulating the minimum quality standards and
setting up of a reasonable fare prices scheme, but not by placing a market entry cap.
However, under normal circumstances it should generally be left to the market to
regulate the service quality standards and the fare price. The oversupply of the market
will eventually force some new and old market participants out from the market in
search of better business opportunities. However, a steady stream of new participants
should always be a welcome change since it keeps the competition alive and existing
market participants on their toes (OECD 2018).
Finally, maintenance of market entry restrictions is commonly justified on the
ground that the existing holders of licenses will lose value for the investment made
when they initially acquired the expensive taxi license. Some markets have intro-
duced a licensing mechanism for taxi operators meaning that only those with such
licenses are permitted to provide taxi services. Due to their limited number, the free
market value of such limited licenses soared.25 Any market entry liberalization (com-
plete or partial) will result in the loss of the accrued value when market access was
restricted, and when one could not provide taxi services without the license. In other
words, the market entry restrictions are being justified on the ground that in case
of liberalization the existing holders of such licenses will incur substantial losses.
However, loss of license value cannot be used as an excuse for preserving market
entry restrictions. That is because the purchase of such a license can regularly be
qualified as entrepreneurial (speculative) risk attributed solely to its holder (OECD
not improve the quality of the service. They rely on the monopoly they enjoy. That is logical in the
absence of any quality regulation standards because there is no incentive for them to do so.
24 There are some indications that liberalization might lead to increased taxi fare prices (Wyman
2017; Aarhaug and Skollerud 2014; Productivity Commission Australia 1999).

25 Some taxi operators have even relied on the sale income from such a license for their retirement
(OECD 2018; Toner 1992; Zuluaga 2017; Gorecki 2012, 2016; Productivity Commission Australia
1999; Noguellou and Renders 2018).
2018; Productivity Commission Australia 1999).26 There is no public or any other

valid guarantee that the license will maintain or even increase the initial invested
value for the holder.27 Nevertheless, to ease the hardship caused by the liberalization
of market entry restrictions, the public authority can always decide to compensate
holders of such licenses for the loss of value they had experienced as a result thereof
(Toner 1992; Geradin 2015b). It might also consider undertaking measures that could
ease the transition for the existing taxi operators (e.g. by the progressive implemen-
tation of liberalization) (Productivity Commission Australia 1999). Such schemes
should be undertaken when public authority, through its actions, created certain rea-
sonable expectations on license holders that the license will not lose its value (e.g.
by repeatedly making public promises that no deregulation of entry cap will follow)
(Productivity Commission Australia 1999).28
It should also be noted that, based on the above-mentioned justifications, issued
taxi licenses are normally geographically restricted to a certain area. This area usu-
ally corresponds to the territorial jurisdiction of the issuing (municipal or county)
public authority (European Commission 2016a). In other words, taxi operators can
only pick up a passenger in a certain area encompassed by the issued license. This,
unfortunately, leads to situations where the taxi drops off a passenger outside of
its base territory. Then, to pick up another passenger it must make an empty return
journey to its original territory. Such regulation makes inefficient use of resources
at disposal which diminishes the overall supply capacity of the taxi service (OECD
2018). It also goes to the detriment of consumers whose requests for transport outside
of the base jurisdiction are more likely to be rejected by the individual taxi operators.
This is especially apparent in situations when the city airport is not located within
the city’s jurisdiction (e.g. in a smaller nearby town or the city outskirts).29 In such a
situation travelers going to or from the airport are typically faced with two differently
priced services, e.g. regularly the outgoing service being more highly priced than the
incoming.30 Challenges relating to the regulation of taxis operating in different areas
can be resolved through cooperation between various competent public authorities
26 In Ireland, Hight Court decided that previous taxi license holders are not entitled to compensation
from the government because their licenses lost their value due to the liberalization of the taxi
market entry caps (Gorecki 2016). There is also a similar decision of the French constitutional court
dating to the early 1980s (Noguellou and Renders 2018).
27 Trading of such licenses normally occurs in the open and unsanctioned market. Therefore, the
public authority could hardly be held accountable for damages caused by the liberalization of market
entry resulting in the loss of their value.
28 For example, in Australia, an assistance scheme was set up in the amount of 20 thousand AUD per
taxi license up to a maximum of two licenses. In the USA, claims for compensation to medallion
owners, on the other hand, failed (Noguellou and Renders 2018). In Spain, local authorities were
enticed by taxi operators not only to lower the number of taxi licenses but also to buy them out at
the expense of taxpayer’s contributions to the local budget (Noguellou and Renders 2018).
29 As to authorized authority, some airports are given permission to issues special licenses to provide
airport taxi service (e.g. Paris, Zaventem in Brussels and Luxembourg) (European Commission
2016a).
30 This is especially an issue in situations when travelers arrive in off-peak hours after there is no
more organized mass public transportation service (bus or train airport-city transfer) available.
in these areas (Noguellou and Renders 2018). Overall, such geographic restrictions
(notwithstanding the issuing authority) hinder competition, being the practice, which
can hardly be justified.
In other words, there should be no viable justification for placing any market
entry cap restriction.31 Generally speaking, a great number of markets fall into the
category that is best left to the general economic considerations of its participants as
well as the considerations of the market itself. Over time, higher demand will attract
additional competitors, while lower demand will disinterest the existing competitors
and make them seek other business opportunities. Furthermore, the market cap might
not only result in the increased taxi price due to a limited supply of service but might
also result in service shortage to the detriment of the passengers (Zuluaga 2017).
Therefore, capping market entry, as a regulatory restriction, should be rejected.32
As to the regulation of taxi fare prices, the main justification used is the existence
of asymmetry of information between the taxi operator and the passenger. However,
the new digital technologies (ICT) evade such asymmetry by providing the consumer
(through a mobile application) with all the necessary information (e.g. an estimate
of the price calculation, choice of service quality and waiting time for pickup) before
committing to such a service. Although it might seem that regulation of taxi fare is
justified for the traditional taxi service market segment (e.g. hail on the street taxi
service), where the passenger has little choice regarding the terms of service pro-
vided, such asymmetry cannot be accepted for mobile and other online based taxi
services.33 Consequently, the regulatory question which arises is whether the taxi
fare should only be regulated for traditional taxi services or for both the mobile and
other online based taxi services. Regulating fare prices only for the traditional market
segment based operators might restrain them from effectively competing with the
unregulated mobile and website based taxi operators. This might also lead to irregu-
larities in the supply of certain market segments.34 On the other hand, regulating both
market segments restricts effective competition within and between the two market
segments, usually to the detriment of the passengers.35 In the case of market entry
31 For example, Ireland’s High Court questioned the constitutionality of market entry restrictions. It
concluded that such restrictions significantly affect citizen’s rights to work in an industry for which
they might be qualified and the consumer’s right to service availability (Gorecki 2016).
32 After reforms of respective national regulation, some national jurisdictions gave up on the limited
number of taxi licenses. For example, China and Denmark while the Netherlands liberalized market
entry early in 2001 (Noguellou and Renders 2018).
33 In such a situation, passengers could shop before ordering a ride for the taxi service they require
and then order the one which suits their needs and capabilities (OECD 2018; Wyman 2017; Geradin
2015b; Zuluaga 2017; Noguellou and Renders 2018).
34 For example, when the fare is lower in the hailing market segment individual operators might avoid
passenger hails in favor of the higher priced fares offered through the mobile app and web-based
taxi service and vice versa (Wyman 2017; OECD 2018).
35 Namely, the maximum fare price set by the regulator is rarely set lower by individual taxi operators
in the closed market (Toner 1992; Lynch 2016; Aarhaug and Skollerud 2014; Noguellou and Renders
2018). Even if market entry is liberalized, participants will lose interest to lower prices once the
equilibrium of supply and demand is met and taxi fare prices are standardized.
liberalization and increased competition, general taxi fare regulation is highly ques-
tionable (Geradin 2015b; Toner 1992; OECD 2018). However, the taxi fare scheme
of every individual operator should be set and publicly declared beforehand. That
would preclude taxi operators from imposing discretionary inflated prices when, due
to specific market circumstances, they are in a position to do so (e.g. upon uninformed
tourists, during harsh weather conditions or at the airports when regular transport
service is limited) (Productivity Commission Australia 1999). Taxi fare deregulation
can, however, be justified based on the advantages that digital technologies bring to
the table. Namely, anyone with a modern mobile phone and internet access could
check the terms of service while waiting on the street for a taxi. This might lower the
existing asymmetry of information if there is only a smaller number of different oper-
ators in the market. Furthermore, individual taxi operators could simplify the fare
price scheme and make it more externally visible to passengers (e.g. by putting big
visible stickers on the sides of their vehicles or by using digital displays in the front
or on top of the vehicle displaying the taxi fare price currently applicable) (Wyman
2017; Noguellou and Renders 2018). However, this does not resolve the issue that
passengers hailing the taxi on the street or at the taxi rank have no choice between
service different taxi operators provide. They are normally inclined to accept the
first taxi that comes by or which is available, no matter the terms of the service it
provides. This is so because the search cost for another taxi with better and more
suitable terms to the passenger is normally too expensive, i.e. it is time-consuming,
risky and unreliable. With digital technologies being increasingly present, it is likely
that traditional taxi segment’s share (i.e. hail on the street service and taxi rank ser-
vice) will decline in the overall taxi service structure. Ultimately traditional taxi
segments will vanish compared to the service provided through digital technology
(ICT). In such a situation, search (shop) costs are diminished by passenger’s choice
of the mobile application used by individual taxi operators. Also, it is likely that
passengers will themselves switch to taxi segments which eliminate the information
asymmetry, provided they are available. This will force operators in the traditional
market segments to adopt digital technologies or employ other means to eliminate
such asymmetry (Zuluaga 2017).36
As to the justification based on the economies of scale, with Uber presence and
market entry liberalization, it is hard to imagine that economies of scale could have
such an impact as before. Existing companies that held large or dominant market
shares before liberalization are unlikely to continue to hold such positions. New
entrants will challenge their hold over the market. It will also be hard for Uber to win
over and maintain any significant market share. Other entrants, with a similar digital
business model, have been observed to enter the market and challenge that market
share (Wyman 2017).37
36 In this regard, the traditional taxi services in China are undergoing a transformation (Noguellou
and Renders 2018).

37 For example, Lyft, Taxify, mytaxi and Go-Jek. It should also be noted that the original taxi
operators have started adjusting to Uber’s business model by providing access to their services
Another common regulatory effort is based on ensuring passenger safety and

protection. These regulatory restrictions generally relate to drivers and their vehi-
cles. The most common restriction applying to drivers is the absence of a criminal
record (European Commission 2016a; Aarhaug and Skollerud 2014; Noguellou and
Renders 2018). Such general restriction, covering all criminal offenses, does not
satisfy the principle of proportionality. Many criminal offenses cannot be brought
in connection with passenger safety.38 It would be more convenient to limit this
restriction only to a limited number of criminal offenses which can be associated
with passenger safety (e.g. murder, rape, causing of injury and bodily harm, endan-
gering road traffic). However, even such criminal offenses should not present an
obstacle after the perpetrator is rehabilitated.39 Other driver related restrictions refer
to meeting certain health and psychological requirements. There is no justification
for such requirements to deviate from those generally established for receiving a
driver’s license. In other words, if a person is a holder of a valid driver’s license and
has passed a health and mental check, he/she should also be permitted to operate a
vehicle as a taxi driver.40 As to the required vocational training or some other special
knowledge and driving ability test requirement, in the modern age of digital (ICT)
and GPS technology, the need for such restrictions is questionable (Lynch 2016;
OECD 2018; Productivity Commission Australia 1999). New technologies not only
integrate unobtrusively into the driver’s environment but also assist the driver by
through a mobile application similar to Uber (e.g. in traditional taxis in China and Radio Taxi in
Zagreb Croatia).
38 For example, unlawful termination of pregnancy, violation of freedom of expression or a freedom
to vote, treason, disclosure of state secret, possession of narcotic drugs, incest, bigamy, breach
of family obligations, defamation, embezzlement, fraud, computer forgery, misuse of bank check,
violation of copyright and patent rights, medical malpractice, unauthorized medical treatment,
quackery, environmental pollution, poaching game and fish, unlawful exploitation of forests and
mineral resources, destroying or damaging a danger sign, counterfeiting securities or value tokens,
money laundering, forgery of trademarks, preference of creditors, causing bankruptcy, malpractice
in bankruptcy proceedings, evasion of tax and other levies, violation of keeping business books,
abuse of monopolistic position in the market, unfair competition in foreign trade operations, abuse
of trust, receiving or offering a bribe in economic or other transactions, illicit trade or manufacture
etc.
39 Rehabilitation implies that a person charged with criminal offences is deemed a person that has
not committed a criminal offense, thus having rights and liberties which do not differ from the rights
and liberties of another person that have not committed a criminal offense. This normally occurs
after a certain period has passed after the punishment of imprisonment has been served, remitted,
or purged by the statute of limitations. There is no justification for denying a certain person access
to a certain market on the basis that it previously committed a criminal offence for which it had
already served the sentence.
40 If a regular health check demonstrates that a driver is fit to operate a road vehicle, requirement
of any further checks for the operation of a taxi vehicle can hardly be justified. A regular driver is
not restricted in operating a vehicle for a prolonged period if he needs or wants to. Besides, if there
are some restrictions applicable to the driver (e.g. obligatory use of glasses or eye lenses during
vehicle operation), such conditions should apply to the taxi drivers as well. Issues might arise in
the jurisdiction which does not require for a driver to pass a health check before receiving a driver’s
license. In such a situation, an obligatory health check would be justified as a precondition for
receiving a taxi driver’s license.
suggesting the fastest possible route to the final destination (e.g. by avoiding heavy
traffic congestion). Under those circumstances, it is highly contentious whether any
additional topographical or knowledge test would be as efficient as the advantages
provided by the technology. In addition, it should also be noted that knowledge tests
generally relate to the quality of service provided and not to the passenger safety and
protection interests. As such, additional knowledge tests and/or experience require-
ments could be left to the market self-regulation and employment policy of individual
taxi service operators (e.g. premium taxi service operators might establish such tests
for driver candidates). In regard to the driving ability test, it is ambiguous if such
additional test extends to the overall passenger safety and protection compared to the
obligatory ability test normally required to obtain the driver’s license, provided such
test is conducted in a manner which would ensure that proper safety and protection
standards are demonstrated by the driver’s license candidate.41 It should also be noted
that stringent test requirements (e.g. the knowledge exam in London) can have the
same effect as previously elaborated market entry caps (Lynch 2016).42 Whether a
driver should know additional languages as a requirement should also be left to the
market and general employment policy of taxi operators.
It seems reasonable to conclude that any such additional requirements must pass
the proportionality test. In other words, the restriction imposed (an additional require-
ment is a restriction on the freedom to provide services) should not go beyond what
is indispensable to achieve the goal that the requirement seeks to achieve. Some of
the above-mentioned rationales for restrictions might be justifiable (e.g. knowledge
of the city, knowledge of a foreign language, which is to the benefit of consumers).
Nevertheless, they must be interpreted narrowly, and the restrictions must be limited
and put in balance with the reasonable motives behind such restrictions.
As to vehicle requirements, normally such requirements rarely contribute to the
betterment of passenger safety and protection. Generally, all vehicles nowadays must
conform to general safety and protection standards. There are, naturally, vehicles
that offer higher safety and protection standards. However, to avert overly stringent
requirements on market participants, the decision, whether to use one vehicle over
the other, should ultimately be left to individual taxi operators (e.g. for the purposes
of uniform taxi fleet identity or provision of a higher standard of service).43 Cer-
tain urban environments might want to restrict choice of taxi vehicles to a certain
brand in order to revive or maintain a recognizable iconic status of the local taxi
service (e.g. yellow Checker cab in New York or Austin FX4 in London) (Wyman
2017; European Commission 2016a; Aarhaug and Skollerud 2014). In this regard,
41 It would be more efficient to deny access to drivers which have a certain number of traffic offences
on the record (e.g. speeding, careless driving and driving under the influence of alcohol or drugs).
If experience is a factor, then the taxi market could be denied to drivers without holding a valid
driver’s license for a certain amount of years.
42 For more on market entry restrictions see previously in this chapter.
43 In some jurisdictions, taxi vehicles are obligated to have certain equipment installed. For example,
in Denmark, this relates to seat sensors that register passengers in the vehicle and internal video
surveillance. In the Netherlands this relates to the equipped onboard computer which registers ride
details, working hours, etc. (Noguellou and Renders, 2018).
the justification that such requirements are needed to prevent fraud and illegal access
to the market seems to be disproportionate to the goal they are trying to achieve.44
The requirement that a vehicle meets the accident and passenger insurance standards
could also relate to the general insurance standards applicable to all vehicles. In some
countries, however, regulatory authority or insurance companies set higher insurance
standards or premiums for commercial vehicles than for those privately used.45 How-
ever, whether taxi drivers should insure their vehicles with higher premiums, should
generally be left to the insurance market. Potential regulation in this regard might
be called for when there are no set general insurance requirements established in a
certain jurisdiction, when such insurance standards are set very low (especially for
passengers) or when the cost of insurance is excessive (Wyman 2017; OECD 2018).
As to other reasons, the use of vehicle motors that limit or minimalize pollution emis-
sions might present appropriate grounds for regulation (e.g. use of electric-powered
vehicles against gasoline or even diesel-run vehicles). On the other hand, the age of
the vehicle should not be a separate requirement for the provision of a taxi service
(Productivity Commission Australia 1999). Age of vehicle is generally related to the
quality of service standard, environment protection, and passenger safety.46 Quality
of service should be left to self-regulation by individual taxi operators to enable for an
increased margin of differentiation between services and competition between mar-
ket participants in an open market (OECD 2018; Productivity Commission Australia
1999). On the other hand, while the age of vehicles can negatively affect pollution
and passenger safety, such standard requirements should be more specifically reg-
ulated (e.g. by requiring all taxi drivers to use non-diesel run vehicles) since older
vehicles are not necessarily bigger polluters or less safe.
The existence of specific driver and vehicle requirements can rarely be justified
since similar mechanisms already exist at other levels of regulation. The regulatory
efforts in this regard should be limited to what is necessary to achieve intended goals.
In other words, the regulatory burden should be mitigated by delegating regulation,
wherever possible, to other general regulatory efforts (e.g. general driver’s license
and vehicle inspection requirements). This will not only lower administrative costs
for market participants and the regulator but also enable reasonable attainment of
goals pursued by such regulatory efforts.
44 Discovery of fraud and illegal access can be achieved through less stringent and more cost-
effective ways than having a uniform fleet of vehicles cruising the city. For example, by issuing
permits that must be visibly displayed on the taxi vehicle and which are not easily forged, by
checking the displayed taxi license numbers with the licenses issued by the respective authority,
etc. Such regulation also limits the possibilities for competition and service distinction between
various market participants (Aarhaug and Skollerud 2014).
45 For example, in Spain, a regulatory requirement for insurance coverage up to 50 million euros is
set for all taxi operators (Noguellou and Renders 2018).

46 For example, newer vehicles can generally be more appealing to passengers, more environmentally
friendly and more reliable than older and worn out vehicles.
The final area of regulation, often overlooked, is the principle of universal service
provision, i.e. equal treatment and provision of service to all passengers.47 This does
not mean that the services that individual taxi operators provide should be uniform.
It only means that one taxi operator should not discriminate in the provision of its
service to its customers on any basis.48 This is one area of regulation that should be
uniformly established for all passenger transportation services, be it via taxi, ferry
or bus service. Such regulatory efforts should be aimed at establishing ex-ante and
ex-post measures. For example, denying issuance of licenses to drivers with previous
discrimination related offences on the record, that every taxi operator should provide
to the customer support with whom complaints can be filed, that taxi operator is
required to investigate the complaint and inform the customer of the results and
potentially of the measure taken to avert similar future infringements, establishment
of an alternative venue for customers to file complaints directly to the regulatory
authority or the license issuer, monetary penalization and/or revocation of issued taxi
licenses to the taxi operator and/or the infringing driver for repeated breaches of the
principle etc. Digital technologies and mobile platforms (e.g. like Uber) could provide
indirect assistance in lowering the number of infringing instances.49 However, if the
review system established by the platform goes both ways, i.e. both the driver and the
passenger get to review each other, the platform operator should be careful that the
system is not abused by the driver in a discriminatory manner although the service
was provided.50
The establishment of the operator’s duty to comply with this principle is one
regulatory effort that should be undertaken. Taxi operators provide a public service
and should thus provide the same transport service to all the customers. Discrim-
ination of any kind should be openly discouraged and when encountered severely
sanctioned. To that end, appropriate and clear accompanying ex-ante and ex-post
measures should be established.
47 For example, in the Croatian national legislation on regulating transportation service, there is no
mention of this principle concerning the provision of a taxi service. At the same time, some of its
elements are occasionally mentioned regarding other forms of services (e.g. provision of service
by bus stations and passenger terminals and public line transportation of passengers in inland road
transport). On the other hand, some aspects of the provision of universal service are regulated in
China, France, Germany and Geneva (Noguellou and Renders 2018).
48 This as a principle is not incompatible with the possibility that the driver, for example, refuses
service if the passenger is obviously violent or intoxicated so that the safety of the driver and the
vehicle is jeopardized.
49 For example, Uber requires that its drivers accept and carry out the majority of passenger transport
requests. Furthermore, such platforms provide the driver with a destination only after it has accepted
the passenger’s request thus lowering the possibility of discrimination on that ground. The use of
the Uber platform provides customers with a certain degree of privacy towards the driver, so there
is a smaller possibility for discrimination based on race or nationality than normally (Wyman 2017;
OECD 2018).
50 For example, when a passenger is given a bad review by the driver based on race, nationality
or publicly displayed faith. In such situations, a system could put in place that would monitor
bad reviews given by the driver and compare them to detect discriminatory patterns. When such a
pattern is detected with the specific driver, appropriate action should be taken by the operator (e.g.
exclusion of such a driver from the market).
7 Possible Competition Concerns
This chapter focuses primarily on regulatory aspects of the taxi market. The reason
thereto is the view that deregulation of the over-regulated market is indispensable
for competition to arise. Hence, we could not even discuss competition concerns if
there is no suitable environment for competition to emerge and develop (i.e. if the
market is excessively regulated).
We therefore only refer to some possible legal issues from the perspective of
competition law. There should generally be no doubt whether Uber is an undertaking
within the meaning of Articles 101 and 102 Treaty on the Functioning of the European
Union. Namely, Uber is a legal entity actively engaged in commercial activity which
is undertaken on a for-profit basis which exposes Uber to the usual economic and
financial risks on the relevant market. As elaborated earlier, the ECJ concluded that
although Uber provides an intermediation service between the supply and demand
side of the taxi market, the dominant component of its service is nevertheless the
transport service. However, one cannot but notice that Uber business model demon-
strates characteristics that also put it in direct competition with online platforms and
dispatching call centers. The latter only act as intermediaries between the demand
and the supply side of the market. Therefore, when establishing the relevant product
market for Uber, one should not only take the more evident intermediary component
of Uber business model, but also its dominant component—the taxi transport ser-
vice that the individual drivers provide. Having in mind the specific circumstances
relating to the taxi market in every Member State, the relevant geographic market
will generally comprise of a part or the whole area of a certain Member State. That
depends on the applicable market conditions and who are the market participants.
Potential issues might also arise in regard to the legal status of the drivers that
provide the actual taxi service within the Uber business model framework. Namely,
whether individual taxi drivers are considered as separate undertakings from Uber
or do they all form one unique undertaking. In other words, who is considered as
“undertaking”: only Uber or also its drivers. If Uber drivers are considered separate
undertakings (which is generally claimed by the Uber itself), the contractual rela-
tionship between Uber and its drivers might fall under the scrutiny of Article 101
paras. 1 and 2 Treaty on the Functioning of the European Union. Under that provi-
sion all agreements between undertakings and concerted practices which may affect
trade between Member States and have as object or effect prevention, restriction or
distortion of competition within the internal market shall be void. In this regard, the
Uber pricing algorithm seems to demonstrate elements of a “hub and spoke” cartel
between Uber and its drivers.51 Nevertheless, it should be emphasized that in such
situation one should also bear in mind the exceptions provided in Article 101 para. 3
51 For example, this issue was raised in an antitrust case before the US District Court, Southern
District of New York under Spencer Meyer v Travis Kalanick in 2016. However, in November 2017
the District Judge referred the plaintiff to arbitration based on the arbitration clause inserted in the
Uber’s general terms of service accepted by the plaintiff.
Treaty on the Functioning of the European Union. Such agreements could be justi-
fied despite their negative effect on competition, provided they promote technical or
economic progress and allow consumers a fair share of the resulting benefit. There-
fore, an argument might also be made that at least for now the benefits Uber brings
outweigh the possible negatives for the competition.
On the other hand, the distortion of competition relating to the abuse of a dominant
position in case of Uber will generally depend on specific circumstances in the
relevant market. Normally, it seems that Uber experienced a significant initial spike
in its market power share when it first entered the market, but soon afterwards other
alternative service providers (like Uber) followed grabbing a part of that market
share for themselves (e.g. Lyft, Bolt and mytaxi). In addition, the original market
participants (traditional taxis) normally also adopted to the change and advances Uber
brought to the taxi market. These traditional taxis commenced to provide consumers
with Uber-like online service and adjusted their fare prices to remain competitive.
All this normally means that at this stage it is unlikely that Article 102 Treaty on the
Functioning of the European Union will find application in regard to Uber market
activities.
8 Conclusion
When Uber first emerged as a new player, hardly anyone could have guessed the tur-
moil it will cause in the taxi market. Almost ten years later, many taxi markets where
Uber appeared underwent or are still undergoing through changes. Such changes
result in a smaller or a greater degree of regulatory liberalization (e.g. China, Den-
mark, France, Germany, and Switzerland). The purpose of such legislative interven-
tion being the need to accommodate a new digital technology based intermediation
service introduced by the Uber platform into the existing regulatory taxi market
framework. The model introduced by the Uber platform, although simple in its fun-
daments, changed the appearance and operation of the overall taxi market.
Such changes caused by the Uber platform were further emphasized by con-
sumer’s dissatisfaction with the stagnant traditional taxi market and their services.
Before the advent of Uber, the existing taxi operators had very little to no incentive
to change and adapt. This is because the regulatory framework established in many
countries resulted in the creation of a monopoly or a very tight oligopoly. Faced
with little to no competition, there was very little incentive for existing taxi opera-
tors to change the way they have been providing services for decades. Under such
circumstances, dissatisfied consumers welcomed Uber with opened hands giving it
support and legitimacy in the struggle that ensued with the original taxi operators and
the competent regulatory authority. Although it provides generally the same service
as the traditional taxi operators, service provided by Uber is generally perceived as
cheaper and more accessible than the service provided by other taxi operators.
Regulation of the taxi market can generally be divided into the market entry and
taxi fare restrictions, observance of certain passenger safety and protection standards
and the need to ensure universal service provision. Such restrictions and regulations
are being justified on a dozen grounds, e.g. congestion prevention, easier control of
service quality, prevention of economic hardship for taxi operators and asymmetry of
information. It seems that many of such justifications are unfounded. Consequently,
excessively restrictive regulatory measures that are either redundant or that should
be replaced by more proportionate and/or existing measures are being applied. As a
result, the stringent traditional regulatory framework can hardly justify its existence
anymore. It needs to not only adjust, but embrace the changes introduced by digital
technologies. This would enable competition in the previously non-competitive and
stagnant market and make way for the provision of new types of taxi services. On the
other hand, in such a new state of awakened competition, the provision of universal
service should remain regulated. This is to ensure that every consumer receives the
same service afforded to other consumers by the respective taxi operator. Generally,
irrespective of the level of regulatory changes caused by the Uber platform, it seems
that traditional taxi markets can hardly justify the maintenance of the status quo that
existed before Uber. Many traditional taxi operators are already transforming their
business models by adopting digital technologies similar to the Uber platform. With
the widespread use of mobile phones, it is likely that the traditional taxi service
segments (hail on the street and taxi rank) will decline giving way to the Uber-like
digital and cruising service. Such service increases the effectiveness of the oper-
ator, enabling its drivers to be constantly on the move and not lose time cruising
the streets or waiting at the taxi rank space for the next customer. Following initial
turmoil resulting from market entry liberalization, the competition mechanism will
eventually force the surplus of taxi operators out of the market establishing an equi-
librium of supply and demand. However, such equilibrium will be temporary since
new entrants with fresh ideas and services will always keep the existing participants
on their toes.
Uber’s emergence is being hailed by many national competition authorities for
upstarting competition in the previously non-competitive market. Still, there are
possible worrisome aspects for competition introduced by the Uber business model.
Most notably, indication that the Uber pricing algorithm might demonstrate elements
of a cartel. However, none should disregard the benefits Uber brings which seem to
outweigh the possible negatives.
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Taxing Uber
Nevia Čičin-Šain
Abstract Sharing economy has disrupted not only labor or competition law but also
tax law. With the proliferation of various online sharing platforms, enabled by tech-
nological advances, classical work organizations that usually appeared in the form
of medium or large companies, as an expression of economic vertical integration,
now started to dissipate into a cloud of self-employed entrepreneurs gathered around
one or several suppliers of labor—the platforms. These suppliers of labor claim to be
simple intermediaries, putting into contact individuals seeking and offering services,
often by using their own idle assets. Value is thus created through the interaction
of many dispersed individuals, rather than by a single centralized entity. As will be
explained in this chapter, there are currently not only labor law incentives, but also
tax incentives, to structure businesses in the way Uber and other “gig” entrepreneurs
have done. Countries, on the other hand, are facing a drop in tax collection of indirect
taxes (VAT/GST), as well as direct taxes (withholding taxes or payroll taxes) caused
by the increasing quantity of individuals taking part in this new form of economy.
Alongside these specific problems related to the new form of work organization used
by Uber and other online sharing platforms, there is the issue, albeit not specific
solely to sharing economy, of tax avoidance schemes used by the platform itself.
Unlike the traditional intermediary businesses, Uber and other similar sharing plat-
forms (such as AirBnB) which rely heavily on the use of an intellectual property
(IP), in this case the Uber application, can easily relocate their profits to low-tax
jurisdictions, leaving high-tax jurisdictions where their income is effectively being
earned, without their fair share of tax. These circumstances also create an increas-
ingly unfair market competition between the “gig” entrepreneurs and the participants
of the traditional “brick-and-mortar” economy which remain under the scope of the
existing tax rules, without the possibility to dislocate or morcellate their businesses
as the digital economy entrepreneurs are able to do. The following Chapter will thus
focus on the questions regarding the tax liability of Uber—both the company itself
and individual Uber drivers.
N. Čičin-Šain (B)
Institute for Austrian and International Tax Law, Wirtschaftsuniversität Wien, Vienna, Austria
e-mail: cicinsain.nevia@gmail.com

https://doi.org/10.1007/978-3-030-31535-1_6
182 N. Čičin-Šain
1 Introduction—Tax Structure of Uber
In order to identify the questions relating to tax, one must first understand the Uber
business model. Not all information about the group is publicly available.1 A number
of jurisdictions in which Uber had located parts of its business have confidentiality
rules, shielding filed information from being visible in public records.
Uber is a multinational enterprise with a widespread web of companies operating
in various jurisdictions that, inter alia, helped shield the group’s revenues from the
tax. The head of the Uber group is the parent company—Uber Technologies Inc., a
Delaware corporation that was founded in March of 2009 (under the name of UberCab
at the time) with its principal place of business registered in San Francisco, California.
The complex tax structure revolves around an arrangement called “Double Dutch”,
or the C.V./B.V. structure, in which a couple of Dutch companies are essential in
order to make the tax scheme work.
Uber International C.V. is a Dutch partnership (Commanditaire Vennootschap)
which, although formed under Dutch law, has its business address registered in
Hamilton, Bermuda. Under Dutch law, a C.V. necessarily has at least two mem-
bers—a general partner that has unlimited liability for the obligations of the C.V. and
a limited liability partner who accounts for the obligations only with the invested
assets. Uber International C.V. has one general partner—Neben LLC, another wholly
owned subsidiary of Uber Technologies Inc. created in February of 2013 and regis-
tered in Delaware,2 and limited liability partners.3
The parent company Uber Technologies Int. and Uber International C.V. entered
into a platform contribution transaction agreement, pursuant to which Uber Interna-
tional C.V. was granted a non-exclusive right to use the intangible property (the appli-
cation).4 This occurred in May 2013, prior to extensive capitalization of the company,
causing that the royalty payment was significantly lower than it would have been if
the transfer occurred after Uber Technologies Int. substantially increased its market
value (O’Keefe and Jones 2015). Uber Technologies Inc. and Uber International C.V.
also entered into a cost-sharing agreement, pursuant to which both companies will
1 The following section on the structure of Uber is based on a personal research of the author of all
publicly available company records (Dutch, Delaware, French, German, Croatian), on Uber’s own
publicly presented data, on research performed by journalists working for Fortune magazine and
other publicly available information. Due to the complexity of the corporate structure, as well as its
flexibility, some data might be lacking or might have changed between time of submission of the
article in November 2018 and its publication.
2 Information about Neben LLC can be found at the official register of Delaware entities (Delaware
2019).
3 According to the Financial report 2014 for Uber International C.V. filed at the Kamer van Koophan-
del, the Association agreement of the CV, in Article 8 “Association agreement governing allocation
of profits and losses” mentions a General Partner, a Limited Partner Interest A and a Limited Partner
Interest B.
4 Apparently in exchange for a one-time fee of approximately a million USD and a further royalty
payment of 1,45% of the future net income, for the use of Uber’s IP (the application) outside of the
US. (Maine and Nguyen 2017; Uber International C.V. Financial Reports 2014).
Taxing Uber 183
share the development costs of the IP (Uber International C.V. Financial Reports
2014).
Uber International C.V. is also the sole owner of the other Dutch company—Uber
B.V., a private limited liability company set up in Amsterdam to which it sublicensed
the IP. Under their intangible property license agreement, the Uber B.V. must pay a
variable royalty fee to Uber International C.V. for the use of Uber’s IP (the application
itself) finally leaving Uber B.V. with an operating margin of 1%—effectively 1% of
revenue—after subtracting the costs of operation, while the rest is being transferred
to Uber International C.V. (Uber International C.V. Financial Reports 2014).
The ride fares outside of the US (and a couple of other jurisdictions)5 are therefore
being charged not by Uber International C.V., but by Uber B.V. (Uber B.V. Terms and
conditions 2017). Out of every 100 EUR that is being charged by Uber B.V. to the
rider, 75 EUR is subsequently remitted to the driver as remuneration via another sister
company—Raiser. The remaining 25 EUR is being kept by Uber B.V. However, this
amount of revenue is then significantly reduced by: (a) the above-mentioned royalty
payment it makes to Uber International C.V. for the use of the application; and, (b)
the payments the B.V. makes to local subsidiaries such as Uber France SAS, Uber
Germany GmbH or Uber Croatia d.o.o, for the services these subsidiaries provide to
Uber B.V. (O’Keefe and Jones 2015).
Uber drivers, on the other hand, enter into a contractual relationship with one
of the numerous subsidiaries of Uber named usually Rasier—for instance, Rasier
LLC, Rasier Pacific V.O.F., Rasier Operations B.V. or Rasier-CA LLC.6 According
to Rasier’s Software Sublicense & Online Services Agreement Rasier is providing:
lead generation to the Transportation Provider comprised of requests for transportation ser-
vice made by individuals using Uber Technologies Inc.’s mobile application. Through its
license of the mobile application, Rasier provides a platform for users to connect with inde-
pendent transportation providers. Rasier does not provide transportation services and is not
a transportation carrier. The company neither owns, leases nor operates any vehicles. The
company’s business is solely limited to providing Transportation Providers with access,
through its license with Uber Technologies Inc. to the lead generation services provided by
the software, for which the company charges a fee. (Rasier Software Sublicense & Online
Service Agreement 2014)
Finally, the local subsidiaries of Uber, have a limited significance since their
operations in the individual countries are reduced solely to promotional activities of
representation of foreign companies, market surveys and testing of public opinion for
the benefit of Uber in the country concerned paid by Uber B.V. from the Netherlands.
5 For example, Uber USA, LLC (in the US), Uber Japan Co. Ltd. in Tokyo and Kyotango.
6 Information about Rasier LLC and Rasier-CA LLC can be found at the official register of Delaware
entities (Delaware 2019).

2 Taxing Uber
Uber as a group is known for privileging growth over profits.7 For the time being,
the company is incurring losses, due to their rapid expansion, not only to different
geographical markets (China, Russia, Middle East, Australia, Europe …8 ) but also
to different sectors (UberEats, UberBoat, autonomous vehicles, electric bikes …)
(Newcomer 2018). However, the company underwent an IPO in 2019 and will strive
to become more profitable, by cutting down marketing expenses while still raising
its revenues, both by increasing the number of rides and by increasing the fee that the
drivers need to pay to Uber. The sale of its Southeast Asian business to its competitor
Grab and to Yandex in Russia caused the company to have a 2.5 billion dollar profit
at the beginning of the year 2018.9 Also, their gross revenues (the revenues that the
drivers bring in from the rides) have grown exponentially for years.10
Tax planning schemes are important to maximize after-tax return on investment
and thus attract further investors. As can be inferred from the business model, Uber
is using a combination of existing tax rules of various jurisdictions in order to shift
the vast majority of its income into low-tax jurisdictions even though the income is
effectively being earned in the high-tax jurisdictions where the majority of the Uber
riders are located. As has been mentioned above, the local Uber subsidiaries are
simply providing marketing services, market research analyses, and other consulting
services to Uber B.V., and they receive a fee in return. They do not actively participate
in Uber’s core business and therefore they do not collect any of the profits that Uber
gets from drivers when they use the application. After deduction of all expenses, the
local subsidiaries declare a derisory amount of profits to the local tax administrations.
For instance, the local UK subsidiary Uber London Limited declared for the fiscal
year 2016 roughly 37 million £ of turnover and having paid 551.174 £ in tax,11
whereas the French subsidiary Uber France SAS, declared 34 million EUR of revenue
in France with a 1,7 million EUR in tax (Henni 2018).
The purpose of using the C.V./B.V. tax scheme is to shield the non-US income of
Uber from U.S. corporate income tax, whilst not exposing it to Dutch tax. Normally,
income derived by a US owned controlled foreign company (CFC) from operations
conducted outside the United States would not be subject to US taxation until the
7 Uber isn’t publicly traded but has chosen to release select financial information to investors and
the public in recent quarters.
8 Pursuant to Uber official website the company claims to operate in 65 countries and 600+ cities
worldwide in September 2018. The company has announced that it will perform an IPO in the second
half of 2019 and will then be obliged to report auditable financial and accounting information for
instance to the Securities and Exchange Commission (SEC) in the United States.
9 This information is gathered and available from various news sources on the internet including,
but not exclusive to the Official Uber website, BBC, Reuters etc.
10 Gross bookings have grown exponentially for years, from $685 million in 2013 to $2.9 billion in
2014 to $8.9 billion in 2015 to $20 billion last year, according to a chart Uber provided in April.
Last year, Uber more than doubled at massive scale (Newcomer 2017).
11 Information about Uber London Limited can be found at the Companies House (Companies
House 2019).
Taxing Uber 185
repatriation of the income into the US in the form of dividend distribution from the
CFC to the parent. However, under Subpart F rules,12 introduced into U.S. tax law
in 1962 as anti-avoidance rules, certain, mostly passive types of income of a CFC
(dividends, interests, rents, and royalties) are deemed to be distributed to the US
shareholders and subject to taxation in the US in the hands of the shareholder on a
pro rata basis at the time the CFC earns the income and not when it distributes it to the
shareholder (McDonald et al. 2015). An important exception to this rule, however, is
the so-called active royalty, or royalty income paid by an unrelated person to a CFC
in the course of the latter’s active conduct of a trade or business.13 Therefore, the
income of the B.V. would not be taxable under US tax law, since drivers are unrelated
parties paying for the limited use of the application which is chargeable in the course
of the B.V.’s active course of business. On the other hand, the payment of the royalty
fee from the B.V. to the C.V. under their sublicensing agreement could be taxable
in the hands of the C.V., since this royalty payment is being made between related
parties.
This is where the so-called hybrid mismatches come into play. A “closed” C.V.14
is a reverse hybrid entity, meaning that under the laws of the country of its incorpo-
ration (the Netherlands) it is treated as tax transparent, whilst from the perspective
of the country where its partners are located, it is considered as tax non-transparent.
Accordingly, the Netherlands would tax Uber International C.V.’s income in the
hands of the partners and not the entity itself. The US, on the other hand, is not
bound by the company’s qualification by the Netherlands and will apply its own
company qualification rules, the so-called check-the-box-rules, under which foreign
US subsidiaries may be considered for US tax purposes either as corporations, part-
nerships or disregarded. In a typical Double Dutch tax scheme, the B.V. company
would be treated as a disregarded (pass-through) entity for US tax purposes, while
the C.V. would be treated as a non-transparent corporation, simply by “checking
the box”. Therefore, the royalty payment between the two would not be recognized
because there is no separate second-tier entity (Gravell and Marples 2018). As a
result, it would be the C.V. and not the B.V. that would be considered as the recipient
of the active royalty paid by the drivers for the use of the app, which is considered
as non-Subpart F income (Elliot 2018).
Uber Technologies Inc. and Uber International C.V., besides entering into a licens-
ing agreement, also entered into a cost-sharing agreement, pursuant to which both
companies will participate in the further development of the IP and share costs and
benefits. Uber is just one of a series of US multinationals who sought to transfer the
ownership of intangibles to a subsidiary located in an offshore tax haven, claiming that
profits related to the intangibles should not be currently taxed by the United States,
12 See:Sections 951–964 of Internal Revenue Code, Chapter 1 Subchapter N, Part III, Subpart F.
13 See:Section 954(c)(2)(a) US Tax code.
14 According to the Dutch tax code, a CV can be either “closed” and consequently tax transparent
or “open” or tax opaque. A CV will be considered as “closed” if the admission and substitution of
limited partners is subject to the unanimous consent of all other partners. Therefore, by including
the appropriate provisions in the CV agreement, the partners can decide whether or not the CV
should be tax transparent or not.
because they belong to where the intangible was located (Avi-Yonah 1995, 2006).
The US legislator first responded to these abusive practices, by revising section 482
of the Internal Revenue Code (IRC) in 198615 and inserting the requirement that
whenever an intangible is transferred to an offshore affiliate, whether by way of
sale, license, or contribution to capital, a royalty must be paid that is “commensurate
with the income” generated by the intangible, the so-called “super-royalty rule”. An
important exception to the application of this rule, however, is the entry into a cost-
sharing agreement with the foreign subsidiary. The ratio legis behind the exception
is that there is no risk of double tax benefits, in this case, namely a full deduction
of R&D expenses plus a tax deferral on future income, since the parent company, in
theory, reduces its R&D costs, by sharing the costs with the foreign entity (Levey
and Ruchelman 1988). However, this only created a loophole for US multinationals,
as subsequent Congress Subcommittee’s investigations revealed.16 Under the cost-
sharing regime, the US parent company, in this case, Uber Technologies Inc., and its
CFC, Uber C.V., enter into an agreement to share the costs of developing an intan-
gible. The development de facto occurs in the US and not where the CFC is located.
The CFC nominally contributes to the costs of developing the intangible (usually by
investing funds provided by the parent company itself through some sort of a loan17 )
and can therefore retain the equal percentage of future profits without falling into the
scope of application of the super royalty rule (US Senate Permanent Subcommittee
on Investigations 2012b). On the flipside, the parent company would not be able to
deduct losses from a failed intangible development project, thus ensuring, at least in
theory, that the participation of the US company in the cost-sharing agreement would
not be too low. However, in practice, multinationals would enter into the cost-sharing
agreements only once they are fairly certain that the development of the intangible
will be successful.
The last step is to eliminate the Dutch corporate income tax liability of the US-
based limited partner regarding its take in the royalty payments made by the B.V. to the
C.V. (Vleggeert 2016). Namely, under Dutch corporate tax rules, the foreign-based
limited partner would normally have to pay 25% corporate tax on profit participating
royalties collected in connection with the limited partnership’s licensing of the IP to
the limited company. However, the double tax treaty in force between the Netherlands
and the United States reduces this liability to 0% (van Duijn 2016).
15 Section 482 of the 1954 IRC is the reflection of the internationally accepted tax law standards
which requires parties to interact with each other at arm’s length and gives the power to the tax
administration to reallocate income, deductions and credit among taxpayers in order to achieve the
arm’s length standards (ALS).
16 See: hearings of the Permanent Subcommittee on Investigations regarding offshore profit shifting
and the U.S. Tax Code regarding Microsoft & Hewlett-Packard (US Senate Permanent Subcom-
mittee on Investigations 2012a); and Apple Inc. (US Senate Committee on Homeland Security &
Governmental Affairs 2019).
17 Uber International C.V. entered into an intercompany loan on December 31, 2013, for a total
principal amount of half a billion USD (Uber International C.V. Financial Reports 2014).
Taxing Uber 187
As can be inferred from the above, Uber and other multinationals consider these
schemes as a legitimate use of tax planning opportunities, made available by dispari-
ties in tax laws of different jurisdictions. Countries and supranational or international
organizations, such as the European Union or the Organisation for Economic Coop-
eration and Development (hereinafter: OECD) (OECD 2015), qualify this kind of
behavior as an abuse of law and are actively searching for ways to combat it.
The tax structure in itself is not innovative. It is used by many other multinational
companies. The added innovation lies in the fact that Uber’s application is providing
a highly flexible source of work for all people who own a private vehicle. Since
these individuals do not have to obtain licenses required for other professional taxi
drivers, the costs of this service are comparably lower than traditional taxi drivers.
In addition, by using technological advances, the consumer reverts to the use of the
application for reasons of convenience, as well as the lower cost rather than to the
traditional forms of transport services. This kind of service is increasingly facing bans
or regulation around the world due to unfair market competition claims. However,
this new business model also brings along a myriad of related tax questions related
to the drivers themselves, which will be addressed in the following section.
2.1 Taxing Uber Drivers
Sharing economy brought in a new concept—the concept of “micro-providers”. It

is namely based on a large group of people providing goods or services on a small
scale individually, the aggregate sum of which however amasses to a scale of pro-
duction similar to one of classical brick-and-mortar industries. The emergence of
“micro-providers” in Uber-like business models raises though unique tax compli-
ance concerns (Codagnone et al. 2016). Namely, placing the micro-providers in one
of the pre-existing tax categories, i.e. income from independent or dependent work is
challenging due to the fact that not every individual engages in sharing economy in
the same way (Beretta 2018). Their involvement ranges from occasional and perhaps
supplementary to their main source of income, to permanent and principal source of
their revenue.
A lot of attention arose with respect of the (un)fair tax competition between the
Uber business model and other similar platforms, who claim to work with self-
employed people, and more traditional companies with employed workers. The
answer to what the legal nature of the service that Uber provides is, has far-reaching
consequences in tax law. Challenges arise both from the perspective of direct taxes
(profit and personal income tax), as well as indirect taxes (VAT/GST), as will be
demonstrated later on in the chapter.
Under one perspective, Uber can be regarded as merely a service provider,
who connects, via an application, non-professional and/or professional drivers,
using his/her own (or leased) vehicles, with persons soliciting urban transporta-
tion. From another perspective, Uber can be seen as much more than a sim-
ple intermediary, but rather as the factual employer of the individual drivers
and thus the provider of the service itself. This radically affects the tax obligations
of Uber on the one hand and the drivers on the other.
2.1.1 Is Uber an Employer?
In Article 2 of its legal terms, Uber expressly claims that it is an application providing
the connection between the driver and the rider, where the drivers are independent
contractors and Uber is merely an intermediary (Uber B.V. Terms and conditions
2017) and it, therefore, fulfills its tax obligations accordingly. In other words, when
analyzing Uber rides under this perspective, one must distinguish between the pro-
vision of two separate, yet closely linked services: (a) an intermediary service—
provided by Uber to the driver in exchange for the use of the platform, and (b) a
transportation service which consists of a ride being carried out by the driver. Con-
sequentially, the drivers, as self-employed contractors, need to account for all the
relevant taxes and social contributions pertaining to the cost of the ride (for instance,
75 EUR out of the hypothetical 100 EUR ride), whereas Uber, as the intermediary,
needs to account only for the tax on the provision charged for the use of the appli-
cation (the remaining 25 EUR). However, as will be demonstrated hereinafter, this
legal interpretation underpinning Uber’s business model has been disputed in certain
countries, thus adding complexity to the already challenging issue at hand.
The legal qualification of drivers as independent contractors, purported by Uber,
has been contested primarily in decisions concerning labor law. For instance, in
the UK, the Employment Tribunal rendered a judgment in Aslam, Farrar v. Uber
(Case No. 2202551/2015, 28 October 2016), later upheld by the Appeal Tribunal
(Appeal No. UKEAT/0056/17/DA, 10 November 2017), in which it found that the
claimants (Uber drivers) succeeded in proving that they were in fact “workers” with
the corresponding rights to benefits and protections, such as the National Minimum
Wage, sick and holiday pay. They proved that, despite the written legal terms, the
reality of the performance of the services by the Uber drivers represented actually a
relationship close to employment. This was based on the fact that Uber interviews
and recruits drivers; that it requires drivers to accept trips and provides a penalty by
logging off the ones who declined three times in a row. Also, Uber sets the driving
route that the driver may deviate from, only at its own risk Uber applies a rating system
of the drivers followed by a disciplinary procedure in the case of mediocre results.
Additionally, Uber handles and decides upon all of the rider’s refund requests, but
at the expense of the driver. Uber also maintains the right to unilaterally change the
driver’s terms. The impact of this labor law judgment on the tax treatment of Uber
drivers is not straightforward. Even though the drivers are qualified as “workers”
by the Employment Tribunal, this does not automatically mean that they will be
treated as “employees” for UK tax purposes, primarily due to the fact that UK labor
law distinguishes between three categories—self-employed, worker and employee,
Taxing Uber 189
while UK tax law distinguishes only two-employed and self-employed.18 Moreover,

the HMRC is not bound in its qualifications by the decisions of an employment
tribunal (Office of Tax Simplification 2015). Nevertheless, recent proposals of the
Office of Tax Simplification suggested that a tax withholding system similar to the
PAYE system might be introduced for the platforms in order to take over the tax
compliance burden from the individual workers, without changing their employment
status (Office of Tax Simplification 2018).
In contrast to the UK decision, the Australian Fair Work Commission in Kaseris
v Raiser Pacific V.O.F (Case No. FWC 6610, U2017/9452, 21 December 2017),
decided that, due to the lack of a wages-work bargain, as well as other relevant
indicators of an employment relationship, Uber drivers in Australia should not be
treated as employees.
The Court of Justice of the European Union, in case C-434/15, Asociación Profe-
sional Elite Taxi v. Uber Systems Spain (EUCLI:EU:C:2017:981), declared that an
intermediation service the purpose of which is to connect, by means of a smartphone
application and for remuneration, non-professional drivers using their own vehicle
with persons who wish to make urban journeys, must be regarded as being inherently
linked to a transport service and, accordingly, must be classified as ‘a service in the
field of transport’ within the meaning of EU law. Consequently, such a service must
be excluded from the scope of the freedom to provide services in general as well as
the Services in the Internal Market Directive 2006/123 and the Directive on elec-
tronic commerce 2000/31. By making the decision to classify Uber not as a digital
service, but rather as a “service in the field of transport”, the Court indirectly opened
a way to question the treatment of drivers as employees of the transport company in
question rather than independent contractors using an intermediary (digital) service.
This position was reiterated by the Court in C-320/16, Uber France SAS v. Nabil
Bensalem (EUCLI:EU:C:2018:221).
The classification of Uber drivers is not clear in the U.S. either. A state appellate
court in Florida decided that Uber’s drivers were not its employees under Florida
law.19 But the opposite has been concluded in California by the California Labor
Commissioner’s Office,20 as well as the Unemployment Insurance Appeal Board of
New York State.21 In addition, the Californian Supreme Court recently rendered a
decision in favor of workers of a document delivery company Dynamex Operations
West that were seeking employment status. The Court used the so-called ABC test
that can also be applied in the future to test the legal qualification of Uber drivers.
18 Under UK law, not all workers are employees. The threshold for an employee is higher and one
of the key differences is that there needs to be a mutual obligation for the employee to accept work
and for the employer to offer work (Sayliss 2016).
19 See: the decision of the Third District Court of Appeal in the State of Florida in case Darrin E.
McGillis, Appellant, versus Department of Economic Opportunity; and Rasier LLC, d/b/a UBER
from 2017 (Case No. 3D15-2758).
20 See: the decision of the California Labor Commissioner in case Berwick v. Uber Technologies,
Inc from 2015 (Case No. 11-46739 EK).

21 See: the decision of the Unemployment Insurance Appeal Board of New York State in case Uber
Technologies Inc. / NY Taxi Workers Alliance and others from 2018 (Case No. 596722).
Under this test, a worker is properly considered an independent contractor to whom

a wage order does not apply only if the hiring entity establishes: (A) that the worker
is free from the control and direction of the hirer in connection with the performance
of the work, both under the contract for the performance of such work and in fact;
(B) that the worker performs work that is outside the usual course of the hiring
entity’s business; and (C) that the worker is customarily engaged in an independently
established trade, occupation, or business of the same nature as the work performed
for the hiring entity.22
It resorts from the above, that various jurisdictions have a similar set of criteria to
test whether an individual is a self-employed person or an employee, mainly based on
the ability to subcontract/delegate, the basis of payment, equipment, tools and other
assets used, commercial risks assumed, control over work and independence. Yet it
also appears that the conclusion on how Uber drivers fulfill these criteria is rather
divergent and depends greatly on the appreciation of the relevant justice. Therefore,
even though the qualification of Uber as an employer would defiantly eliminate the
above-raised issues regarding tax collection, having in mind that States are free to
decide on the legal qualification of what constitutes a working relationship and that
there is no single approach on how to qualify employment status in the collaborative
economy, one cannot to depend on the legal qualification of Uber drivers as workers
as a universal solution to the problems at hand.
2.1.2 Direct Taxes
The answer to the above question—is Uber a de facto employer?—dramatically

affects the regime of direct taxes. If Uber were to be treated as an employer for tax
purposes, the company would have to withhold all corresponding social contributions
and payroll taxes. However, as can be inferred from above, Uber has not always been
treated as a factual employer by the courts, and even in instances where it has, tax
administrations do not necessarily need to abide by their conclusions. Therefore, in
the majority of jurisdictions, for the time being, Uber drivers need to account for
their own taxes and social contributions. Here, an important question that arises is
how to ensure compliance and efficient tax collection. The small amounts that the
micro-providers earn represent a substantial figure of taxable profits on an aggregate
level which risk being untaxed if not subject to effective control. In this respect,
two factors can be decisive in shaping the effectiveness of compliance of drivers
with the regulations—effective control on the one hand, and enhancing cooperative-
compliance on the other hand.
First, effective control of drivers by the tax administration in the present case will
depend heavily on the use of third-party data—namely the data collected by Uber.
Since the platform collects all the data about the rides for its own account—time,
place of supply, distance, information about the driver, information about the rider
22 See: the decision of the Supreme Court of California in case Dynamex Operations West Inc. v.
The Superior Court of Los Angeles County from 2018 (Case No. S222732).
Taxing Uber 191
and of course the value of the supply—timely and accurate exchange of information
between the platform and the tax administration is essential for effective control of
how individual drivers pay their taxes and social contributions. The data on sales
and the data on payments necessarily need to correspond to each other. The OECD
stipulated that the spread of digital payments, electronic invoicing and connected
devices is generating data that can be used by tax administrations (OECD 2017a).
Uber has total insight and control over the fares, for the purpose of collecting its
own commission, even when the riders pay the fares in cash directly to the driver.
Namely, if the ride has been paid in cash, Uber still issues the payment confirmation
to the rider and deducts its commission, either from the rides previously paid by
credit card by another rider or charges the amount of its commission on the credit
card that the driver had to provide upon sign-up. In both cases, the platform collects
accurate, real-time data on the supply is made.
Australia already makes extensive use of third-party data with respect to, inter
alia, Uber drivers (OECD 2017b). The tax authority has access to information held
in the Australian Transaction Reports and Analysis Centre (AUSTRAC) which is
Australia’s financial intelligence unit with regulatory responsibility for anti-money
laundering and counter-terrorism financing. Through this information, it has traced
funds flowing to drivers and renters from overseas to local banks from where they
are distributed. The tax authority is using its powers to obtain data from these banks
to identify unregistered business activity such as Uber drivers. So far, it has been able
to identify a large portion of drivers. In addition, the tax authority is working with
the platform facilitators, Uber and Airbnb in particular, to have taxation information
provided to their partners (i.e. drivers and letters of properties).
Recently Mexico, in an attempt to curb tax evasion, announced a pilot project in
which Uber will act as the collector of taxes due by the drivers, the VAT on the rides
as well as income tax (Navarro 2018).
Over the last five years, some European countries introduced measures for bet-
ter controlling cash payments in general. For instance, Croatia introduced a digital
certification of invoices process called “fiscalization”, based on the model originally
adopted in Latin America (NFC-e) in March of 2013. This model has subsequently
been also adopted by e.g. Slovenia23 and the Czech Republic.24 Other countries such
as Hungary, Italy also have such measures in place.
Even though data collection might be facilitated by using innovative technolog-
ical solutions, the issue still remains regarding the actual tax collection, once non-
compliance has been established. Sharing economy introduced a new challenge for
the tax administration and that is the multiplication of interlocutors with which the
administration has to deal in order to collect the same amount of tax. This means that
tax collection became more expensive and that the net amount of tax income might
be lower than it would have been in the presence of only one large taxpayer—Uber
(or a similar sharing economy platform).25
23 See: Zakon o davčnem potrjevanju računov (Uradni list RS, št. 57/15).
24 See: Zákon o evidenci tržeb (EET) (Předpis č. 112/2016 Sb.).
25 This statement is based on the author’s assumptions and has not been (yet) purported by data.
On the other hand, tax administrations need to enhance voluntary tax compliance.
The majority of Uber drivers aren’t professional taxi drivers who had to deal with tax
compliance in the past. Therefore, they might be unaware of the, at times complicated,
registration and filing procedures that need to be regularly followed.
2.1.3 Indirect Taxes
Within the European Union, VAT is, to a large extent, harmonized.26 VAT should
be accounted for both the provision of the intermediary service that Uber provides
to the drivers and for the transportation service provided by the driver to the rider.
In this respect, the questions that need to be answered are the classical questions
concerning VAT—who is the taxable person (who?), is there a taxable transaction
(what?), where does the taxation occur (place of transaction?), what is the tax base
(taxable amount?), and last but certainly not least—is there room for the application
of any exemptions.
Depending again on the legal qualification of Uber drivers as independent con-
tractors or employed workers, the whole VAT treatment changes radically. In the
first scenario, there are actually two transactions taking place at the same time: (a)
an intermediary service provided for by Uber and (b) the actual service of transport
of persons by the driver. In the second scenario, there is only one transaction—the
provision of transport of persons by Uber to the riders.
When analyzing the VAT treatment in the first scenario, one needs to ascertain
who is the taxable person in the two, closely linked services. Uber is without a doubt a
taxable person concerning its intermediation service. However, the question that can
be raised is whether the drivers can be qualified as taxable persons for the purpose
of VAT under the EU VAT Directive with respect to the provision of transport.
According to article 9(1) of the EU VAT Directive ‘Taxable person’ means any
person who, independently, carries out in any place any economic activity, whatever
the purpose or results of that activity. Only transactions where the person acts as a
taxable person will be considered as taxable with VAT. The Directive in article 9(2)
lists exploitation of tangible property for the purposes of obtaining income therefrom
on a continuing basis to be in particular regarded as an economic activity (for instance
the exploitation of a car for urban transport). Additionally, the condition of continuity
of performance of the economic activity arises from the teleological interpretation of
the VAT Directive. Namely, article 12 of the Directive foresees an option for Member
States to regard as a taxable person anyone who carries out a transaction relating to
the activities referred to in the second subparagraph of Article 9(1), on an occasional
basis (implying that continuity is usually required) (European Commission 2015).
In addition, recital 13 of the Directive states that:
26 Such harmonisation is based on the Council Directive 2006/112/EC of 28 November 2006 on the
common system of value added tax (OJ L 347, 11.12.2006, pp. 1–118) and its numerous successive
amendments.
Taxing Uber 193
“In order to enhance the non-discriminatory nature of the tax, the term ‘taxable person’ should
be defined in such a way that the Member States may use it to cover persons who occasionally
carry out certain transactions”. With regard to this condition, the VAT Committee considers
that: “it can, however, be assumed that, in general, joining a sharing economy platform
through which goods or services are provided in return for remuneration, implies some
continuity”.
Furthermore, in order for a transaction to be taxable, the taxable person needs to

provide the service “acting as such”, meaning in his/her business capacity and not
when acting in a private capacity (for instance when engaging in a hobby). Services
emerging from one’s use of private assets in a private capacity would, therefore, be
excluded from taxation, as opposed to the usage of the same in a business capacity.
In a case of mixed usage (private and business usage), as could be the case for Uber
drivers, the delimitation is not as straightforward. It seems though that the decisive
factor would be whether the person is taking active steps to commercialize resources
similar to those deployed by a producer a trader, or a person supplying services within
the meaning of article 9(1) of the VAT Directive (Beretta 2018).
In sum, the fact that some Uber drivers provide the rides on an occasional basis,
sometimes as a supplement to their primary source of income, does not imply that they
will not be considered taxable persons. Yet here we encounter another problem—the
exemption for small enterprises. Even though VAT rules are largely harmonized, the
turnover thresholds for applying the exemption for small enterprises differ greatly
from one EU Member State to another, ranging from around 6.000 EUR in Denmark
to 40.000 EUR in Croatia or almost 65.000 EUR in Italy.27 Therefore, in countries
with a relatively high turnover threshold for small enterprise exemption, a large
number of rides provided by Uber drivers that are treated as independent contractors
will remain untaxed, as opposed to the situation in which Uber itself would be
considered to be the provider of the transportation service itself. In the UK, the gap
in revenue collection between the situation in which Uber would be treated as the
transport service provider and the VAT collected in the current situation is probably
the biggest in Europe. This is due not only to the fact that London is such an important
location for Uber but also because the UK has a very high turnover threshold for the
application of the small enterprise’s exception (£85,000). Only in Spain and the
Netherlands,28 there is no exemption for small enterprises, meaning that every Uber
driver needs to generally charge VAT as soon as he/she makes any taxable sale.
Australia, unlike the EU, does not face concerns regarding the tax gap due to the
extensive use of the small businesses’ exemption, because Uber rides were judged
to be a taxi service (Joseph 2018)29 which is itself a taxable supply, regardless of the
AUD 75,000 registration threshold.
27 See: applicable VAT thresholds in EU Member States in April 2018 (European Commission
2018b).
28 Albeit sometimes at a reduced rate. As of 1 January 2020, the Netherlands will modify its the small
businesses scheme (KOR), enabling entrepreneurs with a turnover under e 20,000 to be exempt
from paying VAT.
29 See: the decision of the Federal Court of Australia in case Uber B.V. v. The Commissioner of
Taxation of the Commonwealth of Australia from 2017 (Case No. NSD 904 of 2015 FCA 110).
On the other hand, if Uber were treated as the factual employer of the drivers, there
would be only one provision of service—transportation service of persons, provided
directly by Uber to the riders. According to article 10 of the VAT Directive the
condition in Article 9(1) that the economic activity be conducted ‘independently’
shall exclude employed and other persons from VAT in so far as they are bound
to an employer by a contract of employment or by any other legal ties creating the
relationship of employer and employee as regards working conditions, remuneration,
and the employer’s liability. Therefore, Uber, and not the drivers, would have to
account for the VAT on the rides.
3 New Rules
Most Member States do not have comprehensive tax rules for regulating shared
economy, but rather apply general rules, including, as we saw thresholds on annual
income for VAT purposes. As can be inferred from the above, these rules are not
necessarily apt for facing the challenges connected to the emergence of the new
business model. A reform needs to be founded on the overarching principle of equal
treatment or horizontal equity and neutrality. Under the first, individuals who are
identical in every way except their legal form should not face radically divergent tax
incentives or protections, whereas the second requires that similar activities need to
be treated similarly and not create incentives for individuals to distort their behavior
to move from high to low taxed/regulated activities (Adams et al. 2018).
Countries adopted a series of interim measures to close down the existing loop-
holes regarding corporate tax planning that is not specific only to the sharing econ-
omy. For instance, the US revised its provisions on the exemption from Subpart F for
active royalties, under which it sufficed for the CFC to participate in a cost-sharing
agreement in order to satisfy the “active developer test”. Revised temporary regula-
tions instead provide that only activities of a CFC’s own employees can be taken into
account for all active business tests and, in particular, that cost-sharing arrangements
cannot be relied on to satisfy the active business tests (Yoder 2016). The recent Tax
Cuts and Jobs Act (P.L. 115-97) with its repatriation, global intangible low-taxed
income may affect U.S. Taxation of the C.V.’s royalty income (Elliot 2018). The EU
extended the application of the Anti-Tax Avoidance Directive to hybrid mismatch
structures with third countries now covering the Dutch C.V./B.V. -structures. Under
the rules, the payments to the C.V. made by the B.V. may be non-deductible until the
C.V.’s income becomes subject to tax in the Netherlands on January 1, 2022, on the
basis of the reverse hybrid rule.30
30 Such extension of the Anti-Tax Avoidance Directive to hybrid mismatch structures with third
countries was undertaken by the Council Directive (EU) 2017/952 of 29 May 2017 amending
Directive (EU) 2016/1164 as regards hybrid mismatches with third countries (OJ L 144, 7.6.2017,
p. 1–11).
Taxing Uber 195
In the long run, a more comprehensive and durable reform of the corporate tax
system will have to be made specifically targeting issues created by the digital econ-
omy. Currently, corporate taxation rules are conceived in a way as to tax the value
created, but this in the case of the digital economy it is not easy to ascertain. The
reality of the highly digitalized businesses is that (OECD 2018): 1. they are highly
involved in the economic life of a jurisdiction without any significant, physical pres-
ence; 2. that their business model is structured around an intangible asset, and 3. that
they also rely heavily on user data and participation and their overall synergies with
the IP. Countries, however, differ in their opinions on whether and to which extent
user participation adds to the value creation and should it be therefore taxed and in
which way.
The two main policy challenges that need to be addressed can be summarised as
follows: —Where to tax? (nexus)—how to establish and protect taxing rights in a
country where businesses can provide services digitally with little or no physical pres-
ence despite having a commercial presence; and—What to tax? (value creation)—
how to attribute profit in new digitalized business models driven by intangible assets,
data, and knowledge. The reforms will have to entail an alteration of international tax
rules on permanent establishment, transfer pricing and profit attribution applicable
to digital technologies (European Commission 2017a). An effective solution could
only be possible in the form of a global, consensus-based solution, which could prove
challenging to achieve, having in mind the differing policy priorities of individual
jurisdictions.
At the international level, the challenge of ensuring that all actors in the digital
economy are fairly taxed on their income was already identified under the Action
1 report of the OECD/G20 BEPS project, and in the OECD interim report on the
taxation of the digital economy (OECD 2018) which was presented to the G20
Finance Ministers in March 2018. The interim report reflects different options to
address this challenge and the OECD intends to seek a consensus-based solution by
2020.
At the level of the EU, the European Commission proposed on 21 March 2018 new
rules to ensure that digital business activities are taxed in a fair and growth-friendly
way in the EU.31 One proposal responds to calls from a couple of Member States
for an interim tax which covers the main digital activities that currently escape tax
altogether in the EU.32 The EU Commission’s Proposal COM(2018b)148 sets out
the common system of a tax at a single rate across the Union of 3% on the revenues
derived from the supply of certain digital services by taxable persons33 (hereinafter
31 Such new rules consist of two proposals for new directives (European Commission, 2018; Euro-
pean Commission 2018a).
32 Such calls were made by Germany, France, Italy and Spain to the Estonian Presidency of the
Council in September 2017 through a Political statement: joint initiative on the taxation of companies
operating in the digital economy (Ministry of Economy and Finance, Italy 2018).
33 In accordance with Article 4(1) of Proposal (2018) 148, an entity fulfilling both of the following
thresholds qualifies as a taxable person for the purposes of the DST: —the total amount of worldwide
revenues reported by the entity for the latest complete financial year for which a financial statement
“Digital Services Tax” or “DST”). The DST should apply on a temporary basis until
a comprehensive solution is in place.
This more comprehensive solution should be provided for by the second Proposal
COM 2018/147 final for a new Directive on corporate taxation of a significant digital
presence. The Directive proposes that businesses would have to pay tax in the Member
States where they have a significant digital presence (a digital nexus), even if they
do not have a physical presence there. This would be defined according to revenues
received from the supply of digital services, a number of online users or number of
business contracts for digital services. These thresholds would ensure that significant
levels of digital activity are taken into account when assessing where a company
should be taxed while avoiding disproportionate burdens on SMEs. The Directive
also establishes new rules for attributing profits to digital businesses. The Directive
proposes to build on the current transfer pricing principles and sets out that the
attribution of profits to a digital business should reflect the particular ways in which
digital activities lead to value creation, through use of criteria such as data and users.34
The measures from the proposed Directive on corporate taxation of a significant
digital presence could eventually be integrated into the scope of the Common Con-
solidated Corporate Tax Base (CCCTB) where the Commission already proposed an
initiative for allocating profits of large multinational groups in a way which better
reflects where the value is created.
4 Conclusion
As stated in the introduction, sharing economy definitely caused not only a ripple
but a tidal wave on the surface of tax legislation, disrupting concepts that have
been around for decades. Sharing economy knows no borders and it even does not
require physical presence, whereas at the same time it generates a lot of revenue. Its
taxation is not only important for respecting the principle of equal treatment with the
traditional brick-and-mortar industries but is also vital for maintaining the levels of
public revenue, so desperately needed for funding the welfare state’s expenditures.
This Chapter only pointed out the complexity of the issues at hand and how tax law
will have to undergo radical changes in order to accommodate the new phenomena
called—sharing economy.
is available exceeds EUR 750,000,000; and—the total amount of taxable revenues obtained by the
entity within the Union during that financial year exceeds EUR 50,000,000.
34 This is specifically stated in the Communication from the Commission to the European Parliament
and the Council, Time to establish a modern, fair and efficient taxation standard for the digital
economy from 2018 (COM (2018) 146 final).
Taxing Uber 197
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Passengers’ Rights and Consumer
Protection
Jasenko Marin
Abstract The following Chapter deals with the topic of protecting the rights of
passengers arranging their transport by using services provided by Uber. Taking into
account the fact that Uber, according to the relevant ECJ decisions, provides services
in the field of transport as well as the fact that taxi passengers are consumers too,
Chapter briefly elaborates protection of these passengers established by the trans-
port regulations as well as by the consumer legislation. It is pointed out that at the
moment there is no applicable EU transport legislation regulating taxi passenger
rights. Therefore, this topic is regulated under the sources of national transport legis-
lation adopted in the Member States. Uber has to obey national ius cogens regulating
the performing of his services. It has to be on the principles of professionalism,
licensing, registration and technical and personal education and authorization. On
the other hand, some Uber Terms and Conditions may be treated as unfair and as
such, they are not in line with the EU consumer protection legislation. Legislative
action should be taken by the national legislators in different states (and hopefully
soon by the EU legislator) in order to precisely regulate the rights of the users of
services provided by Uber. There are examples of the amendment of the Uber Terms
motivated by the amendment of the national taxi transport legislation in a specific
state where Uber provide his services. That is the way to make Uber’s Terms and
Conditions more consumer-friendly.
1 Introduction
Without any doubt, one could say that the protection of passengers is a matter of
national, supra-regional (EU) and international public interest. Special concern for
passengers’ rights is particularly obvious during the last few decades. At the EU
level, this strategic goal was clearly announced eighteen years ago, in a strategic
document—White Paper “European transport policy for 2010: time to decide” (Euro-
pean Commission 2001). Commission strongly announced that users of the transport
J. Marin (B)
e-mail: jasenko.marin@pravo.hr

https://doi.org/10.1007/978-3-030-31535-1_7
200 J. Marin
system need to be put back at the heart of the transport policy, regardless of the mode
of transport. It has been pointed out that new specific measures are needed so that
passengers can both know their rights and enforce them.
Thus, passengers are users of transport services. In order to be transported from
point A to point B, they are concluding contracts with other persons—suppliers of
services in the field of passenger transport. When passengers, as natural persons,
conclude such contracts for the purposes which are outside of their trade, business
or profession, they are also the consumers, according to the widely accepted legal
definitions contained in relevant national and EU legislation.1
Due to the fact that passengers are also consumers, protection of their rights is
regulated by the legal sources of transport law as well as by the legal sources of
consumer protection law.2 The basic remarks of this “dual” legal system regulating
passengers’ rights shall be elaborated in following two sections of this Chapter.
Special attention shall be devoted to the question of applicability all these legal
sources to the protection of the rights of taxi passengers who arrange their transport
by using services supplied by Uber.3 The sections that follow after that deal with the
issues related specifically to the protection of passengers using Uber services.
2 Protection of Passengers’ Rights According to the Legal

Sources of Transport Law
The concept of the transport legal instruments dealing with passengers’ rights is
based on the principle of unimodality. It means that for each transport mode (air,
waterborne, bus/coach, and rail) exists separate legal instrument dealing with the
1 As an example of definition of the consumer in the EU law: Council Directive 93/13/EEC of 5

April 1993 on unfair terms in consumer contracts, OJ L 95, 21.4.1993, p. 29–34, Art. 2(b).
2 In some specific services, like in the case of so-called “package-arrangement”, transport service
may be combined with some other service (for example with accommodation or entertainment)
and offered to a traveller. In such cases, sources of other branches of law, like tourist law, may be
applicable too. But even then, the basic rule is that regarding the rights and liabilities arising out of
transport service which makes a part of such package-arrangement, specific rules of transportation
law shall be primarily applied.
3 For the purposes of this Chapter, persons arranging their taxi transportation by using services
supplied by Uber shall be called “passengers” although they can be (and sometimes are) called
“users”, “riders”, “consumers” etc. However, the term “passenger” is selected due to the fact that
such persons use Uber services in the process of arranging taxi transportation. The main ratio of
using Uber services, from such person’s point of view, is to be transported from the point A to the
point B. It is the same ratio like in carriage performed by any other mean of transport (aircraft,
ship, bus, and railway). Laws regulating these types of transport use the term “passenger” in order
to identify such a person. Thus, it seems appropriate to use the same term for the person transported
by taxi. Furthermore, this Chapter shall elaborate on the protection of taxi passengers using Uber
services. Uber offers various types of services aimed at arranging taxi transportation or hiring a car
with the driver (UberX, UberPOP, UberBlack …). However, this analysis is limited to features which
may be applied mutatis mutandis to different Uber services related to the transport of passengers.
Passengers’ Rights and Consumer Protection 201
rights of passengers. This is particularly the case at the EU as well as at the inter-
national regulation level. It is the most realistic approach taking into account the
different economic and technological background of each transport mode. However,
especially in relation to EU transport legislation, there are ten core passenger rights
common to all modes of transport (European Commission 2011). These rights are
the following:
1. Right to non-discrimination in access to transport;
2. Right to mobility;
3. Right to information;
4. Right to renounce traveling in case of disruption;
5. Right to the fulfillment of the transport contract in case of disruption;
6. Right to assistance in case of delay or cancellation;
7. Right to compensation under certain circumstances;
8. Right to carrier liability towards passengers and their baggage;
9. Right to a quick and accessible system of complaint handling;
10. Right to full application and effective enforcement of EU law.
This right, sometimes called “EU Passenger Bill of Rights” are regulated in cor-
responding EU secondary legislation separately for each transport mode (this leg-
islation is listed and briefly elaborated in: European Court of Auditors 2017). EU
is the first region of the world which established such a comprehensive system of
protection of passengers’ rights.
There are numerous international unimodal transport agreements dealing with
the carriage of passengers (1999 Montreal Convention for the air transport, 2002
Athens Convention for the sea transport, 1999 COTIF for the rail transport, 1973
CVR Convention for the road/(bus transport). EU and/or some of its Member States
have ratified majority of these instruments. However, these instruments deal with
the contract for the carriage of passengers in general. They do not systematically
regulate all above-mentioned passengers’ rights. In most cases, these international
instruments predominantly regulate right related to the compensation by the carrier
in case of death of or personal injury t to a passenger, right to compensation for the
lost or damaged baggage as well as the right related to compensation in case of a
delayed transport.
But none of this EU or international legal instruments is applicable to taxi trans-
port. Therefore, the right of passengers transported by taxi is a subject regulated by
the national or even regional transport legislation. At the EU level, the additional
argument supporting this conclusion may be found in the written answer of EU
Transport Commissioner, Ms. Violeta Bulc, related to the issue of the Commission
opinion about the Member States legislation regarding transport of passengers by car
which should be adopted in order to ensure consumer protection. Ms. Bulc inter alia
answered that, at least today, there is no specific EU legislation applicable to passen-
ger transport by car. She pointed out that these rules should nevertheless be in line
with principles established in TFEU, such as proportionality and non-discrimination
as well as the freedom of establishment. Additionally, Ms. Bulc pointed out that
202 J. Marin
national rules could be necessary to achieve objectives of general public interest,

including consumer protection (European Parliament 2018).
Bearing in mind the fact that taxi transport is a matter of public transport just as
much as the transport performed by bus, rail, aircraft or a vessel, as well as the fact
that protection of taxi passengers’ rights is a matter of public interest just as much
as the protection of the rights of passengers using other transport means, the task of
national legislator in each country is to establish systematic and passenger-friendly
system of protection of taxi passengers’ rights. Rights of taxi passengers should
correspond at the most possible level to the above mentioned ten rights enjoyable by
the passengers using other means of transport taking into account technological and
economical specifics of taxi transport.
It is worth noting that a number of taxi carriers, in cooperation with national
legislators and consumer associations, has adopted the so-called Taxi Bill of Rights.
A key element of the Taxi Bill of Rights is a passengers’ right to be picked up
and transported to their stated destination. Regarding the EU Member States, this
fundamental right is explicitly proclaimed in a number of state and regional laws,
service charters, codes of conduct etc. (European Commission 2016).
Other rights which can be find in above mentioned Taxi Bill of Rights are: the right
to a courteous driver, who provides assistance if requested, right to travel with an
assistance dog or portable mobility, right to a taxi that is clean, smoke free and in good
repair, right to be driven by the specific route preferred by passenger (and, in absence
of passenger directions, right to be driven by the most economical route), right to the
adequate receipt etc.4 These rights should be respected not only by the taxi carriers
but also by all traders included in the arranging and performance of taxi transport.
Taking into account that Uber, according to his own terms and conditions, keeps the
system of evaluating his driver-partners by the passengers, there is a foundation for
the thesis that Uber should be bound by the obligation to take all reasonable efforts
to monitor and control the level of respect these rights as exercised by Uber driver-
partners. Furthermore, Uber should not cooperate with drivers in respect of which
Uber has knowledge (or should have knowledge) that they frequently violate these
rights. Disregarding this obligation could arise liability towards the passenger.
In order to achieve the desired level of protection of taxi passengers’ rights,
national legislation must ensure that all activities related to the providing taxi services
must be supplied by the licensed and registered professional traders. That principle
must apply not only in respect of taxi carriers/drivers accepting passengers for a taxi
carriage but also to all other traders providing services different from carriage itself
but aimed at facilitation of providing such carriage, including but not limited to the
intermediaries whose business (at least as they state) is to connect providers of taxi
transport service (carriers/drivers) with the passengers looking for such service. The
principle of professionalism must be established and affected by the highest possible
level. Even if one accepts Uber’s statement that he is not the taxi carrier, he is never-
theless subject to these requirements of professionalism, licensing and registration if
these requirements are applicable to all other transport intermediaries (for example
4 As an example, such Taxi Bill of Rights applies in Canada (British Columbia).

traditional taxi dispatch center) in a particular state. The fact that Uber provides ser-
vices by means of smartphone application (and other traders provide such services
by other “traditional” means) is irrelevant in this context. After all, researches that
have been conducted shows that differences between “traditional dispatch centers”
and “new mobile applications are less and less clear. The traditional dispatch centers
have introduced their own apps to compete with other intermediaries or have signed
agreements with software companies to exploit their apps (European Commission
2016).
Abovementioned requirements of national transport laws are serving inter alia
to the purpose of achieving safe taxi transport which is of tremendous importance
regarding the protection of passengers. Safe transport and protection of passengers
are important elements of public policy (Barainsky et al. 2016). Taxi passengers
are paying for a taxi service and they have a legitimate right to expect the highest
possible level of professionalism in performing any of the activities related to the
arrangement and performance of their taxi transport. Passengers in any other mode of
public transport have the same legitimate expectations and there is no reason to threat
taxi passengers in a different way, especially taking into account that taxi transport is
in the substantial number of national legislation considered as a type of urban public
transport, therefore it is a matter of public interest (Aarhaug 2016; Noguellou and
Renders 2018).
The important argument supporting the thesis that Uber is subject to national
transport legislation could be found in the position of ECJ expressed by its decision
in case of C-434/15 Association Professional Elite Taxi and confirmed by decision
in case C-320/16 Uber France SAS. ECJ pointed out that the Uber intermediation
service at issue has to be regarded as forming an integral part of an overall service
the main component of which was transport service and has to be classified, not as
an “information society service” within the meaning of Article 1(2) Directive 98/34
but as a “service in the field of transport” within the meaning of Article 2(2)(d) of
Directive 2006/123 on services in an internal market, forming an integral part of an
overall service the principal element ow which is the transport service.
According to ECJ, Uber services are services “in the field of transport”. That is the
current EU legal position regarding the identification of Uber activities. Therefore,
Uber is subject to national legislation regulating taxi transport in the state where
Uber provides his services.
As an example, Croatian CRTA requires licensing, registration and authorization
for taxi carriers as well as for the agents (intermediaries) in road transport, including
agents in road passenger transport. This Act and respective bylaws prescribe tech-
nical, educational and financial conditions (i.e. insurance) which must be fulfilled
by the trader in order to obtain license and registration for providing these services.
According to Croatian law (and similar to other national laws in a significant number
of European countries), a person without an adequate license issued by the competent
authority is not allowed to provide transport of passengers by car for remuneration.
Taking into consideration that these are the features of the service UberPOP if such
service would be offered by Uber in Croatia that would constitute the violation of
Croatian transport legislation. It is important to notice that Croatian Act on Road
204 J. Marin
Transport requires from the agent in road transport to arrange and keep compul-
sory insurance covering his professional liability (up to the amount of approximately
20.000,00 EUR per harmful event of approximately 100.000,00 EUR for all claims
per year) for the damage he caused to the carrier, transport contractor or to any third
party.5
The taxi carrier itself has to keep and arrange his liability insurance for the damage
caused by the use of his taxi vehicle which is regulated by the Croatian Compulsory
Traffic Insurance Act.6
Even if the Uber is considered as a transport intermediary (and not the taxi carrier
itself), high level of professional diligence requires from Uber to take best efforts
to ensure that his partners—taxi drivers have such insurance in force and that these
drivers fulfil all other regulatory requirements.
It is important to notice that in the United States Uber is treated as so-called
Transport Network Companies (TNC). TNC are companies that provide “prearranged
transportation services for compensation using online platforms (website or mobile
apps) to connect passengers with drivers using their personal vehicles”. Therefore,
Uber activities are focused on providing prearranged transportation services. One
could state that this definition confirms that, under US law, similar to under the
EU law, Uber shall be considered as a company offering specific services in the
field of transport. The term TNC has been coined by the California Public Utilities
Commission (CPUC) when designing a regulatory framework for companies like
Uber. Although the concept of TNC does not exist in EU secondary legislation,
European institutions sometimes use this term in their work aimed at analyzing
the social, economic and legal impacts of those companies in Europe (European
Commission 2017).
All these elements are parts of transport legislation (including transport insur-
ance legislation) which could be found in a number of states. They are aimed at
strengthening the legal position of passengers using taxi transport toward all traders
participating in the arrangement and performance of taxi transport.
3 Relevant Sources of Consumer Protection Law
Consumer Protection Law is developing strongly in the past few decades. That is
a worldwide trend. At EU level, around 90 directives cover consumer protection
5 According to CRTA, Law on Obligations shall be applicable regarding the question of the existence
of the transport agent liability.

6 This is the compulsory liability insurance for all car users. It is regulated in accordance with the
relevant EU Directive on motor liability insurance. Croatian insurance companies consider that
using a vehicle in order to provide taxi services represents a special additional risk. Therefore,
large number of insurance companies calculate higher insurance premium for taxi vehicles liability
comparing to the liability insurance in respect of vehicles which are not used for the passenger
transport. The Croatian Compulsory Traffic Insurance Act requires from the (inter alia) taxi driver
to arrange personal accident insurance on behalf of the passengers.
issues. There are some directives dealing in the consumer rights generally, such as
Directive 93/14/EEC on unfair terms in consumer contracts, Directive 2011/83/EU
on consumer rights, Directive 2013/11/EU on alternative dispute resolution for con-
sumer disputes. Some other directives and regulations cover consumer rights related
to some specific area like the digital market, financial services, food safety, energy
etc. (Valant 2015).
The purpose of this section is to explore the extent to which some selected EU
general consumer protection legislation may be applied in respect of taxi passengers
using Uber services.
The first piece of EU legislation that is going to be explored is the Directive
93/113/EEC on unfair terms in consumer contracts.7 This Directive is applicable to
all consumer contracts. Thus it is applicable to the contract between the consumer—
taxi passenger and the taxi carrier. It is applicable to the consumer contract between
the passenger and the Uber. The basic rule of this Directive is contained in its Article
3 according to which a contracted term which has not been individually negotiated
shall be regarded as unfair if, contrary to the requirement of good faith, it causes a
significant imbalance in the parties rights and obligations arising under the contract,
to the detriment of the consumer. A term shall always be regarded as not individually
negotiated where it has been drafted in advance and the consumer has therefore not
been able to influence the substance of the term, particularly in the context of a
pre-formulated standard contract. This is of particular importance in respect of Uber
taking into account that various parts of the contractual relationship between Uber
and the passenger using Uber services are based on terms and conditions prepared
by Uber. The Annex of the Directive 93/113/EC contains an indicative and non-
exhaustive list of the terms which may be regarded as unfair. According to Article 6,
Member States must ensure by its national law that unfair terms used in a contract
concluded with a consumer bay a supplier shall not be binding on the consumer and
that the contract shall continue to bind the parties upon those terms if it is capable of
continuing in existence without the unfair terms.
Later in this Chapter, some selected Uber’s terms and conditions shall be analyzed
in the light of the Directive 93/133/EC (infra section 7.4.2).
Another important Directive is Directive 2005/29/EC on unfair commercial prac-
tices.8 That Directive forbade the unfair commercial practice, in particular, aggres-
sive and misleading commercial practice. The application of the national legislation
transposing this Directive in relation to Uber’s activities is confirmed by the French
court practice. In December 2015 French appeals court fined Uber 150.000,00 EUR
for misleading commercial practice. The court argued Uber misrepresented Uber-
POP service by claiming it was a legal ride-sharing service. Earlier that year France
7 Council Directive 93/113/EEC of 5 April 1993 on unfair terms in consumer contracts, OJ L 95,
21.4.1993.
8 Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning
unfair business-to-consumer commercial practices in the internal market and amending Council
Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament
and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the
Council (‘Unfair Commercial Practices Directive’), OJ L 149, 11.6.2005.
206 J. Marin
banned UberPOP service which allowed unlicensed drivers to become taxi drivers
using their own cars (NDTV 2015).
It could be interesting to explore the possible applicability of the Directive
2011/83/EU on consumer rights9 to the activities of the Uber.
The scope of application of the Consumer Rights Directive is regulated by Article
3. Paragraph 3, subparagraph (k) of this Article explicitly states that Directive shall
not apply to contract for passenger transport services, with the exception of Article
8(2) and Articles 19 and 22. The explanation for such exclusion from the application
is contained in recital (27) of the Directive. Namely, passenger transport should be
excluded from the scope of the Directive as it is already subject to other EU legislation
(special transport legislation, supra 7.2) or, in the case of public transport and taxis,
to regulation at national level.
If Uber’s services are treated as “passenger transport services” (i.e. if “services
in the field of transport”, as identified by ECJ, falls into the notion of “passenger
transport services”) it could be argued that these services are partly excluded from the
application of Consumer Rights Directive. Consequently, only provisions contained
in that Directive and applicable to Uber’s services in the field of transport are those
which protect passenger (consumer) against excessive fees for the use of means of
payment or against hidden costs (Article 8(2), 19 and 22). The exclusion contained
in Article 3, paragraph 3(k) and explained in recital (27) assumes that rights of taxi
passengers as consumers are regulated in detail by national laws of Member States,
just as these rights are by EU regulation in other types of passenger transport. If that
is not the case in respect of a specific Member States than it should be done as soon as
possible in order to equalize rights of passengers using taxi transportation (including
passengers using Uber’s services) with the rights of passengers using services in
other types of transport. When it is done, this partial exclusion of taxi transportation
from the application of the Consumer Rights Directive shall be of significantly less
importance.
4 Contractual Relationship Between the Uber

and a Passenger
Contractual Relationship between Uber and a Passenger is mostly regulated by Uber

Terms and Conditions (“Terms”). There are different Terms for various countries in
whose territory Uber provides his services. This approach is taken by Uber in order
to adjust his Terms to ius cogens existing in a particular state. According to Terms,
by accessing or using Uber Services, the passenger confirms his agreement to be
bound by these Terms. Terms govern the access or/and use the Uber Services by a
9 Directive2011/83/EU of the European Parliament and of the Council of 25 October 2011 on

consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European
Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC
of the European Parliament and of the Council Text with EEA relevance, OJ L 304, 22.11.2011.
passenger. The services constitute a technology platform that enables users to arrange
and schedule transportation services with independent third-party providers of such
services, including independent third-party transportation providers. Uber strongly
and clearly points out that he does not provide transportation services or function
as a transportation carrier and that all such transportation services are provided by
independent third-party contractors who are not employed by Uber. However, as far
as the EU law concerned, Uber should be considered as a provider of the services
in the field of transport, as described in respective decisions of ECJ. In that context,
Uber’s description of services which he provides, as described in Terms, is not quite
correct and complete and could be treated as misleading.
5 Selected Provisions Contained in Uber’s Terms
5.1 Amendment and Termination of Terms
Uber’s Terms contains provisions according to which Uber may immediately termi-
nate these Terms or any Services, or cease offering or deny access to the Services
or any portion thereof, at any time for any reason. Furthermore, Terms provides that
Uber may amend the Terms related to the Service from time to time. Amendments
will be effective upon Uber’s posting of such updated Terms at his web site or on
the applicable service. If the passenger continues to use of the services after such
posting, it shall be considered as passenger’s consent to be bound by the Terms as
amended.
Terminations of Terms and Services actually leads or may lead, to the termination
of the contract between Uber and the passenger. Uber has the authority to terminate
the Contract for any reason and without any reasonable notice delivered to the pas-
senger. Taking into account that the contract between the Uber and a passenger is of
indeterminate duration, this provision may be considered as unfair from the position
of EU consumer legislation. Namely, Annex of the Council Directive 93/13EEC on
unfair terms in consumer contracts, in paragraph 1(g) contains the provision that the
contractual term enabling the supplier of service to terminate a contract of indetermi-
nate duration without reasonable notice may be considered as unfair, except where
there are serious grounds for doing so. The described provision contained in Terms
allows Uber to terminate the contract for any reason without the obligation to provide
the passenger with reasonable notice about his intention to do so.
Regarding the provision establishing Uber’s right to unilaterally amend the con-
tract by amending Terms, it could be considered as fair only if he is required to inform
the passenger with reasonable notice and that the consumer is free to dissolve the
contract. This conclusion is based on the Annex to the Directive on unfair terms in
consumer services, Annex, para. 1(j) in connection with para. 2(b). If Uber decides
to amend the Terms, it could be argued that, in accordance with the required level
of good faith and taking into account that he has the ability to contact the passenger
208 J. Marin
via smartphone, Uber should be required to explicitly and individually inform a pas-
senger about the amendment of terms (by SMS, for example), no later than on the
occasion when a passenger shows his intention to use the service for the first time
after the amendments has been made. The Uber should pay passenger’s attention
to his right to terminate the contract if he does not agree to the amendments made
by Uber. Posting such amendments on Uber web site could not be considered as
enough if the passenger is not informed about such an amendment. Namely, it is not
reasonable to expect from the passenger to regularly check the Uber web site in order
to notice possible amendments to the Terms which may be made by Uber.
5.2 Payment of Charges
According to Terms, charges paid by the passenger a final and non-refundable, unless
otherwise determined by Uber. The Passenger retains the right to requires lower
charges from a Third party provider (taxi carrier) for services received at the time
passenger receives such services. Uber will respond accordingly to any request from
a Third party provider to modify the charges for a particular service.
The good thing is that charges have to be paid only after the taxi service has been
provided. However, the problem may arise when the taxi service has not been per-
formed in accordance with the necessary level of professional diligence that should
be exercised by the taxi carrier. For example, that could be the case when the vehicle
was not clean or when the taxi carrier, after picking up the first passenger, picks
up some other passengers without the consent of the first passenger. According to
Terms, there is no mechanism enabling the passenger to contact Uber directly and
request lower charges. Uber has to react only if the Third party (taxi driver) con-
tacts Uber. It is questionable and maybe even unfair solution in cases when a Third
party refuses to contact Uber and request lower charges for a particular service. It is
recommendable to arrange the appropriate mechanism, as well as to regulate such
mechanism in Terms, allowing passengers to contact Uber directly after the charges
have been paid, in order to request at least partial refund in justified cases.10
5.3 Exclusion and Limitation of Uber’s Liability
According to Terms, Uber is revealed of his liability in respect of a significant number

of events occurring during the taxi transport and causing damage to the passengers.
It is especially pointed out that Uber shall not be liable for any damages resulting
from any use of the services, even if Uber has been advised of the possibility of such
damages. Furthermore, it is pointed out that Uber shall not be liable for damages
10 However, it is recommended for the passenger to contact Uber web page for drivers asking for
help and to request refund due to poor performance of the taxi services (Uber 2019).
resulting from the services provided by Third party provider (taxi carrier). Uber
shall not be liable for delay or failure in performance resulting from causes beyond
Uber’s reasonable control. Surprisingly, in a significant number of Terms still exists
provision on the possibility that some transport services may be provided by the
carriers/drivers which are not professionally licensed or permitted? Such provision
could be found even in countries where providing such services is forbidden (like in
France).
Finally, under the Terms, the potential total liability of Uber shall in no case exceed
500 EUR.
It is worth noting that Terms contains the statement that all limitations and dis-
claimer do not purport to limit liability or alter passenger’s rights as a consumer that
cannot be excluded under applicable law. Therefore, Terms dealing with exclusions
and limitation of Uber’s liability shall be legally binding only if they are not in con-
trast to the ius cogens. Otherwise, they are null and void. For example, according to
the Annex to the Directive on unfair terms in consumer contracts, Paragraph 1(a),
contractual terms may be found unfair if they are aimed at excluding or limiting the
legal liability of a supplier in the event of the death or a consumer (passenger) or
personal injury to the latter resulting from an act or omission of the supplier. Further-
more, under the provision of national legislation in some states, including Croatia,
limitation or exclusion of liability is not allowed if the damage has been caused by
the intention or gross negligence of the wrongdoer. These examples lead to the con-
clusion that the applicable ius cogens represent adequate legislative weapon aimed
at narrowing wide extent of exclusion and limitation of Uber’s liability prescribed in
Terms.
The importance of national legislation in this context is clearly illustrated in the
example of Uber Terms used in France. After France amended relevant law dealing
with taxi transport by introducing strict and joint and several liabilities of the book-
ing dispatcher and the carrier, Uber amended his respective Terms by introducing
specific liability terms for transportation. According to this amendment, and notwith-
standing any contrary provision in the Terms, Uber will not contest any finding that
it is strictly and jointly and severally liable in France with the Third Party Provider
of transportation services provided in France as a result of a prior booking made
through the services. Uber confirmed that his services are not transport services but
those of a booking dispatcher pursuant to applicable French law. However, Uber shall
sustain no such strict and several liabilities in case of non-performance or improper
performance of the relevant transportation services when such non-performance or
improper performance is attributable to the passenger, or it results from an unpre-
dictable and insurmountable cause due to a third party, or in case of force majeure.
Thus, Uber acknowledges the possibility of his liability for the non-performance or
improper performance of the taxi transport performed by the Third party (taxi carrier)
(Uber’s Terms and Conditions, France 2019).
210 J. Marin
5.4 Arbitration and Governing Law
Uber Terms usually stipulates that they shall be exclusively governed by and con-
strued in accordance with the laws of Netherlands and that any dispute shall be
resolved by mediation and, if such dispute has not been settled by such mediation,
it shall be resolved by arbitration. The place of both mediation and arbitration shall
be Amsterdam, The Netherlands.
According to the Annex to the Council Directive 93/13/EEC on unfair terms in
consumer contracts, paragraph 1(q), a term which have the object or effect of exclud-
ing or hindering the consumer’s right to take legal action or exercise any other legal
remedy, particularly by requiring the consumer to take disputes exclusively to arbi-
tration not covered by legal provision, may be considered as unfair. That rule seems to
be applicable in respect of the above mention Uber Term dealing with the mediation
and arbitration. In a case where, as an example, taxi transport arranged by Uber has
been provided in Croatia by Croatian taxi carrier/driver, exercising mediation and
arbitration in Amsterdam could be treated as unfair toward the Croatian passenger
as a consumer. Therefore, despite the above mentioned Uber term dealing with the
mediation and arbitration in Amsterdam, it is possible to establish the competence of
another forum for resolving disputes, in accordance with relevant EU legislation and
national law, which in some cases may be more convenient to a specific consumer
(passenger) Example of such peace of EU legislation is Directive 2013/11/EU on
consumer ADR.11
Regarding applicable law (in most cases the Terms establish Dutch law as the
applicable law), it is important to have in mind principles and solutions prescribed
by relevant EU legislation such as Rome I Regulation,12 especially articles 3.-6 of that
Regulation, as well as national ius cogens. This is especially the case if the contract
between the Uber and the passenger is not considered as the contract of carriage
but as another consumer contract, which is in line with Uber own statements, and
the contractual relationship has more connections with the country other than The
Netherlands. If that is the case, there is a possibility that some other law, even the
law of passenger habitual residence, shall be established as applicable.
6 Data Protection
Uber states that the collection and use of personal information in connection with the
Services is as provided in his Privacy policy which can be found at Uber’s web site.
Uber may provide to a claim’s processor or an insurer any necessary information
11 Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alter-
native dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and
Directive 2009/22/EC, OJ L 165, 18.6.2013.
12 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on
the law applicable to contractual obligations (Rome I), OJ L 177, 4.7.2008.

(including passenger’s contact information) if there is a complaint, dispute of con-

flict, which may include an accident, involving passenger and a Third Party Provider
(including driver) and such information or data is necessary to resolve the complaint,
dispute of conflict. In respect of Uber’s services provided in EU, Terms are silent
regarding passenger data protection as prescribed by GDPR Regulation.13 Since Uber
has to build up a record or database of his customers’ personal information, such as
names, phone numbers, email addresses, he should be treated as the Data Controller.
He should be also considered as the Data Processor as he uses software and sys-
tems to process his customer’s personal data. Therefore his business must be GDPR
compliant. The breach of these obligations may arise fines and liabilities toward the
passengers. It is a question of particular importance due to a fact that recently Uber
has acknowledged that the personal information of 57 million customers and drivers
was hacked (Gonzales 2017).
7 Concluding Remarks
The protection of passengers, including taxi passengers is a matter of public policy.

The same principle is applicable in respect of passengers who arranged their taxi
transport using services provided by Uber. According to the relevant ECJ decisions,
Uber provides services “in the field of transport”. Having that in mind, these passen-
gers enjoy a “dual” protection system. One level of protection is established by the
transport rules adopted at the national level of different states. At the moment there
is no EU or international legislation dealing with the rights of passengers carried
by taxi. The second level of protection is established by the applicable sources of
general consumer law (passengers carried by taxi are consumers too), especially by
the relevant EU legislation.
Providing any services related to the taxi transport must be established on the
principle of professionalism, licensing, technical and educational authorization and
registration. That should be applicable to the services provided by Uber too—services
in the field of (passenger car) transport. Of course, the competent national bodies
must control the level of respecting these principles.
There are some Uber Terms and Conditions which are not passenger (consumer)
friendly. Even more, some of them may be considered as unfair and in contrast to
the applicable EU and national consumer legislation. Therefore, such Terms are to
that extent not binding for the passenger as a consumer. Generally, Terms regulate
the wide scope of Uber’s rights and narrow range of Uber’s obligations toward the
passengers.
13 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on
the protection of natural persons with regard to the processing of personal data and on the free
movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation),
OJ L 119, 4.5.2016.
212 J. Marin
However, Uber has shown a significant readiness to adjust his Terms to national
ius cogens. The example of Terms applicable in France, according to which Uber
acknowledges its strict, joint and several liability (together with the taxi carrier) for
the damage arising during the transportation represents a significant step forward.
The Uber should take best efforts to ensure that his drivers—partners (Third parties)
respect passenger’s rights.
Bearing in mind that Uber has to obey national regulation dealing with the pro-
tection of taxi passengers’ rights, the national legislator must fulfill his task related
to the protection of passengers. Due to the reason of public policy national (and in
the near future hopefully even the EU) legislator must establish such system of rules
according to which Uber shall amend some of his Terms in order to make them more
consumer friendly.
References
Aarhaug J (2016) Taxis as a part of public transport: sustainable urban transport technical document
#16. Federal Ministry for Economic Cooperation and Development, Bonn
European Commission (2001) White paper: European transport policy for 2010: time to decide.
COM (2001) 370 final, Brussels, 12.9.2001
European Commission (2011) A European vision for passengers: communication on passenger
rights in all transport modes. COM (2011) 898 final, 19.12.2011
European Commission (2016) Study on passenger transport by taxi, hire car with driver and rideshar-
ing in the EU, Final Report. Study contract no. MOVE/D3/SER/2015-564/SI2.715085
European Commission (2017) Exploratory study of consumer issues in online peer-to-peer platform
markets, Final Report, task 4—Uber—case study report. Contract 2015 86 02; Project2017.4058
European Court of Auditors (2017) Passenger rights in the EU. European Court of Auditors
Noguellou R, Renders D (2018) Uber & taxis, comparative law studies. Brussels
Valant J (2015) Consumer protection in the EU, Policy overview. European Parliamentary Research
Service, PE565.904
Online Publications
Barainsky L, Gumberidze E, Amin MN (2016) Uber and taxi regulations: are member states pre-
serving a legal monopoly to the detriment of consumers? Researchgate Portal. https://www.
researchgate.net/. Accessed on 4 Mar 2019
European Parliament (2018) Answer given by Ms Bulc on behalf of the European Commission
(19.9.2018). European Parliament Portal
Gonzales R (2017) Uber data on 57 million people stolen in massive hack. NPR Por-
tal. https://www.npr.org/sections/thetwo-way/2017/11/21/565857184/uber-data-on-57-million-
people-stolen-in-massive-hack?t=1552015972766. Accessed on 4 Mar 2019
NDTV (2015) Uber fined 150,000 euros for misleading practices in France. NDTV
Portal. https://www.ndtv.com/world-news/uber-fined-150-000-euros-for-misleading-practices-
in-france-1252135. Accessed 4 Mar 2019
Uber (2019) Uber help. https://help.uber.com. Uber Cities. www.uber.com. Accessed on 4 Mar
2019
Uber’s Terms and Conditions, France (2019 February 1st) Uber Portal. https://www.uber.com/legal/
terms/fr/. Accessed on 4 Mar 2019

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Ius Gentium: Comparative Perspectives on Law and Justice 76

Uber—Brave New Service

Mišo Mudrić Hrvoje Lisičar

ISSN 1534-6781 ISSN 2214-9902 (electronic)

Zagreb, Croatia Jasenko Marin

Comparative Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 85

Passengers’ Rights and Consumer Protection . . . . . . . . . . . . . . . . . . . . . 199

© Springer Nature Switzerland AG 2020 1

1 Uber’s Business Model

2 Disruption and Uberification

dominated by existing market actors (International Transport Forum 2016). Such

Uber’s privatization of public transportation options (Buchanan 2015).

April 30, 2018).

Division, Claim No. HC-2017001496, 15 June 2017.

7 Uber B.V v Commissioner of Taxation [2017] FCA 110.

8 C-320/16, Uber France SAS, Nabil Bensalem, ECLI:EU:C:2018:221, p. 33.

charge of transportation affairs, internal affairs, finance and commerce, institutions in

Monographs and Studies

Griswold A (2019b) Uber is boring now. QZ portal. https://qz.com/1513388/uber-is-boring-now/.

© Springer Nature Switzerland AG 2020 15

2 Predominantly Transportation Service

1 C-434/15, ECLI:EU:C:2017:981, 20 December 2017.

2.1.2 Preliminary Questions

services in the internal market, OJ 2006 L 376, p. 36.

11 C-320/16, Uber France SAS, Nabil Bensalem, ECLI:EU:C:2018:221.

2.1.4 Key Elements Determination

Finally, having in mind that Uber’s digital platform is a commercial activity, it

2.2 Relevant Comparative Case Practice

2.2.1 Unfair Competition

several transportation services categories.

ternehmen im Personenverkehr (BOKraft).

2.2.2 Uber’s Central Role as a Main Organizer/Direct Provider

17 Tribunale di Milano, Sezione A, N. 16612/2015 R.G., 25 maggio 2015. Further analyzed in

a. Initial setting-up and provision of digital system/program (Uber’s application);

2.2.3 Employees Versus Contractors Dilemma and Level of Control

22 SeeSect. 2.1.3. Considerations.

Dawson, [2018] EWCA Civ 2748.

3.1 Uber and Clients

Application Potentially the same

Fig. 1 Legal relationships—Uber and clients

3.2 Uber and Uber Drivers

Fig. 2 Legal relationships—Uber and Uber drivers

3.3 Uber, Applications Users and Uber Drivers

6a. Application 7a. Uber Driver's Rejection

5. Uber's Application 8. Uber Driver's

Fig. 4 Uber ride: legal deconstruction

29 Depending on jurisdictions, it is possible to select a split-fare options, whereby several application

users share a same ride and share the payment.

3.4 Contract or No Contract

3.4.1 Contractual Maze

3.5 Uber Subsidiary Company

Fig. 5 Uber subsidiary

36 For more information on this particular issue, see Sect. 5.3.

Uber subsidiary companies, established by Uber company that serves as a provider

4 Price Determination and Payment

4.1 Traditional Price Determination

Situation A: Low Average Demand Situation B: High Average Demand

Fig. 6 Demand average

4.2 Uber’s Model for Price Determination

4.2.1 General Factors for Price Determination

4.2.2 Dynamic Charge Increase

Fig. 7 Offer/demand ratio

37 For example, see Sect. 5.