Mark Scott
The Constitutional Council in France upheld on Tuesday a law that banned
Uber’s low-cost ride-hailing service, a much-awaited decision that underscores
how national courts are enforcing limits on the company’s expansion into new
markets.
The decision from the council upheld a section of a transportation law
approved by the French Parliament late in 2014.
The law included a ban on the company’s UberPop ride-booking service,
which used drivers who did not have a professional license to pick up paying
passengers. UberPop is cheaper than Uber’s standard offering.
The council rejected Uber’s argument that the law would have also made
ride-sharing illegal, affecting an accepted form of reducing travel costs for
many people in France.
The council said in its decision that ride-sharing was unaffected and
that the law and the ban “conformed to the Constitution.”
The ruling follows violent protests from Paris to Marseille by many
French taxi unions. The protesters had argued that UberPop represented unfair
competition for standard taxi services and did not comply with strict
transportation rules.
It is unclear what the practical consequences of Tuesday’s ruling will
be. In July, the company suspended its UberPop service in France until the
Constitutional Council made its decision.
An Uber spokesman, Gareth Mead, said that the company was disappointed
by the decision but that it would not have much immediate impact on its current
business in France.
“We suspended UberPop in light of the risk of violence to our riders and
driver partners and we will maintain this suspension — the majority of our
business continues unaffected,” Mr. Mead said.
He added that there were more legal cases and decisions in the pipeline
and that while the Constitutional Council had upheld the transportation law,
that ruling cleared the way for the other cases against Uber to proceed.
For instance, a French local court declined last year to ban UberPop.
That case went before the Paris Court of Appeal and was suspended pending the
Constitutional Council’s ruling. The case will now go forward, Mr. Mead said.
Two Uber executives in France are set to stand trial on Sept. 30 on
behalf of the company in connection with charges including “deceptive
commercial practices” and illegally organizing taxi services through UberPop.
The company has been on a recent charm offensive in France after it was
caught off-guard by the violent opposition to UberPop, which allows anyone with
a car to pick up passengers through the company’s smartphone application.
Uber has claimed that the transportation law, which bars drivers who
lack professional licenses from picking up passengers, unfairly benefits taxis
and should be repealed.
Parisian taxi drivers say they must pay as much as $270,000 for a
license to operate and argue that Uber has the unfair edge.
The company, which is now valued by investors at roughly $50 billion,
has faced regulatory problems in many places it operates, including the United
States and South Korea.
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Its service, which allows people to hail a ride via an app, has expanded
to more than 300 cities in over 50 countries.
In many countries, policy makers and taxi unions have argued that the
company does not follow local transportation and safety rules. Regulators also
have raised concerns over Uber’s working practices, as the service relies on
drivers who are independent contractors, not full-time employees.
Uber has often continued to offer its services despite legal demands
that it stop operating. It also has brought legal challenges against regulators
when it believes they are hindering the company’s growth.
Unlike Airbnb, the home-rental company, which has actively built a
relationship with French policy makers, Uber initially failed to foster close
connections with policy makers when it expanded into France in late 2011, according
to people with knowledge of the matter, who spoke on the condition of anonymity
because they were not authorized to speak publicly.
In recent months, however, Uber executives have contacted many of
France’s leading politicians in an attempt to counter claims that some of the
company’s services are illegal, though some lawmakers remain skeptical over the
company’s aims.
“Modernity is innovation, the quality of service, the sharing economy,”
said Bernard Cazeneuve, France’s interior minister, after the anti-Uber
demonstrations in July. “It is not black-market jobs and clandestine work
organized against the rule of law by Uber.”
To counter opposition in France and other European countries, Uber has
started to lobby the European Commission, the executive arm of the European
Union, to weigh in on whether nations have the right to ban the company’s
offerings.
A Spanish judge also recently referred a case against Uber to Europe’s
highest court, which will now decide whether the company is a transportation
service, which would force it to follow existing rules, or a mere digital
service, which would give the company greater leeway.
As Uber’s legal challenges mount, the company’s executives have stressed
their willingness to use European courts to fight against the perceived
dominance of the region’s taxi industry.
“If governments take decisions that we believe are contrary to European
law, then of course we will have to decide what to do next,” Mark MacGann,
Uber’s head of European policy, recently told reporters when asked about
potential future legal action. “Regulation in some countries was written
decades ago before we all carried smartphones in our pockets.”
Alissa J. Rubin and Aurelien Breeden contributed reporting.
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