Italy makes no exception to the war that taxi drivers in Europe have declared on Uber, and particularly Uber Pop, which is the digital platform connecting demand for car rides with offerings from private car owners. Since Uber’s landing in Italy, taxi drivers have manifested their (at times violent) opposition to Uber Pop, which in their views, enabled private car owners to offer an on demand driving service in breach of applicable taxi regulations, although akin to a taxi service. Taxi services in Italy are heavily regulated. Amongst others, such a service is by operation of law subject to strict access rules, whereby only those drivers that are licensed by the competent municipality may offer the service. Besides access, the regulations fix the applicable tariffs, restrict the geographic area in which taxi services may be offered and the modalities of the service offering.
By way of a decision delivered on 25 May last, the Tribunal of Milan has granted several Taxi Drivers Associations an interim injunction, restraining Uber from making available the Uber Pop application on the Italian market. The decision can be found here. By so ruling, the Tribunal of Milan upheld the unfair competition claim made by the claimants. The reasoning of the Tribunal is interesting, as it provides an answer to the question concerning the conditions which would outlaw as competitively unfair the exercise of a business in breach of laws designed to serve an overriding “public interest”. No doubt that the Taxi Regulations do qualify as public interest serving laws, to the extent that such an interest is identified in that to a secure service, with regulated tariffs. In this connection, the Milan Court has ruled that the breach of public interest serving laws is as such sufficient to substantiate an unfair competition finding, when a direct causal link can be established between the breach of law and the competitive advantage gained by the competitor. The Court denies that Uber Pop is a car sharing, community based service, but is instead a direct competitor of a traditional taxi service, because Uber Pop drivers, just like taxi drivers, are contacted via the app by passengers for the latter to be taken to the destination of their choice, most often within the city, whereas in the car sharing model, it is the car owner that looks to share for cost saving purposes a city-to-city ride.
The Court has therefore found that Uber’s “surge pricing” model (in which rates are raised for car trips in the city when demand is higher than normal), will in normal situations lead to application of fares which are much lower than the regulated taxi fares. The court observes that this is made possible precisely because Uber affiliated drivers violate the law requirement and, therefore, may escape all costs imposed by the strict taxi regulations (such as mandatory insurance obligations, costs connected to the installation of meters and to the setting up and maintenance of proprietary radio taxi platforms). As a result, Uper Pop drivers would unlawfully divert demand for taxi rides to their own benefit. In this connection, Uber was found to play a decisive role, going beyond that of a mere mediator or facilitator of the unlawful practice.
The Court’s ruling, if aseptically examined, appears essentially immune from criticism. However, it is unsatisfactory, for want of courage: the court could in fact have examined a different, although strictly related issues, i.e. whether the public interest underlying the taxi regulations can still be considered properly served by the existing legislation, which dates back to 1992, when nothing remotely close to digital connecting people apps could be even conceived. True that ordianary judges do not have the power to repeal legislation. At the same time, nothing would impede courts from abstaining from interfering with market processes, where clear clues exist to the effect that public interest is geared towards innovative solutions, which benefit total welfare and are not covered by existing and outdated legislation.