Further to our general update above on Uber in Europe, Uber Technologies Inc. is challenging a French court ruling that deems one of its fastest-growing services to be illegal in France, escalating a fight amid the car-hailing company’s broader battles in Europe.
The French General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) brought charges against Uber before the Criminal Court of Paris where it argued that UberPop is a taxi service that masquerades as a ride-sharing service. According to the DGCCRF, ride sharing is legal only if it is not conducted for profit.
The UberPop service has been particularly controversial because, unlike traditional Uber services like UberX, it uses drivers without professional taxi or chauffeur licenses and bills itself as ride- sharing.
On October 16, the Paris criminal court agreed with the DGCCRF and ruled UberPop to be an illegal for-profit taxi service masquerading as carpooling. It ordered the company to pay a €100,000 fine for “deceptive business practices” after it advertised its paid transportation service UberPop as a car pool.
A deceptive business practices is a criminal offense. Under Article L. 121-1 of the French Consumer Code, the offense can result from several circumstances such as business practices which create confusion with other goods or services, or those that mislead the consumer as regards to the price of the service. Repression of deceptive business practices is vested in the DGCCRF, which has broad powers of investigation for this purpose. Article L.121-6 of the French Commercial Code provides for a penalty of up to two years' imprisonment and a fine of € 300,000 for any infringement.
The Court noted that Uber incites people to participate in the UberPop transport service by giving the impression that it is legal, when in fact it is not because of its for-profit nature.
The Court explained that, by charging a minimum price, the firm was not asking people to share costs, but rather was charging payment for the ride. According to the Court, this constitutes an “offer for passenger transport for pay”, with a base rate and a rate per kilometer traveled and time elapsed akin to paying a “ride”.
In addition to the fine, the Court also ordered Uber to state on its website that any driver taking part in the service could face criminal charges.
Despite this judgment, Uber said in a statement it would continue to operate UberPop while it appeals parts of the decision.
Uber is under attack from all sides. French chauffeured car (VTC) competitors have also sued to block the service in a case heard on November 21 by the Commercial Court in Paris.
The court was called upon to decide whether UberPop - and by extension the new UberPool shared ride service - competes unfairly with rivals such as VTC’s. After Uber was fined 100,000 euros by the Criminal Court, these rivals asked the Commercial Court, in an emergency proceeding, to stop UberPop activities as soon as possible and to impose a penalty in case of non-compliance which “to have a deterrent effect, cannot be less than 250,000 euros a day”.
A decision is expected on December 12, 2014.