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In many areas in the US, such as California, Uber has almost replaced normal cab or taxi services. In Germany, the legal landscape for Uber is more complicated.
There have been judgments based on unfair competition against Uber that prohibited services such as UberPop—by which passengers can hire private drivers—for breach of German laws requiring a licence for passenger transport.
The plaintiffs in these cases were competitors of Uber such as taxi drivers, who claimed that a violation of passenger transport laws by Uber at the same time constituted unfair competition towards them.
"The reason for this specific regulation is that there must be factors that clearly distinguish taxis from rental car services."
Passenger transport is, in many areas in Germany and Europe, heavily regulated for reasons of public safety and the protection of passengers’ rights, among others. For instance, taxi drivers are by law obliged to accept any passenger’s request for transport, and taxi fares are fixed so that passengers can be sure that they do not have to pay higher tariffs.
The German statute in point is called the Passenger Transport Act (Personenbeförderungsgesetz). In addition to the undeniably positive effects of these regulations, another economic effect of passenger transport laws is that they generally protect a community of taxi drivers and their traditional business models.
Uber has a different business model, and it resorted to another solution: it advertises its services in Germany as a chauffeur service. This is basically possible in Germany, but German laws also have some legal requirements in store for chauffeur or rental car services.
Against the app
On December 13, 2018, the Unfair Competition Senate of the Federal Court of Justice rendered another judgment in favour of taxi drivers and against Uber. Specifically, it was about the app Uber Black, by definition a luxurious rental car service. With this app, Uber violated German laws on passenger transport, the Federal Court of Justice held.
The plaintiff taxi driver had claimed that Uber Black violated a provision in the Passenger Transport Act that provides that a rental car service cannot, other than a taxi enterprise, accept orders directly in the vehicle.
Orders must first be received by a central office which then assigns the orders and passengers to the individual rental cars with chauffeurs. The reason for this specific regulation is that there must be factors that clearly distinguish taxis from rental car services, and that these factors were necessary because taxi services must obey an array of strict rules (such as the obligation to accept any customer, and for fixed tariffs).
If rental car services were allowed to offer basically the same services as taxis, but for much less strict rules, all taxi services would offer their services under the guise of rental car services, with the effect that these strict rules would become obsolete.
The court referred to a decision of Germany’s Constitutional Court which in 1989 had held that for these reasons these regulations did not violate the Constitution and were justified limitations of the protected constitutional right to exercise one’s profession (article 12 of Germany’s Constitution).
The Federal Court of Justice ruled that the Uber Black app violated the Passenger Transport Act because it enabled the Uber cars to accept orders directly in the cars, and orders were not first received by a central office. The court again confirmed that the respective rules in the Passenger Transport Act were so-called “rules for regulating market behaviour”.
Uber had argued that since times and circumstances had changed considerably in recent years, the protection of the existence and functional capability of the old taxi business model in Germany as such could no longer justify the above statutory rules which distinguish a rental car service from a taxi service.
The Court of Justice of the European Union (CJEU) replied in the judgment that Uber had failed to establish that the circumstances had indeed changed so that the underlying policy rationale for distinguishing taxi from rental car services lost its legitimacy.
The court also held that the Germany statutory regulations on rental cars are in line with the freedom of services guaranteed in article 56 of the Treaty on the Functioning of the EU. It refers to a 2018 decision of the CJEU (Elite Taxi), which had held that traffic services were not covered by article 56, and the Federal Court of Justice held that Uber offered such services over the attacked Uber Black app, because, other than an intermediate operator, which according to the CJEU is not a traffic service, it organises everything so that customers would not order the services were it not for the Uber Black app.
Jens Künzel specialises in all IP-related disputes, including patents, trademarks, designs and copyright. He joined Krieger Mes & Graf v der Groeben in 2000 and has been a partner since 2006. He can be contacted at jens.kuenzel@krieger-mes.de
Krieger Mes & Graf v. der Groeben, Uber, vehicle, unfair competition, Passenger Transport Act, business model, Federal Court of Justice, CJEU, services
