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France Says It Will Ban Uber’s Low-Cost Service in New Year France Says It Will Ban Uber’s Low-Cost Service in New Year
(about 3 hours later)
PARIS — Just days after Uber survived a lawsuit here brought by taxi operators, the French government said on Monday that the American company’s low-cost ride-sharing service would be banned in the new year. PARIS — When you call up Uber, the popular ride-booking service, through its smartphone application, various levels of rides show up, from budget commuter cars to premium black sedans.
With Paris taxis threatening to create traffic chaos on Monday with a go-slow action to protest the ride-booking company, an Interior Ministry spokesman said that Uber’s low-cost service, UberPop, would be prohibited in France as of Jan. 1. It is the lower-cost service, called UberPop in Europe, that is increasingly in the cross hairs of regulators and taxi drivers from London to Madrid.
Parisian taxi associations had brought the case against Uber, accusing it of unfair competition. But Pierre-Henry Brandet, the Interior Ministry spokesman, told the news channel BFM TV that the Paris court’s decision on Friday in the case, which allows the company to continue operating its UberPop service in the French capital, did not affect his decision to use a new transportation regulation, known as the Thévenoud Law, to ban the service. Only days after Uber dodged a potential ban in Paris, the French government on Monday indicated that the company’s low-cost service could now be outlawed nationwide as of Jan. 1.
He also noted that in October, another French court “had well demonstrated the illegal nature of the service.” In that case, Uber was fined 100,000 euros, or about $124,000, for deceptive marketing, but it has continued to operate while it appeals the ruling. The potential ban — Uber says that it will challenge any legal ruling to block its services — has put the spotlight on UberPop, which has been attracting criticism across Europe and elsewhere that Uber does not comply with local licensing laws. It also follows steps by policy makers from Amsterdam to Delhi to ban the ride-booking company as not complying with local laws.
The October decision “is exactly in line” with the government’s thinking, Mr. Brandet said, which calls for “better regulating the profession to avoid unfair competition.” The low-cost service, which allows any approved driver with a car and a proprietary Uber device to pick up passengers, is similar to the UberX product offered in the United States. Neither service requires drivers to have specific licenses demanded of traditional taxi drivers.
Those who operate such services, he said, could face two years in prison and fines of up to €300,000. But critics contend that the service represents unfair competition for other taxi operators, and falls afoul of many licensing rules across Europe. That has led cities across Europe, including Brussels and Berlin, to outlaw the budget car service.
A spokeswoman for Uber said on Monday that “Uber is part of the solution, not part of the problem,” and added that the company was in contact with policy makers in France. “Currently, those who use UberPop are not protected in case of an accident,” Pierre-Henry Brandet, the French Interior Ministry spokesman, told the French news channel BFM TV, on Monday. “So not only is it illegal to offer the service, but for the consumer, it’s a real danger.”
And, in an apparent snub to the legal wrangling, Uber Paris posted a message on Twitter on Monday that said, “demand is very strong this morning, have a good week everyone.” Uber does not break out revenue figures for its different services, though in France — one of the company’s largest markets — roughly 40 percent, or 200,000 people, use the low-cost option — where fares can run more than a third below standard taxi rates
So it goes for one of the world’s fastest growing and most disruptive technology companies. The Paris court’s decision on Friday, in a lawsuit in which taxi operators had accused Uber of unfair competition, was a rare spot of good news in a week in which Uber services were banned in the Netherlands, Spain and Thailand. In New Delhi, the Indian capital, the service was outlawed after a passenger accused an Uber driver of rape. The company says that its low-cost service has proved popular with users throughout Europe, and that existing taxi associations are fighting hard to outlaw it because they do not want the competition in an industry whose rules have not changed for decades.
In Australia on Monday, as the police surrounded a cafe in Sydney where an armed individual was holding hostages, Uber began raising its rates. The move, which the company calls surge pricing, is governed by an algorithm and kicks in when demand for rides in an area spikes. Many people who were stranded in the area were asked to pay roughly four times the normal rate, according to complaints on social media. “Consumers are adopting UberPop very quickly,” said Pierre-Dimitri Gore-Coty, Uber’s regional general manager for Western Europe, adding that in cities like Brussels, the low-cost service is the only product that the company offers. “Traditional taxi drivers have always had a lot of power. Every time governments have tried to modernize the industry, it has proved problematic.”
​Roméo Pestana, president of the French Taxi Association, said government officials had reached out to unions over the weekend to reassure them of their support, moves that helped reduce the turnout for the traffic slowdown on Monday. But Mr. Pestana said it was not clear that the new transportation regulation cited by Mr. Brandet could be used successfully to suppress Uber, since it left open some room for the service to claim that its rights of entrepreneurship were being harmed. Uber’s other ride-booking services, including those involving traditional taxis and luxury sedans that require chauffeur licenses, charge more than UberPop. Rivals, including Lyft, which is currently available only in the United States, also offer low-cost ride-booking services, though global regulatory attention has so far primarily focused on Uber’s activities.
Nor, with just two weeks left in the year, have all the elements of the law been completed. That fact figured in the legal decision on Friday, in which the Paris court, though partly siding with Uber’s opponents, said it could not apply legal remedies because crucial elements of the law have not yet been completed. Uber is facing a string of global problems, not just in Europe. In India, one of the company’s black sedan drivers was accused of raping a passenger. And in Australia, Uber began raising its rates on Monday just as the police surrounded a cafe in Sydney where an armed man was holding hostages. The move, which Uber calls surge pricing, is governed by an algorithm and kicks in when demand for rides in an area spikes. Many people who were stranded in the area were asked to pay roughly four times the normal rate, according to complaints on social media, though Uber quickly capped how much drivers could charge passengers.
The ministry did not immediately respond to a request for comment. The legality of Uber’s low-cost service lies at the heart of the most recent dispute in France. Parisian taxi associations staged a go-slow strike on Monday in protest of the American company, which is valued at $40 billion.
The Thévenoud Law would require all drivers who chauffeur paying passengers to have a license, obtainable after 250 hours of training, and to have appropriate insurance, just as with normal taxis. UberPop does not currently meet the licensing requirement, which has led to officials’ and opponents’ accusing it of operating illegally. While a Paris judge ruled last week that Uber’s budget service could continue operating here, Mr. Brandet, the Interior Ministry spokesman, noted that a French criminal court in October had fined the company $124,000 for deceptive marketing, saying that Uber was operating a taxi service, rather than a ride-sharing program. Uber is being allowed to continue operating as it appeals that decision.
Mr. Brandet on Monday did not address the apparent split inside the French government over the challenge posed by Uber. Emmanuel Macron, the economy minister, said last week that Uber “should not be banned in Paris,” and that “you have to be disruptive.” The October decision “is exactly in line” with the government’s thinking, Mr. Brandet said, which calls for “better regulating the profession to avoid unfair competition.” Those who operate such services, he said, could face two years in prison and fines of up to $370,000.
Through a smartphone app, UberPop makes it possible for any approved driver with a car and a proprietary Uber device to pick up passengers. The company describes the service as “ride-sharing,” though its opponents argue that it is operating what is a de facto for-profit taxi service. Introduced to Paris in February, it has been a big hit, with fares that can run more than a third below standard rates, partly because it escapes taxes and social security charges. To adapt to the challenge posed by Uber and similar services, the French government passed new legislation called the Thévenoud Law. It would require all drivers who chauffeur paying passengers — including Uber drivers — to have a license, obtainable after 250 hours of training, and to have appropriate insurance. UberPop does not currently meet the licensing requirement, which has led to officials’ and opponents’ accusations of illegal operation.
While the opposition of entrenched taxi operators is driven mainly by fears for their livelihoods, Mr. Brandet pointed to what may be an Achilles’ heel for Uber. But Roméo Pestana, president of the French Taxi Association, said it was not clear whether the Thévenoud Law could be used successfully to outlaw Uber, since it left open some room for the service to claim that its rights of entrepreneurship were being harmed.
“Currently, those who use UberPop are not protected in case of an accident,” he added. “So not only is it illegal to offer the service, but for the consumer, it’s a real danger.” Nor, with just two weeks left in the year, have crucial elements of the law been settled. That fact figured in the legal decision on Friday, in which the Paris court, though partly siding with Uber’s opponents, said it could not apply legal remedies against Uber for that reason. It also said any challenges should be heard by a criminal court.
For its part, Uber has sought to play down concerns. On its French driver recruiting website, it assures applicants that they do not need any insurance beyond what is standard for their vehicles. All UberPop trips are covered by commercial liability insurance with a $5 million per accident maximum, it says, that covers any damage or injuries caused by the driver. Uber has sought to play down safety concerns about its low-cost service.
On its French driver recruiting website, it assures applicants that they do not need any insurance beyond what is standard for their vehicles. All UberPop trips are covered by commercial liability insurance with a $5 million per accident maximum, it says, which covers any damage or injuries caused by the driver.
“Of course, we take seriously any comments from French officials,” said Mr. Gore-Coty of Uber, who added that UberPop would still be available in France after Jan. 1. “But this law is extremely fragile. It’s being challenged all over the place.”
And while some in France have called for the outright banning of Uber’s services, other lawmakers have thrown their support behind the company and the wider so-called sharing economy, which allows people to rent out spare rooms or earn extra cash by chauffeuring others around town.
Talking at a tech conference in Paris last week, Emmanuel Macron, the French economy minister, sided with Uber, saying that the company should not be banned in Paris.
“You have to be disruptive,” he added.