12 October 2016
Uber is currently valued at around USD66bn. However, this meteoric rise has not been without problems, with regulatory hurdles and opposition from those who view Uber as unfair competition, undercutting prices by allowing unlicensed drivers to escape the regulation (to which its competitors are subject).
For example, Transport for London (TfL) has, under pressure from the taxi industry, sought to impose further regulations upon private hire car drivers which includes Uber drivers and vehicles (there is a separate licensing regime for taxis). Some proposals have been dropped, for example requiring a minimum wait of five minutes after booking a ride before pick- up (aimed at preventing private hire cars plying for hire); restricting drivers registering with more than one private hire firm (to prevent drivers of established firms also driving for Uber); and banning ride-sharing. However, English language requirements and a topographical knowledge test for private hire car drivers have been brought in. Further proposals include requiring private hire firms to have a customer service phone number, which Uber do not have, as all communications are through the app.
However, Uber may have found an ally in the Competition and Markets Authority ("CMA"). The CMA recently wrote to Sheffield City Council to warn them that planned changes to their Private Hire Operator and Vehicle Policy would be anti-competitive and hamper the ability of innovative app-based businesses to compete. Last year the CMA cleared a merger between two Sheffield taxi operators in part because it considered the merged firm would face stiff competition from app-based businesses such as Uber.
In objecting to Sheffield’s proposals, the CMA considers that passengers will benefit from innovation and competition and that regulating for passenger protection is acceptable, but not in a way that inhibits competition.
The CMA’s clear message is that Uber (and other innovative platforms) should be allowed to innovate and provide competition to existing taxi and private hire car services. Their approach can be contrasted with that of TfL.
The approach in this case is relevant beyond the passenger transport industry. App-based technology seeking to disrupt established industries is becoming more and more common, but often comes up against 20th century regulation inappropriate for dealing with the new technologies. The CMA's focus on interpretation of what is good for consumer welfare gives a clear indication of its likely approach in other sectors.
If you think your business may be affected by any of the above, or if you have any other questions, please contact:
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0330 222 1902
This briefing is written as a general guide only. It is not intended to contain definitive legal advice which should be sought as appropriate in relation to any particular matter.