This debate has been given attention recently following the decision in the German courts overruling a ban on drivers-for-hire utilising the smartphone application ("app") known as "Uber" which provides users with access to vehicles on a rideshare basis.
The taxicab industry is regulated globally but there appears to be a lacuna in which rideshare systems such as Uber operate and this has provoked the ire of regulators and taxi operators alike. Back in September (for the second time in 2014) taxi drivers in London staged a protest aimed at causing disruption to parts of the capital; at the heart of their anger was Uber.
The background to the German case stems from the ban on Uber operating within Berlin following challenges brought by the Berlin Taxi Association. These were followed up by the German taxi association (Taxi Deutschland) which obtained a nationwide injunction against Uber for failing to obtain relevant licences. The decision was significant because in addition to the injunction, Uber was facing a fine of up to €250,000 per trip (if they lost the ensuing case) and its German based employees were facing criminal liability and up to 6 months’ imprisonment.
The Frankfurt Regional Court overturned the injunction and potential fines and criminal sanctions because the claim made by Taxi Deutschland leading to the injunction, was filed outside of the prescribed time limit - meaning that the validity of the case advanced by Taxi Deutschland was not examined and the court did not have to decide whether or not Uber was legally operating within Germany. Taxi Deutschland has indicated that it intends to appeal this recent decision.
The fall-out of this decision is that Uber is expanding rapidly following the publicity of this decision which has led to the weakening of the market position of traditional taxicab operators and the decision represents a significant blow to that industry in that respect. Whatever the overall outcome in these series of challenges, it seems there is a real demand in the market for alternatives to traditional taxicabs.
The taxicab market is heavily regulated in Germany, much like in the UK and throughout other European markets, in order to protect consumers. Therefore, despite these new technologies exploiting loopholes in regulations and legislation, operators still need to be aware of them in order to provide at least an equivalent (if not higher) standard of service to those prescribed by regulations and to gain trust and success in the market.
Another key message to take from the Uber case is to ensure that all filing deadlines are diarised and met because the cost of failure could be severe.