HomeInsightsTaxi apps: Court of Justice of European Union finds that an electronic app service that puts taxi passengers directly in touch with taxi drivers constitutes an Information Society Service where it does not form an integral part of an overall service the principal component of which is the provision of transport

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The Romanian company SC Star Taxi App SRL operates a smartphone, which places users of taxi services directly in touch with taxi drivers. The app allows the user to run a search, which displays a list of taxi drivers available. The customer is then free to choose a particular driver from the list. The company does not forward bookings to taxi drivers and does not set the fare, which is paid directly to the driver at the end of the journey.

In December 2017, the Bucharest Municipal Council adopted a Decision which extended the scope of the obligation to apply for authorisation in relation to “dispatching” in order to cover operators of apps, such as Star Taxi App. Star Taxi App was fined for infringing the new rules.

Star Taxi App issued proceedings against the Council in the Romanian courts seeking annulment of the Council’s 2017 Decision on the basis that its business constituted an Information Society Service to which the exemption from prior authorisation under article 9(1) of the E-Commerce Directive applied.  The Romanian court asked the CJEU whether a service that puts taxi passengers directly in touch with taxi drivers via an electronic app constitutes an “Information Society Service”. If yes, it asked the CJEU to assess the validity of the Romanian Council’s 2017 Decision in the light of the E-Commerce Directive (2000/31/EC).

The CJEU observed that the service offered by Star Taxi App corresponds to the definition of “Information Society Service” in the Directive, as it is provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services. Therefore, it is irrelevant that the service is provided free of charge, since it results in a contract between Star Taxi App, as the provider of the service, and each authorised taxi driver for the provision of services and to payment by the taxi driver of a monthly subscription.

However, according to case law (Case C-390/18 Airbnb Ireland and Case C-434/15 Asociación Profesional Elite Taxi), a service might not fall within the definition of an Information Society Service even if it has the characteristics of that definition. That was particularly the case if the intermediary service forms an integral part of an overall service the principal component of which is a service that falls under another legal classification.

The CJEU noted that the service provided by Star Taxi App is an add-on to a pre-existing organised taxi transport service. In addition, Star Taxi App, as the service provider, does not select the taxi drivers, does not set and collect the fare for the journey and does not have control over the quality of the vehicles and their drivers or their behaviour. It followed that the service could not be regarded as forming an integral part of an overall service, the principal component of which is the provision of transport.

As for whether the Romanian Council’s 2017 Decision complied with EU law, the CJEU first assessed whether it constituted a “technical regulation” under the Information Directive (2015/1535/EU). According to the Information Directive, Member States must immediately notify the Commission of any draft “technical regulation”. National legislation affecting an information society service is classified as a “technical regulation” if it is specifically aimed at information society services and is obligatory to the provision or use of the service in question in a Member State or a large part of a Member State.

Since the 2017 Decision made no mention of information society services and applied to all kinds of “dispatching” services without distinction, whether provided by telephone or app, the CJEU said that it did not constitute a “technical regulation”. Therefore, the notification obligation did not apply.

Further, the CJEU noted that the E-Commerce Directive prohibits Member States from allowing access to, or the provision of, information society services subject to a prior authorisation scheme or any other requirement of equivalent effect. However, the CJEU said, that prohibition does not cover authorisation schemes that do not specifically and exclusively target information society services, as in the case of the 2017 Decision.

The CJEU also noted that the Services Directive (2006/123/EC) allows Member States, under certain conditions, to make access to a service subject to such a scheme. The conditions are: (i) the scheme must not be discriminatory; (ii) it must be justified by an overriding reason relating to the public interest; and (iii) there must not be fewer restrictive measures capable of achieving the same objective.

In that regard, the CJEU said that it was for the referring court to ascertain whether there were overriding reasons relating to the public interest justifying the authorisation scheme for taxi “dispatching” services. However, it said, a scheme where the grant of authorisation was subject to requirements that were technologically unsuited to the service concerned, could not be regarded as an authorisation scheme justified by an overriding reason relating to the public interest.

The Court concluded that:

  1. i) a service that consists of putting taxi passengers directly in touch, by means of an app, with taxi drivers constitutes an “information society service” where that service is not indissociably linked to the taxi transport service, such that it does not form an integral part of that taxi transport service;
  2. ii) local authority legislation that makes the provision of an information society service subject to obtaining prior approval, to which other providers of taxi booking services are already subject, does not constitute a “technical regulation” under the Information Directive;
  • iii) the E-Commerce Directive does not preclude the application, to the provider of an “information society service”, of an authorisation scheme previously applicable to providers of economically equivalent services that do not constitute “information society services”; and
  1. iv) the Services Directive precludes the application of such an authorisation scheme unless it is in line with the criteria set out in the Directive, which is a matter for the referring court to decide.

(Case C-62/19 Star Taxi App SRL v Unitatea Administrativ Teritorială Municipiul Bucureşti prin Primar General and Consiliul General al Municipiului Bucureşti EU:C:2020:980 (3 December 2020) — to read the judgment (in French), click here. To read the press release (in English), click here).