Brussels puts Hungary in its place in style over Uber battle

‘A European agenda for the collaborative economy’ is the headline of guidance issued by the the Commission today with the aim “to support consumers, businesses and public authorities to engage confidently" in the sharing economy.

The wording clearly suggests that Brussels welcomes if development is carried out via the collaborative economy. Certain sections of the guidance appear to be designed specifically to carry a message for the Hungarian government, criticising its battle with Uber.

EC guidance

The collaborative economy is growing rapidly. As it takes root in the EU, national and local authorities are responding with a patchwork of different regulatory actions. This fragmented approach to new business models creates uncertainty for traditional operators, new services providers and consumers alike and may hamper innovation, job creation and growth. As announced in its Single Market Strategy, the Commission has today issued guidance to Member States to help ensure the balanced development of the collaborative economy.

A competitive European economy requires innovation, be it in the area of products or services. Europe's next unicorn could stem from the collaborative economy. Our role is to encourage a regulatory environment that allows new business models to develop while protecting consumers and ensuring fair taxation and employment conditions

, commented Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness.

“[...] If we allow our Single Market to be fragmented along national or even local lines, Europe as a whole risks losing out. [...]We invite Member States to review their regulation in the light of this guidance and stand ready to support them in this process," added Commissioner El¿bieta Bieñkowska, responsible for Internal Market, Industry, Entrepreneurship and SMEs.

The Communication also details market access requirements, as if it was responding to Hungary’s drive to ban Uber.

The EC said a key question for authorities and market operators alike is whether and if so to what extent, under existing EU law, collaborative platforms and service providers can be subject to market access requirements. These can include business authorisations, licensing obligations, or minimum quality standard requirements (e.g. the size of rooms or the type of cars, insurance or deposit obligations etc.).

"Under EU law, such requirements need to be justified and proportionate, taking account of the specificities of the business model and innovative services concerned, while not favouring one business model over the other."

Service providers should only be obliged to obtain business authorisations or licenses where strictly necessary to meet relevant public interest objectives. Absolute bans of an activity should only be a measure of last resort.

And if it was not clear that they are talking about businesses such as Uber and Airbnb, the text goes on as follows:

Platforms should not be subject to authorisations or licenses where they only act as intermediaries between consumers and those offering the actual service (e.g. transport or accommodation service).

The EC’s guidance hits at what solution it would welcome but this raises questions of interpretability.

"Member States should also differentiate between individual citizens providing services on an occasional basis and providers acting in a professional capacity, for example by establishing thresholds based on the level of activity."

In our mind’s eye appears an image of the “hobby Uber driver" and of a professional cabby (that uses the Uber platform), which would definitely irk taxi companies but depending on this thresholds Uber drivers will not necessarily be happy about this.

Besides market access requirements the EU executive also discusses liability issues.

“Collaborative platforms can be exempted from being held liable for information they store on behalf of those offering a service. They should not be exempted from liability for any services they themselves offer, such as payment services. The Commission encourages collaborative platforms to continue taking voluntary action to fight illegal content online and to increase trust."

As regards consumer protection the EC says Member States “should ensure that consumers enjoy a high level of protection from unfair commercial practices, while not imposing disproportionate obligations on private individuals who only provide services on an occasional basis."

This is an interesting choice of words from the aspect of Uber in Hungary, because consumers complain a lot more about traditional taxis, whereas Uber is much more transparent in terms of the typical abuses (such as unjustifiably long routes and overcharges).

Discussing what qualifies as employment relationship the Commission reminded that labour law mostly falls under national competence, complemented by minimum EU social standards and jurisprudence.

“Member States may wish to consider criteria such as the relation of subordination to the platform, the nature of the work and remuneration when deciding whether someone can be considered as an employee of a platform," it added.

As for the applicable tax rules, the EC stressed that collaborative economy service providers and platforms have to pay taxes, just like other participants in the economy.

Relevant taxes include tax on personal income, corporate income and Value Added Tax.

Member States are encouraged to continue simplifying and clarifying the application of tax rules to the collaborative economy. Collaborative economy platforms should fully cooperate with national authorities to record economic activity and facilitate tax collection.

Recommendations

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• When assessing whether market access requirements applied to the collaborative economy are necessary, justified and proportionate to meet identified and legitimate public interest objectives, Member States should take into account the specific features of collaborative economy business models.
• For the purposes of regulating the activities in question, private individuals offering services via collaborative platforms on a peer-to-peer and occasional basis should not be automatically treated as professional service providers. Establishing (possibly sectorspecific) thresholds under which an economic activity would be considered a nonprofessional peer-to-peer activity may be a suitable way forward.
• Member States are advised to take the opportunity to review, simplify and modernise market access requirements that are generally applicable to market operators. They should aim to relieve operators from unnecessary regulatory burden, regardless of the business model adopted, and to avoid fragmentation of the Single Market.

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• Collaborative platforms are encouraged to continue taking voluntary action to fight illegal content online and to increase trust (for example by helping to ensure the quality of the services offered by providers of underlying services on their platform). Such voluntary measures should not automatically be taken to mean that collaborative platforms that benefit from the exemption from intermediary liability no longer do so.

• In line with EU consumer and marketing rules, Member States are encouraged to seek a balanced approach to ensure that consumers enjoy a high level of protection in particular from unfair commercial practices, while not imposing disproportionate information obligations and other administrative burdens on private individuals who are not traders but who provide services on an occasional basis.
• The effectiveness and use of online trust mechanisms (e.g. quality labels) to increase trust and credibility should be improved to encourage a more confident participation in the collaborative economy.

In order to help people make full use of their potential, increase participation in the labour market and boost competitiveness, while ensuring fair working conditions and adequate and sustainable social protection, Member States should:

• - assess the adequacy of their national employment rules considering the different needs of workers and self-employed people in the digital world as well as the innovative nature of collaborative business models;
• - provide guidance on the applicability of their national employment rules in light of labour patterns in the collaborative economy.

• Member States are encouraged to facilitate and improve tax collection by using the possibilities provided by collaborative platforms, as these already record economic activity.
• Collaborative platforms should take a proactive stance in cooperating with national tax authorities to establish the parameters for an exchange of information about tax obligations, while ensuring compliance with legislation on the protection of personal data and without prejudice to the intermediary liability regime of the e-Commerce Directive.
• Member States are invited to assess their tax rules to create a level playing field for businesses providing the same services. Member States should also continue their simplification efforts, increasing transparency and issuing online guidance on the application of tax rules to collaborative business models.

• Tags:
• Uber,
• taxi,
• airbnb,
• economy,
• european commission,
• sharing economy,
• cab