October 24, 2016

French court fines Uber, execs for illegal taxi service

File photo shows a taxi passing by an advertisement for the Uber car and ride-sharing service that is displayed on a bus stop in Paris

A French court fined Uber Technologies €800,000 on Thursday for running an illegal transport service with non-professional drivers and slapped smaller fines on two of its executives in the first such criminal case in Europe.

The Uber POP service connected clients via a smartphone app with non-professional drivers using their own cars. Uber France suspended the service last year after the government banned it under pressure from licensed taxi drivers.

Uber said it would appeal the court ruling.

It was the first time executives from the world’s most valuable venture-capital backed startup had gone on trial, although the company has become embroiled in many legal battles as it has expanded to 60 countries since its founding in 2009.

In Frankfurt, a court upheld Germany’s ban on Uber POP on Thursday, rejecting the company’s appeal against a ruling by a lower court which set stiff fines for any violations of local transport laws.

The Paris criminal court ordered California-based Uber to pay €400,000, with the other half of the fine suspended. It also found Pierre-Dimitri Gore-Coty, director for Europe, Middle East and Africa, and Thibaud Simphal, the company’s manager in France, guilty of deceptive commercial practices and being accomplices in operating an illegal transportation service.

Gore-Coty was fined €30,000 and Simphal €20,000. In each case half of the fine was suspended.

The court did not follow the prosecutor’s recommendation that they be banned from running a company in France. They had faced a possible maximum sentence of five years in jail and a €1.5m fine.

“We stopped Uber POP last summer and we are still disappointed by this judgment,” an Uber spokesperson said. “The European Commission has just published guidelines that support such services.”

The European Commission, Europe’s top business regulator, said this month that EU member states should only ban “sharing economy” services like Uber and home-rental site Airbnb as a last resort.

Uber POP has also been declared illegal by courts in Italy and Spain, while appeals are pending in Belgium and the Netherlands.

The company’s problems in Europe have led it to shift its focus to its service staffed by professional drivers in black sedans, which has grown rapidly in France and now employs about 10,000 drivers.

The European Commission, Europe’s top business regulator, said this month that EU member states should only ban “sharing economy” services like Uber and Airbnb as a last resort.

The European Union’s executive is also preparing to challenge a 2014 French law on taxi services and chauffeured cars following a complaint by Uber. The so-called Thevenoud law requires chauffeured cars to return to a base between fares, restricts their use of software to find customers in the street and bans unlicensed services, among other measures.

The Commission has not yet formally launched infringement proceedings against France over the law, but sources familiar with the case told Reuters last month that a challenge was in the works.

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