The Frankfurt Regional Court has issued a nationwide ban against Uber ride-hailing service UberPop, declaring its business model illegal.
UberPop is a service operated by Uber that connects users of its smartphone app with private drivers who offer rides in their own cars for fees that are substantially lower than regular taxi fares. Mediating rides with private drivers who don't have the required licenses is illegal, though, the court ruled on Wednesday.
Uber should in principle put a halt to the service immediately, a court spokesman said, adding that if it does not, it can be fined up to €250,000 (about US$265,000) for every violation.
Uber can appeal the ruling and meanwhile, the complainant in the case, Taxi Deutschland, needs to post a €400,000 security deposit. The money is meant to compensate Uber for lost business in case it wins an appeal. Taxi Deutschland will post the deposit as soon as possible, a spokeswoman said in an email.
Taxi Deutschland welcomed the decision, saying it will help assure safe rides for consumers. Taxi Deutschland, a union that also offers a taxi app, said that Uber should waive its appeal option.
It is unlikely that will happen though. Uber said in an email that it will probably file an appeal, but first, it will wait for the written reasoning for the judgment to be released, which usually happens a couple of weeks after the oral verdict.
Uber thinks the ban is a fundamental infringement of its right to establish and provide a service under European law, it said, adding that therefore it has lodged a complaint against Germany with the European Commission.
Meanwhile, the company will keep operating its other taxi services in the country. UberPop is positioned as a lower-cost alternative to other services from the company that use professional drivers. The company said it is also working on an alternative, low-cost ride-hailing service developed specifically to fit the court's interpretation of existing regulations in Germany.
This time around, Uber did not say it would just keep operating UberPop and defy the court order, which was what it did when it was temporarily banned from operating UberPop in Germany in September last year. (In that case, though, the Frankfurt court that issued the ruling quickly backtracked, lifting the ban after a few weeks.)
Uber typically seems to ignore rulings whenever a European court or regulatory authority deems UberPop illegal. In the Netherlands for instance, Uber has kept operating the service despite fines of €10,000 for every violation, with a maximum of €100,000.
So far, 22 UberPop drivers have been arrested in the Netherlands, which means the €100,000 threshold has been reached, a spokeswoman for the Dutch traffic inspection authority said. Uber so far has paid €10,000, she added. UberPop drivers have also been fined, she said. None of these actions have put a halt to UberPop in the country and meanwhile, its drivers in Amsterdam have been threatened by masked men wearing brass knuckles and wielding hammers, local media reported earlier this week.
UberPop faces similar problems in other countries. It was banned in France as of Jan. 1 and earlier, it was also banned in Brussels, where Uber also keeps flouting the ban, leading to more regulatory threats.
While Brussels is looking for a way to include UberPop in its local taxi regulations, authorities there raided the company's offices last Thursday as part of an investigation, Belgian media reported. On Monday, French authorities raided Uber's Paris offices, also as part of an investigation into UberPop, according to local media reports.
Loek is Amsterdam Correspondent and covers online privacy, intellectual property, online payment issues as well as EU technology policy and regulation for the IDG News Service. Follow him on Twitter at @loekessers or email tips and comments to firstname.lastname@example.org
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.