French Dirigisme At Work: Uber Drivers To Get 2-Years In Prison For Cutting Taxi Rates

From The Wall Street Journal

Uber Technologies Inc.’s regulatory problems deepened Monday when France became the latest country to say it would ban on one of the car-hailing company’s main services while taxis took to the streets to protest the company’s “unfair competition.”

The French government said Uber’s service that uses drivers without professional licenses is “illegal.” Officials said they would move quickly to apply a new transport law that comes into effect on January 1, stiffening penalties for operating such services.

“Passengers still don’t know that it isn’t a legal car service, and drivers don’t understand the risks they’re running, such as fines or the seizure of their vehicles,” said Pierre-Henry Brandet, a spokesman for the French interior ministry.

Organizing a system that puts paying clients in touch with drivers without professional licenses will be punishable by two years in prison and a €300,000 ($373,540) fine, according to the new law cited by officials.

Uber responded that it will continue to operate Uberpop until a judge decides that the new law applies to it. “It’s up to the courts to ban Uberpop,” said Pierre-Dimitri Gore-Coty, Uber’s general manager for Western Europe. “If we’re prosecuted, then we’ll respond.”

The declaration of a French crackdown is a big blow to Uber, which is already facing bans and stiff opposition from incumbent taxi operators in cities across the world.

Uber claims more than half a million users in France and operates in seven cities in here, more than in any other country in Europe. Paris is the first city where Uber launched outside the U.S., and is still the company’s second-largest market in Europe after London.

In Europe alone last week, officials in Spain, the Netherlands, and Brussels all moved toward at least temporary blocks on some Uber services, threatening the expansion of the company, valued at $41 billion. A major bone of contention is the Uberpop service, which offers lower prices than licensed Uber services—something the company says is important to attract new users.

Monday’s announcement from the French government came just days after a commercial court in Paris rejected a request by competing car-service companies to ban Uberpop, because the court said it wasn’t competent to judge or apply the criminal sanctions in the new law. That left the door open for government action.

French officials have pointed to Uber’s strong overall position in France but warned about the risks of using drivers without professional licenses. “You have to protect people,” said French Economy Minister Emmanuel Macron last week. “It doesn’t make sense to have a crazy driver without any license.”

While the court didn’t itself ban Uberpop, it did forbid Uber from advertising certain elements of its services as legal, such as the fact that its cars circle public streets waiting for fares.

Uber argues that provisions of that new law are “discriminatory,” and underlines that elements of the law are already under review. In particular, the Uber has asked for a constitutional review of provisions that ban it from showing the location of available vehicles on a smartphone map, and forbid it from using the exact time and distance of trips to calculate fares.

The company says it has also complained to the European Union that the French law violates EU law and should be invalidated

On Monday morning, taxis protested Uber with the latest in a series of “escargot” operations, slowing traffic to a snail’s pace on the city’s ring road and the highways to its main airports. While the protest was initially intended to denounce the French court decision that declined to block Uberpop, taxis continued to block roads after the government announcement that Uberpop would be banned.

“It isn’t over,” said Salahydin Dahaoui, president of Collectif des Taxis Parisiens, a union of cabdrivers. “We demand that the government crack down on the these illegal taxi services.”

David Stockman's Contra Corner is the only place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked. Subscribe now to receive David Stockman’s latest posts by email each day as well as his model portfolio, Lee Adler’s Daily Data Dive and David’s personally curated insights and analysis from leading contrarian thinkers.