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Office of Competition and Consumer Protection

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Uber - Statement of UOKiK's position

< previous | next > 05.05.2016

In the context of the on-going public debate on the benefits but also potential threats to competition and consumers posed by online platforms on the passenger services market, UOKiK would like to present the following.

Like other competition and consumer protection authorities around the world, UOKiK is closely monitoring and analysing the effects of the emergence on the market of online platforms including those facilitating contact between drivers and passengers, such as Uber.

UOKiK's view is that the monitoring carried out so far does not give reasons for opening proceedings in this case with regard to protection of consumer interests or competition.

Established in 2009, Uber is the creator of a mobile application used to order vehicle transport services by connecting passengers with drivers that provide transportation services. The firm operates worldwide and has a presence in many cities and countries. In Poland, Uber services are available in Warsaw (since August 2014), in Cracow (since April 2015), Gdansk, Gdynia and Sopot region (since June 2015), Poznan (since November 2015) and Wroc³aw (since November 2015). As of February 2016, drivers cooperating with Uber have been required to show proof that they have registered as businesses.

The nature of the service

Uber differs from other similar applications on the market primarily due to the fact that it is not connected to a taxi service. Other applications offer transportation services provided by a specific number of taxi firms at the prices set by those firms. Also, Uber has agreements with drivers, who are not required to hold a taxi passenger service licence. The fare is not calculated using a meter but is based on the actual distance travelled and the time of the journey, which are measured using GPS receivers in mobile devices. There is no automatic driver-passenger allocation system; customers choose drivers after reviewing the driver’s type of vehicle and reading the driver reviews posted by other customers. Uber therefore uses modern information technology: meters have been replaced by smartphone applications, and licensing by social networking and transparent system of review of quality of service.

Uber makes available and operates an electronic platform via which a driver and customer can get in contact and via which payment can be made, while the driver only provides a transportation service. This means that Uber’s liability is correlated to an intermediary service (use of the telephone application and processing of payment) while the drivers are liable for the transportation service, rendering it similar to services provided by other intermediaries such as hotel booking platforms, private apartment rentals, or private sales websites.

The emergence on the market of this kind of services, called “sharing economy” is due to rapidly changing technology and expectations on the part of consumers for various kinds of services to be provided online. According to estimates, the “sharing economy” generated estimated sales of $26 bn in 2013 and this will most likely exceed USD $100 bn in the near future. The number of taxi licenses in Poland at the end of 2014 amounted to 61,300 out of which 10,500 were issued for Warsaw, around 4 thousand for Cracow and 2,500 for Gdańsk. Uber does not offer comparable data, however, the company reports that it has received over 40,000 submissions of persons willing to provide transport services within the framework of its network.

In Poland there is also a distinct increase in the value of services provided to consumers online, and there is no doubt that significant changes on the market will follow due to the increased competition. While beneficial to consumers, this new disruptive competition is a challenge for incumbents. In such circumstances, it is understandable that some voices expect UOKiK to investigate if competition and consumer protection rules are being infringed.

In response to such expectations, in 2015 UOKiK increased monitoring of the passenger transportation service market and legal and economic analysis of the way it functions in Poland and in other jurisdictions.

UOKiK considers Uber’s main competitive advantage to be the use of modern information technology, which on the one hand allows consumers access to functionalities that traditional taxi services do not provide, and on the other lowers the costs of the core service due to more efficient use of a fleet of vehicles.  In this way Uber puts competitive pressure on the traditional taxi service market. An analogy can be drawn between Uber’s expansion and the rise in popularity of taxi firms in Polish cities at the end of the twentieth century.

At the same time, it must be stressed that the innovative nature of Uber cannot be categorized as an activity intended to eliminate competition. The basic technology used by Uber is not patent protected and therefore rival firms can use this business model and modify it further, thereby benefiting the development of competition and thereby consumers. This is confirmed by the availability of rival applications similar to Uber in Poland and other countries.

Also, the type of service that Uber offers might not be the optimal solution for every consumer as it does not guarantee certain features such as anonymity of the passenger or the option of paying by cash, which might be important for some passengers. 

Other concerns with respect to Uber centre around the question of protection of passengers’ rights, such as protection of their personal data and their safety. UOKiK concurs with the view that passenger safety is a fundamental issue in passenger transportation services.  At the moment drivers providing services of this kind are required by law to hold the relevant documents and licences, specifically a certificate of no criminal record, roadworthiness certificate for the vehicle, third-party insurance, and a taxi driver’s licence. 

UOKiK has ascertained that the requirements for drivers who cooperate with Uber are, among other things, that they be at least 21 years of age and have held a driving licence for at least a year. Uber carries out checks on criminal records, penalty points (track record with regard to past traffic violations) and insurance. A car may not be more than 10 years old. Any incurred damages are paid from the driver’s insurance policy.

The question of whether these safeguards are adequate needs to be analysed also by other state agencies responsible for safety in passenger transportation. From UOKiK’s point of view the principal issue in this regard is whether the consumer is made sufficiently aware that use of services via the Uber platform is not the same as a taxi service. Data available on the company’s website does not appear to be misleading for consumers as to the nature of Uber’s activity.  In the Terms of Use on that website, a clear distinction is made as to the policies concerning liability of Uber and of drivers, and Uber stipulates that it does not provide transportation services and neither is it a carrier. It also stipulates that it is not party to an agreement for provision of transportation services (this agreement is concluded between the consumer and the driver).

Liability for transportation services which are ordered using the application is therefore borne by the driver providing such services. Uber is liable towards consumers however for problems arising due to use of Uber’s website or the application. It seems consumers who make use of Uber’s intermediary service therefore should be aware that they will not receive a service provided by licensed taxi drivers. Consumers cannot be deemed to be misled, therefore, as to the qualifications that drivers within the Uber system have to have and the requirements they have to meet.  

Information about the price of the service

It needs to be pointed out that the obligations such as use of a meter, displaying information about fares on the vehicle, and compliance with maximum price limits, are intended to protect passengers from dishonest drivers.  In UOKiK’s view, Uber does not provide a lower level of protection against abuses of this nature as the fare is calculated according to a transparent system of rates and objective parameters. Uber’s price tariff is given in a comprehensible way. The company’s website gives information about the price tariff for selected town or city; in the case of Warsaw: “base fare of PLN 5 + PLN 0.30 per minute + PLN 1.40  per kilometre, minimum fare PLN 5, cancellation fee PLN 10”. On the company’s website and in the application, there is an “estimated fare option” (upon typing in the collection point and destination) for example for Warsaw.  Uber stipulates that estimated fares may vary depending on the amount of traffic, weather, and other factors. The estimated cost does not include fixed fees, discounts, or special offers. Routes displayed are only examples and might not reflect the routes on which the estimated cost is based. 

Complaint procedure

Another important issue is the complaint handling procedure. In this regard, in UOKiK’s view Uber’s activities should not lead to a decline in the standards in force. According to information provided directly by the company,  it has the appropriate back office support needed for efficient review of consumer cases regarding the transportation services provided. UOKiK has ascertained that Uber has a comprehensible complaint procedure in which complaints can be submitted via the application, over the telephone, and by e-mail.  It is also important to note that from the moment Uber commenced operations in Poland until now UOKiK has not received any consumer-related complaints about Uber, nor has it received any information suggesting that there is any improper handling of consumer claims by this company. In view of the above, at the moment we do not have any information being grounds for UOKiK to take action concerning practices infringing collective consumer interests.

Competitive environment

In the discussion on competition from Uber the issue of taxes also arises. It has been suggested that drivers who work via the Uber platform do not pay social security contributions or income tax. Questions have also been asked about whether Uber should pay taxes in Poland. In UOKiK’s opinion these issues need to be looked at from a regulatory point of view, also taking into account the need to ensure a level playing field. It is worth to mention the following position of the Ministry of Finance[1], which has stated that "Personal income generated by providing transportation services using the application is subject to personal income tax according to the rules laid down in the Personal Income Tax Act of 26 July 1991".

Summary

As it has been highlighted in the government’s Competition and Consumer Protection Policy (2015), the main goal of competition protection is to ensure it can flourish to increase economic efficiency, innovation and as a result consumer welfare.

In UOKiK’s view Uber’s entry on local passenger transportation service markets in Poland contributes to the development of competition on these markets and has a positive impact on consumers. For consumers, emergence of a new carrier means wider choice, while for other market players it presents a challenge for them to raise quality and innovativeness of their services.

This does not exclude that the development of this and other platforms might require adjustments in the regulatory environment with regard to safety, personal data protection, and equal treatment with regard to taxes. Nevertheless, any regulatory changes in these areas would have to be a carefully considered and be proportional to the scale of the problems identified. In general they should be conducive to growth of innovative services that consumers expect and avoid solutions that would grant unjustified protection to long established competitors.

Since the type of services provided by Uber and other undertakings operating on the market of online platforms are of a dynamic nature, UOKiK will continue to actively monitor their market activity to ensure compliance with the consumer protection and competition law. In October 2015, as a result of UOKiK's proceedings regarding the functioning of accommodation online booking system, four OTAs operating in Poland voluntarily abandoned the use of wide MFN clauses indicated as anti-competitive[2].

Warsaw, 5 May 2016.  

 

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