LUXEMBOURG (CN) — A Romanian taxi-hailing app is an information service, not a transportation company, and shouldn’t have been fined for not seeking regulatory approval, the EU’s highest court held Thursday.
Because it is not an integral part of the taxi market, the Star Taxi app is an information society service under European Union law, the European Court of Justice ruled.
“Such a service cannot be regarded as organizing the general operation of the subsequent urban transport service, since the service provider does not select the taxi drivers, fix or collect the fare and, moreover, does not monitor the quality of the vehicles and their drivers, nor the behavior of those drivers,” according to the ruling, which was not immediately available in English.
Operating in 11 Romanian cities, Star Taxi connects taxi drivers and riders. It rocketed to the top of Romania’s app storewhen it was first launched in 2012. Now it fields 50,000 ride requests for some 20,000 taxis per day.
In 2017, the Romanian government passed a law that required transportation service apps to apply for government approval. Star Taxi did not and was fined 4,500 Romanian leu ($1,100). The company contested the fine, arguing it was an information service, not a transportation service, and therefore the law did not apply to it.
After losing its initial case, Star Taxi appealed and the Bucharest Regional Court referred the matter to the Court of Justice. The Luxembourg-based court did not hear oral arguments for the case due to Covid-19 measures. Instead it based its decision on written submissions from each side.
“Contrary to what the municipality of Bucharest maintains, [Star Taxi app] cannot, given its characteristics, be classified as a ‘transport service,’” the court found.
Under the EU’s 2000 E-Commerce Directive, an information society service is defined as “any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.” The directive governs online services in the 27-member political and economic union.
Unlike Uber, the drivers being connected to passengers by Star Taxi are licensed taxi drivers and the app does not set the fares. It also allows users to choose their driver, rather than being assigned one, as Uber does.
The EU high court’s five-judge panel ruled that the authorization required by Romanian law was not permitted under EU law.
“Such an obligation … is not only useless, but is also unrelated to the characteristics of a service that is fully linked to the technical capabilities of smartphones, which make it possible to locate and automatically connect both the taxi drivers and their potential customers without direct human intervention,” the court wrote.
The case now returns to the Romanian court for a final ruling on the fine.
The Court of Justice had previously found that American ride-sharing app Uber was, in fact, a transportation company and not an information service. The judges held that because the Uber app was required to access Uber services and because the Silicon Valley giant set prices and other working conditions, it went beyond an information service.
Housing-sharing website Airbnb, however, is an information service, the court found last year.