Last month on-demand ride-hailing service Uber faced a ban in Berlin on passenger safety grounds. That ban was suspended days later while the court in question rules on the legality of the move. But Uber is now facing another injunction in the country — this time a district court in Frankfurt has issued a temporary ban against its service which applies nationwide.
The Frankfurt injunction, which was issued late last week, is reported to be enforceable until the start of any hearing appealing the ban — so is very likely to be lifted soon. Update: Uber has confirmed to TechCrunch that it intends to both appeal the injunction and to continue operating in Germany ahead of its appeal (see below for the company’s full statement).
The civil action has been brought by the German taxi industry. At issue is the lack of an official permit for Uber to operate in Germany under its Passenger Transport Act. The court accuses Uber of unfair competition vs regulated taxi industries, given that its undercutting price model, which relies on drivers using their own cars to offer a ride-hailing service, could mean corners are being cut on areas such as insurance.
A report in Spiegel Online notes the Frankfurt injunction carries a penalty fine of €250,000/$330,000 per violation, and the threat of jail time against Uber’s directors.
Dr Arne Hasse, of the Frankfurt court, confirmed the details of the injunction to TechCrunch — noting via email: “The Uber App violates German unfair competition law. In Germany, commercial passanger transport is only allowed with a permission by the local authorities which the Uber drivers don’t have. The injunction was brought by a taxi drivers’ union which also operates a taxi app. A hearing will only take place if Uber applies for it. The injunction is immediately enforceable; Uber can apply for a suspension of the immediately enforceability.”
In a statement provided to the FT, Dieter Schlenker, chairman of taxi companies’ co-operative Taxi Deutschland, accused Uber of disingenuous behaviour, given how well funded the company is. “The Passenger Transport Act regulates the protection of drivers and consumers. That can’t easily be overturned no matter how neoliberal the company. Uber operates with billions in cash from Goldman Sachs and Google, wraps itself in a Startup-Look and sells itself as a New Economy saviour,” he said.
Uber has a $17bn valuation, huge funding muscle and a swathe of big name backers, including the aforementioned Google and Goldman Sachs, fueling its expansion.
In this latest bump in the ride-sharing road, Uber is able to — and doubtless will — object to the Frankfurt injunction and ask for an annulment of the court’s decision. It certainly has the overflowing coffers to lean in to lengthy legal battles. The company filed an objection to the earlier ban in Berlin, and has been able to continue operating there in the legal interim. It has also previously faced a ban in Hamburg, and recently was able to have that overturned.
At the time of writing Uber had not responded to a request for comment but the company told Spiegel Online it will fight the latest injunction in Germany.
We’ll update this story with any statement from the company. Update: Uber provided the following statement to TechCrunch: “Germany is one of the fastest growing markets for Uber in Europe. We will continue to operate in Germany and will appeal the recent lawsuit filed by Taxi Deutschland in Frankfurt. We believe innovation and competition is good for everyone, riders and drivers, everyone wins. You cannot put the brakes on progress. Uber will continue its operations and will offer Uberpop ridesharing services via its app throughout Germany.”
It is unclear whether Uber will cover any fines incurred for drivers breaking the injunction, or whether the drivers themselves will be left to pay any penalties out of their own pocket. We’ve asked Uber for clarification on this point and will update this story with any response.