What has a Spanish Court said about BlaBlaCar?
On 2nd February 2017, Mercantile Court no. 2 of Madrid handed down judgement in the judicial proceedings opened following the suit filed by CONFEBUS against Comuto Iberia S.L. and Comuto S.A. (companies belonging to the BlaBlaCar platform), with the claim that BlaBlaCar committed unfair competition against the members of CONFEBUS, who transport regular travellers by coach.
It is a judgement that has raised great expectation in the field of collaborative economy, as it has established to what extent a pure collaborative economy platform (in which services are provided peer to peer, without the platform intervening in the object of the underlying contract) provides the information society electronic service, such as an online platform, or also provides, instead of such, the underlying physical service (of transport in this case), in which case, if it does so against the regulations in force, it might be committing unfair competition on the market with regard to that underlying service.
The judgement reaches the conclusion that the companies owning the BlaBlaCar platform do not commit any unfair competition whatsoever in the transport sector as BlaBlaCar does not provide actual transport services, but rather information society electronic services, as the online platform it is and, thus, due to not breaching the transport regulations, it does not infringe Article 15 of Act 3/1991, of 10th January, on Unfair Competition (that “considers it unfair to prevail on the market through a competitive advantage acquired by breach of the laws”, to which end the advantage must be significant).
To reach that conclusion, the judge begins by expounding the grounds of law of his judgement with a striking, extensive referral to the importance of the independence of judges and magistrates as an essential part of the independence of the judicial power. There is a noteworthy initial reference by the Judge to the Digestum, on quoting that: “the rule transcribed remains fully in force in the juridical order and, in order for it to remain unalterable, it is absolutely necessary for there to be and independent judicial power”. Not in vain one must remember at this point how, during the formalities of these juridical proceedings, many news items were published in the press against the activity by BlaBlaCar, some of them even containing paraphrased declarations y political officers, such as that we were able to discuss in our post on the penalties levied on BlaBlaCar.
After this preliminary matter, the Judge set aside both the procedural defects in the suit, as well as the lack of importance of the participatory relationship between the companies Comuto Iberia S.L. and Comuto S.A., as neither performs activities that are contrary to the [unfair] competition legislation. It is then when the Judge evaluates the underlying matter, concentrating on the following matters:
1. Juridical nature of the activity by BlaBlaCar: intermediation
With regard to the juridical nature of the activity by BlaBlaCar, the judgement is clear:
- BlaBlaCar is “a virtual platform from which potential travellers, or those who wish to lower their travel costs, may reach an agreement, in which case it intervenes by identifying the people, not to provide the travel or pay the expenses, but rather to allow the parties to reach an agreement, according to certain rules that are clearly published on its web page to do so with its intervention.”
- BlaBlaCar is “a platform that may be joined by any person who registers on the page www.BlaBlaCar.es, where they input their personal data, age, telephone, etc., and after having input that data, the origin and destination of the journey is stated, also configuring the volunteers to go on such journeys.”
- A highly interesting paragraph is the one that states: “Everyone agrees that travel options may be sought by home grown means, by advertising on the Internet, within universities, or even on a supermarket bulletin board. The platform perfects the system so it generates an enormous volume of users and providers, much beyond a craft system, as due to its fame and the advertising it provides, everybody who wants to lower travel costs, or who wishes to travel by private car, may access such in an infinitely more effective way than if performed by mechanical or computer advertisement. No friction would be caused up to that point”, recognises the Judge, who moreover goes beyond this to affirm that:
- BlaBlaCar in addition to being an intermediary in the contact, is also the party that sets the rules regarding the people who organise it, the format in which it should be performed, the price that should be paid, who receives the money and pays it and even who profits from a pre-set fee established in its rules of contact.”
Definitively, what the Judge recognises is that BlaBlaCar provides an intermediation activity, that scarcely differs from that which could be provided in a more primitive way. The only factor that changes is that, due to it being performed electronically, much more people are reached. This refers to the scalability of collaboration platforms (with high initial costs and very low variable costs for each new user), and also their nature as network economies (the more participants there are on a platform, the more value each new participant has).
On reaching this point, one must remember that this same juridical nature was that assigned to Airbnb, a collaborative platform in the short let accommodation sector, in the Judgement of 29th November 2016 by Contentious-Administrative Court no. 11 of Barcelona, by stating that its work was “solely that of providing an open digital space for communication for which a commission is charged”, as we were able to emphasise in our post on that judgement that confirms the legality of the action by AIRBNB.
This is recorded – very precisely and correctly – by Professor Isabel Rodríguez Martínez (1):
“The intermediation service provided by collaborative platforms consists of providing different offering and receiving users an electronic system organised through computer applications, that integrates a set of services, among them of communication and information, developed based on mobile and geolocation tools and technologies, the purpose of which is to offer the best service or produce deals demanded by the applicant user, by automated search and subsequent matching.”
“The service configured thus constitutes a true intermediation service for facilitation of electronic contracting between users – offers and receivers – of goods or services accessed by the platform. It is, definitively, a mediation service between two parties who are potentially interested in entering into a contract, the underlying contract.”
“The object of the contract entered into between the platform and its users has the purpose of intermediation in contracting the underlying service, thus allowing the users to access the platform and post their offers and demands for different underlying services and delivery of goods or money.”
Before continuing with the underlying matter considered, one must note two details that call one’s attention in juridical terms: (i) the fact that in its allegations BlaBlaCar specifies the actual mediation service, on stating that it “charges a remuneration, but not for public transport services, not even for the mediation, but rather for control and management of the platform”, and (ii) the affirmation by the Judge, stating that BlaBlaCar intervenes by “identifying people, not to travel or to pay the expenses, but rather to allow one and another to reach an agreement according to certain rules”, when all the platform does is facilitate one and another being able to reach an agreement, if appropriate, but not intervening directly in the agreement reached.
2. BlaBlaCar does not provide transport services and has no labour relation with the user-drivers.
As to the underlying matter, and after pointing out that the tax effects are not the object of the process, the Judge concludes that BlaBlaCar does not provide transport services to travellers.
To that end, he emphasises the characteristics of the activity by BlaBlaCar which, in addition to serving to reject the claim that such activities amount to a transport service, is of use to define the actual services by the collaborative platforms:
- The fact that BlaBlaCar places private individuals in contact (with more or less requisites, with control over the payments, with criticism of the persons acting due to delay or quality of other services) is not a transport activity, subject to Act 16/1987, of 30th July, on Land Transport Organisation (LOTT).
- The purpose of the platform is not to organise the transport, but rather “to put private individuals who want to travel together and share certain expenses en route in contact, and to provide quality to the contact service, [BlaBlaCar] has net margins and limits and a format for action”.
- The fact that the platform controls the data provided by the user does not constitute an activity integrated and regulated under the LOTT, but rather, to the contrary, it is an activity inherent to the online platform.
- The fact of the platform identifying the driver and his profile as an ideal person to contact does not imply that it is an activity that allows this to be considered a transport activity.
- Even the judge goes beyond this and emphasises that in such a case there is no labour relation between the platform and the driver, so it may not be included under the transport regulations either, and on the contrary, one may thus conclude that it is part of its operating method as an online platform.
- The fact of the platform limiting the expenses, “requiring, orienting, or however one may wish to define the rule established on its web page”, does not imply that these are prices aimed at profit making and, in the event of some drivers wishing to raise the price, that would be exceptional in nature.
- Direct payment to BlaBlaCar by the user does not constitute a significant element to include the activity among those regulated by transport laws, but would rather – a sensu contrario- form part of its activity as an online platform.
- The fact that monetary compensation may be provided by the platform in the case of imminent cancellation of a trip may not be proof of a transport service either, but the intention being solely that of providing its users security.
- Apart form all the preceding aspects regarding the platform, the judge also defines the users as “private individuals who, at their expense and risk, offer themselves on the platform, seeking people who are interested in the same journey and to pay, not in the sense of paying a fee or for a service, but rather to pay the cost of a journey!”. And in this, the judge emphasises something essential: “it is definitively the concept of payment which defines the matter”.
It is also relevant to cite how the judge emphasises that the law is always behind reality and that such a lack of legislation may generate “doubts concerning which regulation must be applied, but of course the lack of definition cannot be subject to law suits or judicial assistance”.
This paragraph also reminds one of the content of the Judgement of 29th November 2016 by Contentious-Administrative Court number 11 of Barcelona, that confirmed the legality of the action by Airbnb, as in that case, the judge also pointed out that “indeed there is an absence of regulation regarding this new consumer phenomenon (up to present performed occasionally, under residual terms and within highly confined specific scopes) that may not be supplemented by imposing a penalty when ‘industrial’ status is reached”, “not being able to provisionally resolve them by imposing ‘prospective penalties’”, as we also emphasised in our post on that judgement that confirms the legality of the action by AIRBNB.
3. Travel by BlaBlaCar users is private transport
Definitively, the Judge recognises that the underlying matter of the suit concentrated on the declaration of acts of unfair competition due to breach of the regulations on organisation of land transport. However, pursuant to those regulations, travel by BlaBlaCar users would be considered private transport, and “those regulations would not be applicable to it”.
The key lies in the text of Articles 101 LOTT and 156 of Royal Decree 1211/1990, of 28th September, that approves the Regulations on Organisation of Land Transport (ROTT):
Article 101 LOTT
1. Private transport is considered that jointly fulfils the following two requisites:
a) Being dedicated to satisfy the personal or domestic travel needs of the owner of the vehicle and related persons. Under no circumstance, except in the event of per diems or travel expenses being received by the owner, may private transport give rise to direct or indirect monetary remuneration.
b) It being performed in vehicles whose number of seats or cargo capacity does not exceed the limits the regulations establish for such.
Article 156 ROTT
1. Private transport, defined in Article 101 of the LOTT, shall serve the personal needs of the owner of the vehicle and related persons, these being understood to be his relatives or other persons who cohabit or have a relationship or personal or labour relationship of a domestic nature with that person, as well as those transport takes place on the basis of a social relationship of friendship or equivalent.
Thus, in order for it to be considered private transport, it must be understood of use to satisfy the personal or domestic travel needs of the owner of the vehicle and related persons, such including his relatives or other personswho cohabit or have a relationship or personal or labour relationship of a domestic nature with that person, as well as those transport takes place on the basis of a social relationship of friendship or equivalent.
Now the Judge affirms that the equivalence of Article 156 ROTT goes far beyond this and that the “equivalence of friendship perfectly fits that of two people who reach an agreement to travel together”.
To sum up, according to the regulations on organisation of land transport, what is relevant in this case is that BlaBlaCar would concentrate solely and exclusively within the scope of private transport, and the judge understands that the Land Transport Organisation Act (LOTT) may be not be applied to them precisely due to the presence of private transport.
Due to this, in relation to the underlying matter of unfair competition, the Judge understands that the activity by BlaBlaCar is not specifically regulated in the land transport regulations, nor may analogies be applied either, and in order for the activity to be unfair, it should also have caused significant damage, which has not been satisfactorily proven in the judicial proceedings.
4. BlaBlaCar does not provide travel agency services
Another highly relevant moment is when the judge emphasises that one might raise the doubt regarding whether the platform performs an intermediation activity, but pursuant to the LOTT, this must be rejected outright as it cannot be considered a travel agency for the following reasons:
- BlaBlaCar falls within the concept of private transport.
- Travel agency regulation is devolved to the Autonomous Communities and thus the LOTT would not be applicable as its scope is national.
- The intermediation regulations refer to transport of goods, which is not the case.
- The case does not concern a commission agent, because that would require a specific empowerment, which does not arise in this case.
- Nor is it the case of a “transit agent” as this would require a transport intermediary and organiser, and the relevant fact in this case is that “both parties lack professional status”.
5. BlaBlaCar is a collaborative platform that provides information society services. Reference to the European Commission Communication on the collaborative economy.
Throughout the judgement, the judge not only denies that the action by the platform BlaBlaCar is liable to being included in the legal regulation of transport, but rather “constitutes, rather, the activity inherent to the information society under the terms of Act 34/2002”. He states this clearly and decisively.
It is also recorded by Professor Isabel Rodríguez Martínez (1), who states that:
“it is precisely these characteristics – provision of the remote service through electronic means – that lead the intermediation service by electronic contracting to a specific mode: that of providing services by electronic means, included within a category which is that of Information Society Services, recognised by Community Law, now contained in Article 1 of Directive 2015/1535/EC, and under Spanish Law, by Act 34/2002, on Information Society Services (LSSI), that transposed Directive 2000/31/EC”.
Moreover, it was affirmed at that time by the European Commission, in its Communication of 2nd June 2016, titled “A European Agenda for the collaborative economy”, in which it stated:
- That to the extent that collaborative platforms provide a “service normally provided in exchange for remuneration, remotely, by electronic means and on individual request by a service provider”, they offer an information society service.
- That there are cases in which collaborative platforms offer other services, in addition to the information society system, acting as intermediaries between the providers of the underlying services and the users, and in such a case the collaborative platforms may be subject to the specific sectorial regulations, to determine which the European Commission considers the level of control or influence exercised over the collaborative platform by the provider of the services shall be extremely important.
- One must add that auxiliary activities may also be provided with regard to the main information society services offered by the platform as an intermediary between the provider of the underlying services and the users (e.g.: means of payment, insurance coverage, after-sales services, offer of evaluation or classification mechanisms, etc.), without these in themselves constituting a proof of influence and control with regard to the underlying service.
However, the Judge assigns Ground of Law Six of his Judgement to refer to the Communication by the European Commission (that we analysed in our post related to the position of the European Institutions in 2016), in which the European Commission defends the role of collaborative platforms. It is noteworthy that Ground of Law Six just summarises the position of the European Commission, without linking it to everything stated throughout the Judgement, especially when everything the Judge has affirmed throughout his Judgement is in keeping with and a result of that position by the European Commission. Notwithstanding this, it is very easy to link these, as everything affirmed by the Judge leads – straight away – to the conclusion that BlaBlaCar is providing an information society service and that it is a collaborative platform.
Here one must again consider all the points emphasised by the Judge to state it does not constitute a transport service, to configure the concept of information society service provided as a collaborative platform.
6. Limiting provision of services by the collaborative platform BlaBlaCar would go against the public interest, would be unjustified and would be discriminatory.
Moreover, the Judge even considers whether the principle of freedom to provide services (understood to refer to providing the information society service) is absolute or not, and if it is not, to what extent it may be limited in any way. To that end, he considers the principles already stated in Directive 2006/123/EC by the European Parliament and the Council, of 12th December 2006, on services on the domestic market and, in particular, the need to attend to the judgement of proportionality between the measure adopted and the objective of general interest expected of such, as well as the need for that objective to be achieved.
This is where the judge makes one of his most outstanding pronouncements, in which he considers that the platform BlaBlaCar not only is not infringing the public interest, but rather that such interest benefits from development of these new technologies that allow proliferation of new, more competitive markets.
One may thus conclude that even in the hypothetical case of being able to understand that a risk of certain severity exists, at that moment the aforementioned proportionality judgement must be carried out, “which would undoubtedly lead to the conclusion that imposing a limitation in this case, under the terms demanded by the claimant, would be totally unjustified, to the extent of this being considered discriminatory”.
We shall end with this last – brave – pronouncement by the Judge: setting limits for collaborative economy platforms is not only contrary to the public interest and would be unjustified, but would also be discriminatory. That is what was said.
(1) MONTERO PASCUAL, JUAN JOSÉ (Director). “REGULATION OF THE COLLABORATIVE ECONOMY”. Chapter 4 “The electronic mediation service and the obligations of collaborative economy platforms”. Pages 128 and following. Ed. Tirant Lo Blanch. January 2017.
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