Yves here. Unions in Europe have not forgotten how to play hardball. But will it be enough to impede Uber?
By Don Quijones of Spain, the UK, and Mexico, and an editor at Wolf Street. Originally published at Wolf Street
Uber has struck a more conciliatory approach this time, but taxi drivers are not convinced.
War is about to break out once again between Uber and the highly mobilized taxi drivers of one of its most febrile markets, Barcelona. After three years of absence due to regulatory issues as well as the hostile welcome it received from local taxi associations, the ride-share giant announced this week that it was returning to Spain’s second largest city.
This time will be different, it says. “We are changing the way we work. And Barcelona is no exception. We want to work with local agents to help build a mobility model that is more sustainable,” said the company in a statement. The company has long shown a special interest in the Catalan capital because of its tourist influx and potential for business.
Uber marked its Barcelona comeback by placing over 100 advertisements around the city with the tagline, “More than a journey. Barcelona, your Uber has arrived.” In less than 48 hours, around half of the ads had been defaced, with the word “Uber” replaced by the word “taxi.” The company’s logo was also concealed and the image of an Uber vehicle swapped for that of a black-and-yellow Barcelona cab.
That was just the beginning. On Thursday night, an estimated 300 taxis blocked access to the city’s main bus station, Estacio Nord, to prevent the departure and entry of buses belonging to the transport company Alsa Coaches, which has been closely linked to the sale of the VTC licenses that allow ride share drivers to operate in Spain.
Due to loopholes in Spanish law, companies have managed to rack up indecently large profits by buying up batches of these permits from local councils for as little as €32 a piece and then selling them on to ride-share drivers for tens of thousands of euros. In Madrid VTC licenses can sell for as much as €65,000 each. When the Community of Madrid finally cottoned on to the scam, it refused to continue selling the licenses. But the decision was appealed by the same rent-seeking transport companies, and Spain’s Supreme Court predictably ruled in their favor.
Other irregularities and abuses abound in Madrid’s burgeoning ride-share business. In the last year the police conducted 10,128 inspections of passenger transport vehicles with up to nine seats. The infraction rate of the vehicles operating with Uber and Cabify was a staggering 42%. Also, by law there is supposed to be a maximum of just one VTC license for every 30 ride-share vehicles but that number is allegedly on the rise.
Taxi drivers in Barcelona worry that Uber will show the same disregard for the law in Barcelona as they have done in Madrid. A common fear is that the “cockroaches” — as the black cars used by Uber and Cabify drivers are endearingly termed — will once again concentrate their activity in high-wealth areas, which is prohibited in the current Royal Decree on the Regulation of Land Transport.
Uber has struck a more conciliatory approach this time around. “In recent weeks we have spoken with representatives of Catalonia’s regional government, parliamentary groups, competition regulators and also with the Barcelona City Council,” said Juan Galiardo, Uber’s director for Spain. “Our starting point was to explain that we are coming back, that our model is legal, that we want to do things well. There is a market for everyone.”
Many taxi drivers are not convinced. Following the announcement of Uber’s return, Alberto ‘Tito’ Álvarez, spokesperson of Elite Taxi Barcelona, the taxi drivers’ association that organized the boycott of Alsa Coaches, delivered a stark message: “Uber and Cabify drivers, welcome to hell!”
In Madrid tensions between taxi drivers and car-share drivers recently escalated into violence as around 50 ride-share cars were pummelled with stones and showered in acid. Elite Taxi has already warned that it plans to take industrial action against Uber every day next week.
Given the financial pain Elite has already caused Uber, the ride share firm’s management is unlikely to take the threat lightly. Last year the taxi drivers’ association took the global tech giant to the European Court of Justice (ECJ) over its Peer-to-Peer service UberPop, which hooked up nonprofessional, unlicensed drivers with riders. It was a David versus Goliath case, and it was David who came out on top. Not only did the ECJ rule in the taxi firm’s favor but it also declared that Uber was a transportation business, not just a technology platform.
It was a big setback for a firm that spent much of last year mired in corporate scandals and struggling with huge losses. Uber was also recently banned from operating in London after being accused of a string of failures over passenger safety. Undeterred, the firm hopes to win back Transport for London’s approval through a series of talks, while a legal appeal against the ban allows it to keep operating in the UK capital without a licence.
Since the ECJ ruling, the UberPop service has been withdrawn in Spain and several other countries. The ruling will nonetheless force Uber to comply with the bloc’s rules for taxis and other transport companies, meaning the company could face stricter licensing and other requirements.
But ultimately it’s up to each EU Member State to regulate the conditions under which transport services are to be provided, as long as they are “in conformity with the general rules of the treaty on the functioning of the EU.” In Spain the central government, market regulators and legislative branch are largely lined up in Uber’s favor. In April, the Supreme Court could even decide to scrap the current one-license-for-every-30-drivers cap, which would lead to a surge in ride-share services.
That would raise tensions even more. “Everything is really calm now, but the instant Uber sets foot here, it’s going to be a mess,” said Tito Álvarez, spokesman for Elite Taxi. “We cannot control what happens on the streets when their cars start rolling out.” It’s an ominous warning that sounds more like a threat — and one that Uber, in all its worldly hubris, is unlikely to heed. By Don Quijones.
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