On 25 May 2015 several Taxi Drivers Association obtained an interim injunction from the Court of Milan (Mr. Marangoni – full Italian text here) restraining, pursuant to unfair competition grounds, Uber from providing, on the Italian market, the “Uber Pop” application which is the digital platform connecting demand for car rides with offerings from private car owners.
First of all, the Court of Milan has noted that Taxi service in Italy is heavily regulated by public laws.
Secondly, the Court stated that Uber Pop is a direct competitor of taxi drivers. In fact, even though Uber Pop is a private transport service (drivers use their own cars), it actually has the same features as a public transport service, such as taxis. Indeed, the drivers are contacted by the users through a phone app and they have to drive the user to the destination they choose. Uber pop may not be considered as a car sharing or a ride sharing: in these cases the car owners aim at sharing the costs of the drive for reaching their personal destination.
Having said that, the Court stated that Uber’s “surge pricing” system (i.e. when drivers are scarce, and demand is high, prices go up), actually allows Uber to apply fares that are much lower than the taxi fares. Uber’s drivers are able to apply the “surge pricing” system because they are not subject to, nor have to comply with, the laws regulating the Taxi service, hence they do not have to bear the expenses required to the owners of a transport license (like taxi drivers), such as costs for installing meters, insurance obligations or purchase of a car exclusively dedicated to third parties’ use, frequent maintenance checks, etc.
According to the Court’s opinion the breach of public laws constitutes an act of unfair competition by means of art. 2598 n. 3 Italian Civil Code if (i) it constitutes the “main and direct cause” of the decrease of a competitor’s advantage or if (ii) a connection can be established between the breach of public law and the competitive advantage reached by a competitor.
In the Court’s view, the lack of authorization and the non-regulated behaviour of Uber Pop’s drivers entail a competition advantage and, therefore, constitutes an act of unfair competition.
With this decision, the Court of Milan confirms a long standing Italian case law according to which a breach of a public law amounts to an act of unfair competition by means of Art. 2598 n. 3 of the Italia Civil Code only if the competitor, by virtue of the breach of law, obtains a competitive advantage that would not be reached but for that breach, hence damaging (subtracting clients to) its competitor (see Supreme Court n. 8012/2004).
The interim injunction has been confirmed by the well-grounded appeal decision (Mrs. Tavassi – full Italian text here) dated 2 July 2015. It must be noted that some consumers’ associations joined the appeal proceedings; the decision highlighted that not all the associations have the same position on Uber’s activity and the Judge seemed to share the position of the association Movimento Consumatori which filed a complaint before the Italian Antitrust Authority.
Gianluca De Cristofaro
Court of Milan, 25 May 2015, Taxi Drivers Association vs. Uber
Court of Milan, 2 July 2015, Taxi Drivers Association – Consumers’ Association vs. Uber