Bulgaria: Supreme Court shuts down smartphone car service Uber

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The app-based car service Uber has been popular with its customers in Bulgaria’s capital Sofia since 2014, but has provoked massive criticism from registered taxi firms and public authorities. After a ruling by the Supreme Administrative Court, the company was forced to stop its activities. It is now proposing changes to the law that would allow it to resume operations.

Background

The Uber car service began operating in Bulgaria in December 2014. The company, which uses mobile information technology to match passengers with drivers, was popular among the citizens of Bulgaria’s capital Sofia, but provoked massive opposition from taxi drivers and state institutions. On 11 March 2015, the largest taxi trade union organisation Union Taxi announced its plan to protest against Uber’s activity in Sofia (in Bulgarian). The Commission for the Protection of Competition (CPC) then announced a a ban on Uber’s operations (in Bulgarian), citing unfair competition. The date of the ban was brought forward by the Supreme Administrative Court, and on 6 October 2015, the media reported that 

Uber had temporarily stopped operations (in Bulgarian). Uber then launched a petition in support of the service (in Bulgarian), which has already been signed by more than 21,000 people. Reactions in other Member States to Uber have been documented in the Eurofound article Digitalisation and working life: lessons from the Uber cases around Europe.

Union Taxi call for ban on Uber 

In March 2015, taxi drivers warned that they would block Sofia’s roads if state institutions did not act to stop Uber. Union confederation Union Taxi, which represents the National Union of Carriers, the Branch Chamber of Taxi Drivers and Operators and the Association of Taxi Unions, claimed that the services for shared transportation offered by Uber was breaking the law and undercutting authorised taxi firms. Kiril Rizov, the President of Union Taxi, said his organisation’s 5,000 drivers were ready to strike (in Bulgarian). Union Taxi claimed Uber was ‘stealing’ its members’ passengers and causing serious financial loss to what they described as ‘legitimate’ taxi firms. The union complained several times to the CPC, pointing out that Uber has been banned in a number of other countries.

Prompted by the taxi drivers’ opposition, in late February 2015 the National Revenue Agency, the Ministry of the Interior, the Automobile Administration Agency and the Ministry of Transport joined forces to investigate Uber’s activity (in Bulgarian).

The CPC investigated Uber’s operations (in Bulgarian) in April 2015, after receiving an official letter from Sofia Municipality in December 2014. In July 2015, CPC found that two types of passenger service organised by Uber firms had committed offences relating to unfair competition. CPC fined Uber BGN 50,000 (€25,532) and ordered it to suspend its operations (in Bulgarian). CPC also fined the Uber firms an additional BGN 50,000 (€25,532) for failing to provide information requested during the investigation.

Impact on taxi companies

Other online services for taxis – such as TaxiMe and Taxi Maxim – operate in Bulgaria, but they operate in conjunction with legitimate taxi companies. After Uber ceased activity in October, there were media reports that some taxi companies had changed their working style (in Bulgarian), and were attracting new customers by using some of Uber’s practices. Two companies, for example, started offering preliminary fixed taxi rates, telling the customer in advance how much a trip was going to cost.

New legislation means that taxi firms are now obliged to hire drivers with labour contracts, pay social security contributions, declare their turnover and pay tax accordingly. However, it appears that taxi firms that complained about the unfair practices of Uber are now refusing to pay taxes and to give drivers contracts (in Bulgarian).

Trade unions challenge legality of Uber

The Federation of Transport Trade Unions in Bulgaria (STSB) has officially condemned Uber as illegal in Bulgaria because it is not licensed by the Automobile Administration Agency. Neither the company nor its drivers comply with the road transport law and other relevant legislation. Unions also point to unfair competition with licensed taxi companies and drivers who are obliged to regularly renew licences and permits. Uber drivers are reported to avoid paying taxes, and do not provide invoices, receipts or other financial verification. STSB also claims that Uber customers’ safety and security are at risk because the company does not require any evidence about the suitability of drivers, or the roadworthiness of their vehicles. Unlike many other licensed companies, Uber does not provide regular training for its drivers.

Support for Uber

Uber drivers and their clients organised a protest (in Bulgarian) after the service was stopped. They said citizens should be free to choose the way they travel. The protesters do not agree that Uber damages the taxi trade.

According to a recent Gallup International Survey, 77% of Bulgarian respondents said that the ban did not benefit consumers (in Bulgarian). Two thirds said that Uber should continue its work, but perhaps under new rules and regulations. Uber Bulgaria is trying to legalise its activity in Bulgaria by proposing changes to the law.

The problems of poor quality service, undeclared work and the large variety of work organisation within the taxi sector as whole suggest that there is a need to introduce new regulations for all operators, and that there should be an outlet for innovative car services like Uber.

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