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Driving Disruption: Uber in the High Court

Monday, 21 July 2014

Uber’s smartphone-based pick-up service is just the latest in a line of new businesses that are using technology to disrupt existing markets.

London’s black cab drivers are not going to back down without a fight over their territory though. After Transport for London (TfL) authorised the American business to operate in the capital, a fierce row broke out between TfL, the Licensed Taxi Drivers Association (LTDA) and the Licensed Private Car Hire Association (LPHCA).

TfL issued proceedings in the High Court in June to get a judicial determination on the legality of Uber operating its service. This has now been delayed due to a spate of cases related to the service which are making their way through the magistrates’ courts.

What Lies at the Centre of this Dispute?

Cab drivers and private hire companies are regulated under different pieces of legislation with the former relatively heavily so. In both cases operating licences are required for taxi drivers and private hire companies in order to provide their services to members of the public.

In the case of cab drivers, their licences allow them to use meters in order to calculate charges for their fares and pick passengers up off the street. It is illegal for private car hire companies to use meters and they cannot pick passengers up without their service being booked beforehand at an agreed price.

Smartphone and GPS technology means that private hire bookings can now be made in advance on the side of the street and nearby cars that are free can pick passengers up. Thus, for private hire companies operating large fleets in cities like London, technology has effectively got around the rules that gave black cabs an operating advantage.

Uber, which has been granted a private hire licence, has taken this advantage even further. It operates on a similar basis to other private hire cars except that passengers can book their ride via Uber’s online app which sends the nearest privately owned or other vehicle that has signed up to provide its service. It calculates a fare and charges the customer via their account. The private vehicle owners effectively vetted by Uber to head out to pick up and drop off passengers receive their instructions via Uber’s drivers’ App.

Black cab owners have invoked the law that they operate under to suggest that Uber is operating illegally by using a meter, i.e. its Apps. TfL believes that there is no breach of the taxi meter regulations. The High Court is yet to deliver its verdict.

Good for Customers

While it is understandable that taxi drivers are upset to see their market being threatened by the likes of Uber, it is difficult to see that the law will prevent this type of progress. The convenience and cost benefits to consumers are hard to argue against. It seems that taxis, like other industries, must adapt to survive in the digital age.

For specialist advice regarding compliance with commercial regulations contact Peter Gourri today by email or telephone 0207 611 4848.

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