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The Bensalem Case: How the CJEU Will Effectively Decide on More or Less Digital Single Market

· April 5, 2018

The creation of a Digital Single Market (DSM) has rightly been set as a policy priority by European policymakers. But when it comes to the question of how to create a functioning DSM, most people working in policy would most likely first think of the various legislative initiatives that the Commission released in the last years. Proposals tackling geo-blocking, copyright, audiovisual media services and telecom rules are among the more obvious examples.

While this regulatory, ‘top-down’ approach usually gets most headlines, one should not neglect the importance of a mechanism that tries to ensure that online activities are not unduly hampered by national measures: a legal notification requirement that requires Member States to notify draft laws to the European Commission. You can view it as the flipside of the Commission’s regulatory powers as it would indeed be problematic if European-level efforts to create a functioning DSM were undermined by national measures.

The general principle of the notification requirement is simple: Member States must communicate to the Commission any draft technical regulation that relates to the taking-up and pursuit of information society services prior to their adoption. This ‘bottom-up’ procedure allows the Commission to check draft proposals against their compatibility with existing EU laws, analyse whether they are justified and proportionate, and to send feedback to Member States if there are concerns. To ensure more transparency, other Member States also have the possibility to comment.

On 10 April the Court of Justice of the EU (CJEU) will de facto rule over the effectiveness of this notification requirement in the so-called Bensalem case. The court will deliver a judgment in the context of a preliminary reference procedure which allows national judges to ask for guidance on the interpretation of EU law before deciding the case before them. This referral stems from a French national court in which a taxi driver, Nabil Bensalem, brought a case against Uber France. The focal point of this case is a French law provision, article L. 3124-13 of the French Transportation code, which is part of the so-called Thévenoud Law. This provision made the intermediation of unlicensed transport services a criminal offence under French law. The national court seeks clarification on whether the French legislator should have pre-notified the Thévenoud Law to the European Commission prior to its adoption.

Attentive readers will remember that back in December 2017 the CJEU handed down a judgment in the Elite Taxi case where it held that Uber’s peer-to-peer service, UberPOP (now largely shut down), is a service in the field of transport. Because the notification requirement relates to regulations targeting information society services, many may feel like the Bensalem case has already been decided: France was not obliged to notify the Thévenoud Law as Uber’s peer-to-peer services are to be classified as transport services rather than information society services.

Legal proceedings, however, are rarely simple and the Bensalem case is no exception. Despite the ruling in Elite Taxi, the CJEU may well decide that the relevant provision in French law is a technical regulation which should have been subject to notification because it affects the provision of information society services. Such reasoning would not even be far-fetched because technical regulations must be notified independently of the overall qualification of a given service. This means that even if the Court considers that UberPOP is, legally speaking, a service in the field of transport, Member States cannot pass any technical rules affecting Uber’s ability to provide its services without prior notification. The relevant Directive establishing the notification requirement does not exclude the transport sector as such from its scope.

That is particularly important to bear in mind since in Elite Taxi the CJEU explicitly recognized that UberPOP’s online intermediation service, i.e. connecting a non-professional driver with a person who wishes to make an urban journey, meets all the criteria for classification as an information society service. In summary, it ultimately decided that UberPOP should fall within the transport sector because the transport service would not exist without the online intermediation (para. 39 of Elite Taxi judgment). That, however, should not deflect from the finding that certain elements or parts of Uber’s activity are information society services. Laws like France’s Thévenoud Law should hence be notified to the European Commission, particularly when the motivation behind them is to explicitly target a mobile application.

The importance of this case is not so much about UberPOP — as the Court has already made up its mind on its legal qualification in Elite Taxi it goes much beyond a single company. First, it is about the scope of EU law and the Commission’s effective oversight powers. The notification procedure is a process allowing the Commission to engage in constructive dialogue with Member States when concerns are identified. Second, it is the often undervalued but critically important flipside to the Commission’s regulatory powers. Restrictive national measures that make it more difficult for online innovators of all sizes to grow their businesses cross-border call for closer scrutiny to make sure the DSM does not remain a political ambition but a reality for both companies and consumers. Third, Member States should not be able to escape Commission oversight only because they think online companies are something other than online companies (rather than ‘shapeshifting ducks’). What if a Member State decided to a pass a law tomorrow that would prohibit a service like, for example, BlaBlaCar without any clear public interest justification? Effective Commission oversight would be rather useful in these kind of situations.

In this way, the CJEU’s upcoming judgment in Bensalem will effectively decide over a more national or a more European regime for online innovators — and that is equal to more or less DSM.

European Union

DisCo is dedicated to examining technology and policy at a global scale.  Developments in the European Union play a considerable role in shaping both European and global technology markets.  EU regulations related to copyright, competition, privacy, innovation, and trade all affect the international development of technology and tech markets.

Innovation

New technologies are constantly emerging that promise to change our lives for the better. These disruptive technologies give us an increase in choice, make technologies more accessible, make things more affordable, and give consumers a voice. And the pace of innovation has only quickened in recent years, as the Internet has enabled a wave of new, inter-connected devices that have benefited consumers around the world, seemingly in all aspects of their lives. Preserving an innovation-friendly market is, therefore, tantamount not only to businesses but society at large.