Challenges for the collaborative economy in the context of the EU single market

Thursday 29 June 2017

The European Parliament adopted two own-initiative reports expressing its position on the collaborative economy[i] and online platforms[ii]. In order to keep up with competitors in the US and Asia, MEPs call for clear EU guidelines enabling and facilitating the collaborative economy. However, the ongoing growth of this rather new model has exposed a number of regulatory challenges.

The economic potential of the collaborative economy – a business model that enables peer-to-peer transactions via online platforms – is widely recognised.[iii] Many of its applications, for example car-sharing or food-sharing platforms, have also clear environmental benefits, while stimulating social interaction. By better allocating resources and assets that are otherwise under-used, the model contributes to the transition towards a circular economy.

Bringing down barriers to unlock online opportunities is one of the European Commission’s ten priorities for 2015-2019. Indeed, it is the steer ambition of the European Commission to make the EU’s single market fit for the digital age and to “tear down regulatory walls”.[iv]

Nonetheless, in its communication ‘A European agenda for the collaborative economy’[v], published one year ago, the European Commission already addressed some concerns about the rights and obligations of those taking part in the collaborative economy. As a response to this communication, the European Parliament in turn, adopted two own-initiative reports[vi] on how to deal with this new form of economy in the single market and about the main challenges it poses. 

Fragmentation of the single market

The legislative framework for the collaborative economy differs between and, sometimes, within Member States. This fragmentation creates legal uncertainty and can hinder new platforms to flourish. For example, four EU countries and a number of European cities have banned the taxi-service Uber[vii] while several European cities have imposed restrictions on Airbnb.[viii]

Before setting new harmonising rules however, the European Parliament “emphasises the need to step up enforcement of existing regulation. Many rules, most notably the Services Directive[ix] and the consumer acquis[x], are already applicable to the collaborative economy but more clarity and enforcement is necessary.”

Old vs new: different rules for similar services

Although the collaborative economy has brought greater competition, new and old enterprises should play according to the same rules. Different regulatory regimes for traditional and new models can lead to unfair competition. Therefore, the European Parliament “encourages the Commission to foster a level playing field for competition in comparable services among collaborative platforms and between them and traditional enterprises.”

Likewise, similar taxes should apply to businesses providing comparable services. In other words, an Uber-driver should pay an equal share of taxes as a ‘traditional’ taxi driver. The European Parliament states in its report that “functionally similar tax obligations should be applied to businesses providing comparable services, whether in the traditional economy or in the collaborative economy.”

Peers or professionals?

Blurring lines between the personal and the professional, or between fully employed and casual labour, have raised questions about the status of workers in collaborative platforms. This has important implications because a “peer-to-peer” relationship is different than a “peer-to-business” relationship.

Consumer protection law applies between a trader and a consumer, but in a peer-to-peer scenario, there is no trader. Furthermore, the platform itself is considered as a marketplace, not as a trader. It is thus unclear which role the platform and its users occupy, especially in terms of consumer protection.

The European Parliament “urges the Commission to work together with Member States to provide further guidelines for distinguishing between peers and professionals.” In addition, it calls on the Member States and the Commission “to ensure fair working conditions and adequate legal and social protection for all workers in the collaborative economy, regardless of their status.”

Balancing act

The European Parliament fully supports the Commissions’ ambition to make the single market fit for the digital age.[xi] MEPs stress the importance of regulating the collaborative economy in a way that it is facilitating and enabling rather than restrictive. They firmly call upon Member States to not consider the collaborative economy as a threat.[xii]

At the same time, the growth of online platforms has led to a number of unresolved issues. As José Blanco López, the S&D Group spokesperson for the report on online platforms and the digital single market, said: “Increasing innovation does not mean undercutting our social model or labour rights. If companies are making profit simply by exploiting workers or avoiding social legislation then this must be clamped down on.”[xiii]

The European Commission now has the task of coming up with a proposal on how to deal with this new form of economy in the context of the single market. They face a difficult balancing act between facilitating the collaborative economy on the one hand, and tackling the regulatory challenges on the other hand.



[i] http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2017/2003(INI)

[ii] http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2016/2276(INI)

[iii] http://www.europarl.europa.eu/RegData/etudes/IDAN/2016/595358/IPOL_IDA(2016)595358_EN.pdf

[iv] https://ec.europa.eu/commission/priorities/digital-single-market_en

[v] https://ec.europa.eu/docsroom/documents/16881/attachments/2/translations/en/renditions/native

[vi] http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2017/2003(INI), http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2016/2276(INI),  

[vii] http://www.independent.co.uk/travel/news-and-advice/uber-ban-countries-where-world-taxi-app-europe-taxi-us-states-china-asia-legal-a7707436.html, https://www.theguardian.com/technology/2017/mar/28/uber-to-shut-down-denmark-operation-over-new-taxi-laws, https://www.theverge.com/2017/4/7/15226400/uber-italy-ban-court-ruling, http://fortune.com/2017/06/27/uber-czech-republic/   

[viii] https://www.citylab.com/equity/2016/06/european-cities-crackdown-airbnb/487169/, https://www.theguardian.com/technology/2016/jun/08/berlin-ban-airbnb-short-term-rentals-upheld-city-court 

[ix] http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32006L0123

[x] http://www.eu-consumer-law.org/

[xi] http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P8-TA-2016-0009&language=EN

[xii] http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2017-0271

[xiii] http://www.socialistsanddemocrats.eu/newsroom/online-platforms-we-need-improve-environment-innovation-eu-not-expense-our-social-model

 

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