Collaborative economy: European Commission announces its agenda for the collaborative economy

The Commission recognises that the collaborative economy is growing rapidly throughout Europe and that online platforms (such as those for swapping homes or sharing transport) are leading to more competitive and innovative marketplaces. The commission estimates that collaborative platforms and providers generated revenues in the EU of €28 billion in 2015, with 17% of EU citizens having used services offered by the collaborative economy.

On 2 June 2016, the European Commission published its Communication on the European agenda for the collaborative economy. The Commission recognises that Member States have taken different approaches in regulating collaborative platforms and providers, which has led to considerable uncertainty regarding the collaborative economy, potentially hindering its development. The Communication is intended to provide guidance on how existing EU law, for example consumer, employment and tax legislation, should be applied in the context of the collaborative economy.

What is the collaborative economy?

The Communication defines the collaborative economy as “business models where activities are facilitated by collaborative platforms that create an open marketplace for the temporary usage of goods or services often provided by private individuals … Collaborative economy transactions generally do not involve a change of ownership and can be carried out either on a profit or not-for-profit.”

The Commission identifies three categories within the collaborative economy:

1. service providers who share assets, resources, time and/or skills – for example, individuals offering services on an occasional basis, or professional service providers;
2. users of these services; and
3. intermediaries that connect via an online platforms service providers with users and facilitate transactions between them.

What does the Commission propose to do?

The Communication provides non-binding guidance and policy recommendations “to help ensure the balanced development of the collaborative economy”.  The Commission found that the main areas of concern are market access requirements, consumer protection, liability, labour law and tax.

1.  Market access

The Commission explains that under EU law service providers should only be subject to market access requirements (such as authorisations or licences) where these are strictly necessary to meet public policy objectives, and that platforms should not need such authorisation or licence where they are simply intermediaries. The Communication is explicit in stating that absolute bans should only be a last resort.

The Commission considers that Member States should differentiate between individuals offering occasional services and service providers in a professional capacity, when applying market access requirements. In this regard, the Commission suggests that Member States should establish minimum thresholds above which an activity is undertaken in a professional capacity and should assess existing national legislation to ensure it is still relevant and justified.

2.  Liability

The Commission considers that online platforms are exempt from any liability for storing information on behalf of third parties, such as service providers, where they have only a passive role with no control over the information hosted. In terms of liability for illegal user generated content, the Commission states that Member States cannot oblige platforms to actively monitor or search for illegal activity but that collaborative platforms should undertake voluntary checks on service providers using the platforms, and encourages platforms to take such voluntary action.

3.  Consumer protection

The Communication considers whether EU consumer and market legislation applies to the collaborative economy. The Communication states that Member States should ensure that consumers are protected to a high level against unfair commercial practices, but that disproportionate obligations should not be imposed on private individuals providing occasional services. The Commission notes that EU legislation applies in a B2C environment, where professional service providers must not mislead users of their services, and that individuals providing occasional services will be less likely to qualify as a business/trader for these legislative purposes.

4.  Labour law

The Commission states that EU labour law applies to persons in an employment relationship. In considering when an employment relationship exists, the Commission recognises that employment law is generally an area of national law and within the competence of individual Member States. However, the Communication does specify that, when considering whether persons providing services through a collaborative platform are employees of that platform, Member States should take into account certain criteria, such as whether they act under the direction of the platform, the nature of the work and remuneration.

5.  Tax

The Commission is clear in its Communication that service providers and platforms within the collaborative economy must pay tax, be that personal income tax, corporate tax or VAT. The Commission has recommended that Member States review their taxation legislation with a view to clarifying the application of their tax rules to participants in the collaborative economy.

What now?

To date, EU Member States have adopted different approaches to regulating the collaborative economy. In particular, Uber has faced protests and strikes by taxi drivers in many of the countries where it operates. In the UK, while Transport for London (TfL) proposed rules to “regulate” private hire vehicles such as Uber, the UK Competition and Markets Authority responded strongly criticising the proposed rules. The High Court held in October 2015 that the app is legal in the UK and in January 2016 TfL dropped its proposals.

While the proposals contained in the Commission’s Communication are relatively light touch, the Communication invites Member States “to review and where appropriate revise existing legislation according to this guidance“. This raises questions over the strict regulatory approaches taken to date in some countries, and whether countries such as Spain and France will need to relax their rules.

We will have to watch this space to see how Member States respond to the Communication. The Commission also states that it will continue to monitor developments in the collaborative economy and its regulation.