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TfL Refuses to Renew Uber's licence

Gerald Gouriet QC
Charles Holland

Transport for London has today refused to renew the operating licence for Uber London Limited (“ULL”), the UK off-shoot of the global “technology platform” Uber Technologies Inc.

A dual licensing system exists in the capital. Only hackney carriages may stand and ply for hire. Other vehicles, known as private hire vehicles or “minicabs”, have to be booked through a licensed private hire operator, with the booking accepted at a London based operating centre.

ULL was licensed by TfL as a London PHV operator in 2012, and that licence was used by Uber to launch in the capital, “onboarding” PHV drivers and vehicles who could be hired by customers using Uber’s App. Integral to the App’s operation is that the location of drivers and vehicles available for immediate hire is shown by icons on a map displayed on the smartphone of the user.

Uber’s activities in London have been the source of increasing controversy ever since launch. Although initially providing only executive vehicles, the cheaper “UberX” service - typically providing a Toyota Prius with driver - came on stream in short order. Journey prices were generally cheap, so much so that they are commonly believed to be subsidised by Uber to the extent of over 40%. However, at times of high demand, “surge pricing” applied, with customers often not realising the effect of the multiple until receiving an invoice at the end of the journey.

In the 5 years that Uber has been licensed, the number of PHV drivers in London has nearly doubled from 64,000 to 118,000. The London hackney carriage trade has complained that PHVs on the Uber platform were essentially plying for hire (an activity restricted to London’s black cabs). As the model is an “on demand” model, severe congestion occurs around places of high public resort, such as railway stations and airports, and an automated queuing system has given rise to issues with drivers waiting in villages outlying Heathrow. There has also been concern about over-reliance on satnav navigation in the labyrinthine and crowded streets of London, with numerous traffic infringements and accidents being reported. The Metropolitan Police’s taxi and private hire team have criticised Uber for delays and failures in reporting allegations made against drivers.

TfL did not take external legal advice before licensing Uber in 2012, and, as the ramifications of Uber’s launch became apparent, complaints were made about the legality of the model. A TfL internal review in 2014 declared the model lawful, but an issue as to whether the Driver App constituted a “taximeter” (which PHVs are not allowed to be equipped with) ended up being litigated in front of Ouseley J. in 2015, Uber emerging successful.

TfL then decided to consult on the conditions attached to operating licences, with some of those conditions potentially causing Uber difficulties, such as booking confirmations having to be provided at least 5 minutes before the commencement of a journey, compulsory pre-booking facilities, landline telephones to be in place, and smartphone apps not to show vehicles as available for immediate hire. Uber ran a concerted PR campaign against these measures, with 205,000 people signing a petition in opposition, and TfL proceeded on a more watered-down version. It has since emerged that 10 Downing Street intervened in TfL’s review. Despite their relative success, Uber are currently pursuing judicial review proceedings in relation to conditions that require their drivers to satisfy an English test. A decision of Mitting J in March 2017 is now the subject of appeal to the Court of Appeal.

On the same day as Mitting J.’s decision was handed down, The New York Times broke the story of Uber’s “Greyball” programme, a method of identifying regulatory staff using the Customer App and thereby avoiding regulatory activity. Uber initially robustly defended the programme, but after 6 days announced that it would be withdrawn. Greyball was the first in a series of bad-news stories for Uber, with its CEO Travis Kalanick being caught on camera shouting at a driver, and disclosures of a culture of sexual harassment within the company. Ultimately Mr Kalanick resigned as CEO, and a long search for a replacement has only recently finished with the hiring of Dara Khosrowshahi.

ULL’s operating licence came up for renewal in May 2017. Significant objections have been made against renewal, including an objection by the Licensed Taxi Drivers Association (“LTDA”), the largest London Cab drivers trade association. In a surprise decision, made shortly before the general election, TfL renewed the licence for a 4 month period only, stating that it was carrying out further investigations.

Those investigations did not satisfy TfL who have now refused to renew the licence on the basis that it does not consider ULL to be fit and proper to hold a licence. TfL considered Uber’s approach and conducted demonstrated a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications. Those included:

  • its approach to reporting serious criminal offences
  • its approach as to how medical certificates were obtained
  • its approach as to how Enhanced Disclosure and Barring Service checkers were obtained.
  • Its approach to explaining the use of Greyball, software that could be used to block regulatory bodies from gaining full access to its App and preventing officials from undertaking regulatory or law enforcement activities.

This decision is expected to have huge ramifications both nationally and internationally. TfL’s initial decision to license Uber is one that provincial local authorities will have placed a certain amount of reliance on; its revocation may now have the opposite effect.

ULL’s operating licence remains in force pending appeal. There are statutory avenues of appeal to the magistrates and thereafter to the Crown Court. Uber will doubtless be considering whether to go down this route or to seek judicial review. 

Gerald Gouriet QC and Charles Holland of FTB act for the LTDA in relation to its opposition to the renewal of ULL’s operating licence, instructed by John Luckhurst of Michael Demidecki & Co.

Press coverage:

BBC
London Evening Standard
The Times
The Telegraph
The Indepdent
The Guardian