Uber reaches agreement with the Czech government

Uber reaches agreement with the Czech government
Prague taxi drivers have protested about Uber's operations, particularly at the airport.
By bne IntelliNews March 12, 2018

Uber has reached an agreement with the Czech government to standardise its operations in the country following protests organised by taxi drivers. The car hailing company will immediately ask for a trading licence in the Czech Republic, its drivers will have the same or similar licence as taxi drivers, and will register their sales, Prime Minister Andrej Babis (Ano) said after meeting Uber’s representatives.

“Uber has a company here [in Czechia], which is doing only marketing, but business is done from the Netherlands. Therefore, they will ask immediately for a trading licence. We will sign a memorandum of understanding by the end of March, which will also include the obligation for all Uber drivers to have a licence,” Babis said.

Mayoress of Prague Adriana Krnacova (Ano) should deal with increasing the capacity of the system for granting licences, as Uber requested. “And the memorandum will also include that Uber voluntarily agrees to implement the electronic evidence of sales (EET) system. There will be a protocol between the Financial Administration and the company about reporting their sales,” added Babis on March 8.

Babis stepped in at the end of February when he sent a letter to Uber asking the company to comply with the law or to consider terminating its services in Czechia.

For representatives of Uber, these regulations are welcomed. “We take the comments from today's meeting very seriously. We are definitely confronted with tasks that we have to solve, and we believe that further negotiations will follow in the future as we are committed to doing the right thing for thousands of consumers, for drivers, and for Prague,” said Alexei Stakh, Uber general director for the CEE region.

Stakh also added that he wants to co-operate with Czech cities to make the use of cars more efficient. This should help road transport, reduce cars in the streets, lower pollution and reduce the need for parking lots.

“I am glad that they realise they have been acting illegally for four years," said Krnacova. Transport Minister Dan Tok (Ano) said that it is not acceptable that some drivers continue to drive for Uber without a license. “I would like to push them to immediately stop using unlicensed drivers,” he said. Krnacova said unlicensed drivers could be penalised.

A spokeswoman of the Association of Taxi Concessionaires (AKT) said she was sceptical about whether Uber would comply with the agreement and the taxi organisation would be monitoring the situation.

Another group – the Association of the Czech taxi drivers (SCT) – said that Uber and rival car hailing company Taxify should stop their apps until their drivers meet the lawful requirements. “Contractual transport, which [they] want to apply, is outside the law for five years, so it doesn’t exist. Further, only citizens of the Czech Republic can apply for the exam of local geography,” reacted chairman of SCT Petr Polisensky.

Taxi drivers organised several protests in March or February when they slowed down the traffic in Prague. In October 2017, they protested at Vaclav Havel Airport Prague. Violent clashes with Uber drivers have taken place in Prague.

For taxi drivers, Uber is unfair competition since the company’s drivers don’t have to have a license, thus they don’t need more expensive compulsory third-party insurance or a taximeter. Overall, they can provide services for less.

Moreover, Uber is also open for foreign drivers, which is not the case for taxi drivers. Many also challenged the regulations for taxi drivers, who have to pass an exam on their knowledge of local geography in an era of online navigation systems.

However, taxi drivers don’t have a good reputation in Czechia and a lot of people are in favour of Uber. There are cases of taxi drivers massively overcharging foreign customers, bribing police, and acting as a ‘taxi mafia’ in Prague. Their services are also expensive, so especially for younger people, Uber has become the fast, reliable and online choice.

The regulation of Uber comes amidst an effort to regulate also other services of the shared economy. Higher rents and prices of properties especially in Prague are creating the need to regulate Airbnb. According to the Ministry of Industry, there should be a report in the coming months about how to regulate the shared economy.

Uber in Prague is used by 300,000 people, according to the company's information. This is a 60% increase in the number of customers over the previous year, Prague TV reported. The number of active drivers has increased by half to 2,000. Of these, 90% have another source of income.

Uber also experienced a legal fight in the second biggest Czech city Brno. The Brno court ruled in April 2017 that Uber drivers could not provide services without a taxi permit. All cars must be marked as taxis and feature a taximeter, the verdict said. However, in June 2017, a Czech appeals court announced that it had lifted a ban on Uber in Brno.

The company has experienced extremes in reaction to its controversial service in Central & Eastern Europe. The company has been banned in Hungary, but Estonia hopes to be the first country in the world to make it fully legal.