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TECHNOLOGY

Germany Imposes Nationwide Ban on Uber's Car- Hailing Service Company Could Be Fined Up to $328,225 Per Trip

Updated Sept. 2, 2014 12:04 p.m. ET

FRANKFURT—A regional court in Germany has imposed a nationwide ban on one of Uber Technologies Inc.'s car-hailing services, posing a serious challenge to the company's ambitious expansion plans in Europe's largest economy.

The ban on the Uberpop service—which connects passengers with drivers who don't have professional licenses—was imposed last Thursday and came to light Tuesday in a report in German media.

The Frankfurt court said the San Francisco-based ride-sharing company could no longer carry passengers in Germany or face a fine, overruling a decision by a court in Hamburg to let the company continue operations in Hamburg, despite calling it "likely illegal."

This photo taken on April 24 shows the car pick-up service Uber application in Berlin. Agence France- Presse/Getty Images

By N EETH A M AH AD EVAN

Market Talk

Uber's Push For Open German Cab Market Wins Some Supporters Despite Uber's defeat in German court, transportation experts and even German competition advisers support Uber's push for opening up the cab market to other players. "It's time to challenge whether commercial transport of individuals requires such a high level of protection that the government needs to control it, or whether it may be enough to have a decent car and the required permits," says Andreas Knie, a transportation scientist at Innoz. He believes that a car-sharing society where citizens transport each other for payment would help bring unused cars and people with spare time back into business. ([email protected] and [email protected])

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While the German ban doesn't affect Uber's more expensive Uberblack service in Germany, which uses professional drivers, the cheaper Uberpop 'ride-sharing' service has been a major focus of the company's expansion in Europe, particularly with cost-conscious consumers in Germany.

The court said Uber could no longer offer its Uberpop service because the company's network of drivers lack necessary licenses to pick up passengers.

If the ban is violated, the company could be fined up to €250,000 ($328,225) per trip, and Zac de Kievit, an Amsterdam-based Uber director, could face up to six months in jail, according to a court spokesman. Drivers

aren't liable.

Uber said it would appeal the decision.

"We will continue to operate in Germany and will appeal the recent lawsuit filed by Taxi Deutschland in Frankfurt," an Uber spokesperson said.

Last week, an administrative court in Hamburg overturned a ban on several Uber services, but added that Uber presumably infringes the law because its drivers lack a passenger transportation license.

Uber has two active services in Germany: Uberpop and Uberblack. Black offers limousines with chauffeurs while the

cheaper Pop is the peer-to-peer service offered by private drivers, similar to Lyft in the U.S.

Uberpop has run into legal roadblocks in many other European cities, with Brussels and Barcelona declaring it illegal. A ban on Uber in Belgium imposes a €10,000 fine per ride.

The suit against Uber in Germany was brought by Taxi Deutschland, a consortium of taxi companies operating in major cities across Germany.

"The Passenger Transport Act regulates the protection of drivers and consumers. That can't easily be overturned no matter how neoliberal the company," Dieter Schlenker, chairman of Taxi Deutschland, said in a statement.

The decision was also welcomed by various industry groups including the German Association for Taxi and Car Rentals.

"The decision of the Frankfurt judge confirms our interpretation of the law," the association's president, Michael Müller, said.

Germany has strict regulations for new entrants into the taxi market, requiring drivers to get a specialist license and adhere to a set fare structure. Taxi companies and authorities have accused Uber and its drivers of infringing

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these rules, while Germany's Monopoly Commission, an advisory body to the German government, has recommended deregulating the country's taxi market.

The skirmishes in Germany are part of a wider backlash against Uber, often fueled by existing taxi drivers who say they are under more burdensome rules and regulations than Uber drivers. Nevertheless, Uber continued with its plans to

expand in the country, calling it "one of the fastest-growing markets for Uber in Europe."

The app provider started operating in Frankfurt, Düsseldorf and Hamburg in recent weeks after launching in Berlin and Munich last year, wit h plans to expand into Cologne, Stuttgart and possibly other cities.

In the U.K., court challenges to the Uber service brought by the London Taxi Drivers Association are pending but won't be heard until later this year. Meanwhile, Uber recently allowed London's black-cab drivers to use its app, challenging other taxi-hail startups such as Israel's GetTaxi Inc. and London's Hailo Network Ltd.

—Stephan Doerner, Sam Schechner and Lisa Fleisher contributed to this article.

Write to Neetha Mahadevan at [email protected]

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