To regulate or not to regulate: This question becomes relevant for the sharing economy after last week’s European Parliament resolution calling for clear EU guidelines on the collaborative economy. The resolution is a response to the European Commission’s Communication on “A European agenda for the collaborative economy” from June 2016 which took a light or even non-regulation approach regarding this particular business model. The European Parliament is concerned that the Commission’s Communication did not provide sufficient clarity or harmonization on how EU law applies to the various types of platform business models in order to fill regulatory gaps in the area of employment and social security.
However, the text of the resolution makes clear that the Parliament generally views the sharing economy as a positive development: “the collaborative economy generates new and interesting entrepreneurial opportunities, jobs and growth, and frequently plays an important role in making the economic system not only more efficient, but also socially and environmentally sustainable, allowing for a better allocation of resources and assets that are otherwise under-used, and thus contributing to the transition towards a circular economy“.
Companies active in the sharing economy should take particular notice of the following recommendations of the European Parliament addressing the need for legal clarity and the “risk of fragmentation of the single market”. These points lay out what could be a work plan for the European Commission to think about future regulation of the sharing economy:
- Market Access: market access requirements for collaborative platforms and service providers must be necessary, justified and proportionate, as well as simple and clear. Effective criteria to distinguish between “peers” (e.g. individual citizens providing services on an occasional basis) and “professionals” are needed, with general principles at EU level and thresholds at national level (e.g. based on income). The text suggests that peer providers should be subject to lighter legal requirements.
- Consumer Protection: occasional service providers should comply with consumer protection rules, on the same or on a comparable basis as professional service providers. Consumers should be informed about the rules applicable to each transaction and their rights. Collaborative platforms should put in place effective systems for complaints and for settling disputes. For many occasional sharing economy service providers this suggestion could significantly impact the way they offer their services. Sharing economy platforms would need to consider how to assist their users which only occasionally offer services in complying with such potential requirements.
- Direct and Intermediary Liability: the EU Commission should further clarify the collaborative platforms’ liability as quickly as possible. The Parliament particularly identified the lack of legal certainty regarding the question of whether a platform provides only an online service or in fact the underlying service (e.g. transport services).
- Labor Law and Workers’ Rights: the resolution underlines the paramount importance of safeguarding workers’ rights in the collaborative services, including the right of workers to organise in unions, the right of collective bargaining and action, fair working conditions and adequate legal and social protection. One tangible action item the Parliament demands is that workers should also be able to transfer and accumulate users’ electronic ratings and reviews from one platform to another as these ratings “constitute their digital market value”. The resolution calls on the Commission and the Member States to pay special attention to undeclared work and “bogus self-employment” in this sector.
- Tax: the Parliament suggests that similar tax obligations should be applied to businesses providing comparable services, whether in the traditional economy or in the collaborative economy. Hence, the resolution advocates for innovative solutions to improve tax compliance and calls on platforms to collaborate to this end.
Who should pay particular attention to these latest developments in Europe? The resolution expresses particular concerns regarding the accommodation, transport and energy sectors. For ride-sharing platforms and accommodation platform operators which disrupted the hotel sector, this will not come as a surprise. The focus on energy is a new development. Sharing economy in this area allows consumers, producers, individuals and communities to engage in decentralised phases of the renewable energy cycle. This includes self-production and self-consumption, storage and distribution of energy. In this way, the collaborative economy can play a role in achieving the climate and energy objectives of the EU.
We expect that the Commission will review and consider the European Parliament’s call for action in the light of its on-going Digital Single Market efforts. Further steps could follow in the coming months. The resolution is a reminder for businesses to raise their concerns with European regulation not only with the Commission, but also with its co-legislators, i.e. the European Parliament and the European Council which represents the Member States.
As many sharing economy platforms operate globally, they should also make sure to track regulatory developments at an international level and not only in Europe. For instance, in the U.S. the Federal Trade Commission (FTC) in November 2016 published a report on which is based on more than 2,000 comments the FTC received in response to a workshop.
The Parliament’s press release on the resolution is available here.