Do sharing economy subjects compete unfairly with traditional businesses? Case of passenger carriage

Authors

  • Eglė Brinkman

DOI:

https://doi.org/10.7220/2029-4239.27.3

Keywords:

the sharing economy, transportation, Uber, Bolt, unfair competition

Abstract

The sharing economy is a business model in which private individuals share goods or services in open markets created by online collaboration platforms, reducing the costs of identical transactions with traditional companies. The rapid growth of the sharing economy has created the conditions for competition in various business sectors, such as transport, food industry, rental of things, money lending, etc. This article examines the impact of the sharing economy on the traditional taxi service market, with a strong focus on the Uber platform, which is currently the global leader in ride-hailing. The article also aims to find out whether ride-hailing platforms and their users compete unfairly with taxi companies and what influence legal regulation and/or its absence have on the sharing platforms and their operations. To achieve the goal, the concept of sharing economy, unfair competition and ride-hailing service and legal regulation and court practice in Lithuania and foreign countries are discussed. After evaluating them, it was found that both in Lithuania and in other countries of the world, it is challenging for the business of traditional taxis, passenger transport, to compete with sharing platforms due to the lack of legal regulation and operational supervision. This prevents traditional companies from carrying out their activities with equal rights, competing with the participants of the sharing economy. Although the persons providing transportation services are required in many cases to have licences or permits just like the drivers of companies providing taxi services, there is no verification mechanism developed to ensure the protection of the public interest. Sharing platforms do not prevent fraud, i.e. using another person's permission or licence to provide services, thus not ensuring the reliability of service providers. In addition, sharing platforms usually limit their civil liability to a minimum amount of money and are not responsible for damages caused by the illegal actions of the service providers. It has also been established that although ride-hailing platforms are recognized as companies providing transport services and drivers as their employees in various countries of the world, the platforms do not guarantee all the rights of employees, which are mandatory for companies providing taxi services. After evaluating all these differences between platforms offering ride-hailing services and companies providing taxi services, it is important to pay attention to the fact that from an economic point of view, it is much easier for sharing platforms to increase the offer of services. In order to increase the number of taxis, the company needs to buy a car, hire a new driver, ensure that he has all the necessary documents, etc., and on the Uber platform, the number of drivers increases when new users of the platform register on the platform and start providing services. Thus, although the legal regulation in certain areas is changing and tightening the activities of the participants of the sharing economy, the lack of rules is still evident. There is also a lack of an effectively functioning supervision mechanism regarding the licensing of individuals, ensuring consumer rights, etc. It is believed that when improving legal regulation, the possibility of determining the responsibility of sharing platforms for violations of user rights, ensuring the quality of the service, thus protecting the public interest and ensuring the availability of a suitable service to the public, should be considered.

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Published

2023-10-29

How to Cite

Brinkman, E. (2023). Do sharing economy subjects compete unfairly with traditional businesses? Case of passenger carriage. Teisės apžvalga / Law Review, 1(27), 53–76. https://doi.org/10.7220/2029-4239.27.3

Issue

Section

ARTICLES