Uber Loses Battle in Brussels, Opening Door to Fees

Uber

A major municipality has finally challenged Uber’s impunity to operate what is a taxi service without proper licensing, an issue we addressed in a previous ValueWalk article.

Brussels says “nicht” to transportation firm ferrying passengers without paying tax

The issue of Uber operating without taxi licensing in major metropolitan areas crosses the lucrative operation of highly connected taxi medallion owners.  In Chicago for instance, the taxi medallions are owned by a small group of politically connected operatives who were never shy to flex their political muscle to defend their monopoly – crushing those who advocated free markets.  Then comes Uber, the apparently highly-connected firm, backed by Goldman Sachs, who steps on the toes of local fiefdoms with an immunity the reminds one of Obi-Wan Kenobi in Star Wars hypnotizing local officials to not ask logical questions.  Among those logical questions: how can a company operate a taxi service without a taxi medallion or paying fees?

Uber defied local political muscle… somehow

But it wasn’t the political muscle in Chicago or New York that stood up to Uber.  It was a Brussels court, those softie socialists, who made the absurdly bold decision to rule that a taxi service must have a taxi license to operate in a municipal region.

“We have absolutely nothing against an application like Uber. On the contrary, we would even want to integrate them into the traditional taxi sector,” said Brussels’ Minister of Public Works Brigitte Grouwels in a statement from a spokesman on Tuesday. “However, if you offer paid transport services you should abide by the rules of the sector, otherwise there is unfair competition,” he said. In short: Uber should pay taxes like everyone else and its drivers should have proper licensing and insurance when in operation as a transportation service. Wow, that’s a brave ruling.

The genesis of the Brussels revolt occurred when a taxi company noticed Uber was undercutting taxis by nearly 20%.  The cost of a taxi medallion and various fees and licensing typically exceeds 20% for standard taxi drivers. The benefit Uber had in official government officials allowing the transportation company to operate without licensing found its way back into the consumer’s pocket, if through a less than egalitarian method.



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com