Legislative Observatory: Uber's Law

1.DEFINITION

Article 4, item X, of Law 12,587, of 2012, is now in force with the following wording, included by Law No. 13640, of 2018:

Article 4 For the purposes of this Law, it is considered:

(...)

X - individual private passenger transport: paid passenger transport service, not open to the public, for individual or shared trips requested exclusively by users previously registered in applications or other network communication platforms

The analysis of the legal text allows to identify four essential elements in regulated transport:

I) must be remunerated. It is interesting to avoid confusion with other types of applications based on the notion of hitchhiking, in which users reciprocally enjoy the car of others, sharing only fuel costs;

II) not open to the public. Thus, the driver is not allowed to serve people who wave in public places. It is an interesting measure to distinguish such workers from taxi drivers;

III) the trips can be carried out individually or in a shared way. It is relevant determination, since it allows the variation of the form of provision of services. In addition to the usual way of traveling, it is possible that unknown people jointly enjoy the service provided if they are traveling to nearby locations (such as Uber Pool, for example);

IV) requirement of previous registration in application or other platforms. It is a measure adopted by the legislator under the justification of raising the degree of safety for both the driver and the users of this type of transport service.

2.COMPETENCE AND GUIDELINES FOR MUNICIPALITY AND DF

Article 11-A of Law 12,587, of 2012, is now in force with the following wording, included by Law No. 13640, of 2018:

Art. 11-A. It is exclusively the municipalities and the Federal District that regulate and supervise the individual private passenger transportation service provided for in item X of art. 4 of this Law within their territories.

Single paragraph. In the regulation and supervision of the individual private passenger transport service, the Municipalities and the Federal District shall observe the following guidelines, with a view to efficiency, effectiveness, safety and effectiveness in the provision of the service:

I - effective collection of municipal taxes due for the provision of the service;

II - requirement for the purchase of Personal Accident Insurance for Passengers (APP) and Compulsory Personal Injury Insurance caused by Land Vehicle Vehicles (DPVAT);

III - requirement of registration of the driver as an individual taxpayer of the National Social Security Institute (INSS), under the terms of item h of item V of art. 11 of Law nº 8.213, of July 24, 1991

The legislator assigned the municipalities and the Federal District the competence to detail federal regulation and oversee the provision of transportation service by application. This option is compatible with the federative principle that shapes the national legal structure, according to article 1, caput, of the 1988 Constitution, allowing local law to establish conditions adapted to the respective peculiarities. It should also be noted that it is possible for abuses by the municipal or district legislator to be stipulated by excessively detailed or costly requirements which could ultimately render the provision of this type of transport service uneconomic or economically uninteresting.

3. PERSONAL DRIVER CONDITIONS

Article 11-B of Law 12,587, of 2012, establishes the following, as amended by Law 13640, of 2018:

Art. 11-B. The individual private passenger transportation service provided for in item X of art. 4 of this Law, in Municipalities that opt ​​for their regulation, only the driver will be allowed to fulfill the following conditions:

I - have a National Qualification Card in category B or higher that contains the information of which they are engaged in paid activity;

II - drive a vehicle that meets the maximum age requirements and the characteristics required by the transit authority and the municipal public authority and the Federal District;

III - issue and maintain the Vehicle Registration and Licensing Certificate (CRLV);

IV - present negative certificate of criminal record.

Single paragraph. The operation of remunerated individual private passenger services without complying with the requirements of this Law and the regulation of the municipal public authority and the Federal District shall characterize illegal passenger transportation. "

The federal legislation stipulated four personal conditions to the driver, otherwise the transportation would be considered illegal:

a) have CNH in category B or higher. It is an essential requirement for the worker to be able to guide the vehicle with expertise. It is an obvious element for the exercise of the transport activity under study.

b) drive vehicle with characteristics required by the municipality or Federal District. In this respect, the federal legislature seems to have made a mistake, because it could have detailed a little more, leaving less space for municipal or district regulation. By using the word "drive", it did not require the application-driven driver to be the owner of the vehicle. It is correct, in our view, to allow someone to rent a vehicle in order to exercise the economic activity under study, but since this situation has not been made explicit, the local legislator is theoretically allowed to demand from the worker the property of the vehicle to perform the transport. Although this can be discussed judicially, the field for legal insecurity is broad. The same observation applies to the expression "required characteristics". For example, there is nothing to prevent the local legislator from imposing the need for any external mark on the driver's vehicle by application, among other measures, in order to make the provision of this type of service more expensive or even impossible.

c) issue and maintain the CRLV. As in the case of the CNH, it is an essential bureaucratic condition for the circulation of any vehicle.

d) present a negative certificate of criminal record. This is a salutary measure adopted by the federal legislature, which produces, as a practical effect, greater safety for users regarding the conduct of the driver. It does not particularly burden the driver and has the potential to make the activity more attractive to the consumer market.

4. LACUNAS

As mentioned elsewhere, even though federal regulation of the application transport has been assessed as reasonably adequate, as it respected the federative principle, did not excessively burden the driver and increased the level of user safety, there appears to have been excessive caution on the part of the legislator to dealing with some topics, which may cause market doubts or practical problems at the moment of regulation at the municipal or district level.

The first doubt arises that municipal or district power may prohibit individual private passenger transportation by application. It does not seem to us that such a situation causes a great stir, since it is the exclusive responsibility of the Union, as Article 22 (XI) of the Constitution of the Republic, to legislate on transit and transportation. Therefore, if such activity is allowed under federal law, the local legislator may not enforce it. It concerns only the excessively broad field left to the municipalities and the Federal District, a fact that can lead to the practical impracticability of transportation by application.

Another quite common question alludes to the effect of non-regulation at the local level of transport by application. In the face of federal regulation, the municipal and district regulations are merely supplementary, whose absence does not have the effect of impeding the practice of transportation by application, observing the determination of article 5, item XIII, of the Major Text, which states that " exercise of any work, profession or profession, having regard to the professional qualifications established by law ". As the outlines are already outlined in federal law, the action of the local legislator is not an essential condition for the activity of drivers per application.

Finally, due to the wide regulatory space left to the municipal legislature and the Federal District, nothing would prevent, in principle, the requirement of special license plate in motor vehicles by application or the local limitation of cars or professionals in that activity. Obviously, such restrictions could be challenged judicially on the basis of the provisions of the Constitution of the Republic on the social values ​​of work and free enterprise (Article 1, IV) and free competition (Article 170, IV), but the legal uncertainty resulting from the manifestation of local power would be very deleterious from the economic and market point of view.

5. POLITICAL QUESTION

Draft Law no. 5587/2016 was presented to the Chamber of Deputies on June 15, 2016 by the Federal Deputy Carlos Zarattini (PT of.), Luiz Carlos Ramos (PR Rio de Janeiro), Renata Abreu (PODEMOS - SP). Osmar Serraglio (PP of Paraná), Laudivio Alvarenga Carvalho (PODEMOS - MG) and Ronei Tanios Nemer (PP - Federal District). Its approval occurred only at the end of March this year, more than 20 months after its initial submission.

The path taken by the bill, according to legislation and rules of the federal legislative power, includes the passage, and consequent approval, in several commissions, among them a special Commission for the specific purpose of analyzing this project. This detailed path can be consulted in its entirety on the website of the Chamber of Deputies [1].

We highlight some important points of analysis. The sending of a bill to regulate individual private remunerated transport fits into the classic dual-function logic of the integrative dynamics of state functioning: regulating and legitimizing (JOBERT, 2004). The emergence of new forms of action (be they political, social or economic) ends up entering the sphere of attention and regulation of public power. In this specific case, through the action of the federal legislative power.

The emergence of the privately-owned private payload application service, the most well-known of which is UBER, spread rapidly (not only in Brazil) and also had rapid acceptance and demand from users. Its emergence and growth has created a conflict of interest between at least two groups: the taxi drivers on the one hand and the drivers and private individual private transportation companies on the other. There were confusions in almost every major Brazilian city until it came to the conclusion that there was no return to that fact. The continuity, success and growth of the applications made those involved mobilize and try to gain political support for regulatory resolutions that were favorable to them. Finally, it should be noted that the support of the population seems to have played a decisive role in making regulatory decisions less harmful to the workers and users of the applications.

6. EVALUATION OF LEGISLATION UNDER THE PERSPECTIVE OF ECONOMIC FREEDOM

The project originally presented was disastrous from the point of view of economic freedom, because it required: [2]: specific authorization of the place of service, red plate and that the driver owned the vehicle (in the original wording: "[...] ] it is the responsibility of the Municipalities and the Federal District to regulate and supervise the service ", the vehicle must meet" ... the characteristics required by the transit authority and by the municipal authorities and the Federal District "and the CRLV [3] be issued by the "Municipality of the rendering of the service, obligatorily in its name, as owner, trustor or lessee, with registration and registration of the vehicle in the rent category).

Thus, the original formulation faced economic freedom by attempting to maintain an artificially established degree of monopoly, to the benefit of the owners of licenses, by generating a series of barriers to the entry of new competitors. Furthermore, it is not possible to say that the main beneficiary group is the group of taxi drivers, since many of them end up "providing services" to the license holders. The granting of permits by municipalities, in turn, does not follow the logic of the laws of supply and demand, making it possible for owners of this documentation and their heirs to receive privileges. In this context, an important pressure group was created, which won from the public power several advantages, such as tax benefits and authorization to transit in exclusive bus lanes.

Legal barriers to entry discourage competition and negatively affect consumers in terms of service quality and price / availability ratio. As the prices of taxi services do not observe the market laws, as they are "tabulated", a series of distortions arise. Among these distortions, it can be emphasized that the existence of a remuneration based on a previously established combination between mileage and taxiing time can create disincentives for taxi drivers to work in conditions that increase their costs and risks (eg rainy days, increase the possibility of accidents), decreasing supply at times of higher demand, as Oliveira and Machado (2017) [4] point out.

In addition, regulatory restrictions create disincentives to innovation and, when approved, stimulate other corporatist pressures, as Peixoto (2018) [5] warned. It should be remembered that the same kind of technology that allowed taxis to be triggered by applications - reducing taxi drivers' downtime and their dependence on taxis and hubs - was the one that enabled the emergence of privately- such as Uber, Cabify and 99. Such technology reduces informational costs by enabling callers and service providers to find themselves more easily, increasing the degree of efficiency in the market. In addition, this type of platform, when working with dynamic prices, creates incentives to offer services, at a time when conditions are not as favorable, such as rainy days and commemorative dates, enabling more users.

On the other hand, the applications of remunerated transport of passengers allowed a greater supply, reducing the price and increasing the quality and variety of the services provided. Data released by Uber accounted for 500,000 drivers and 17 million users registered only by that company [6]. At the same time, there are already academic studies, such as Oliveira and Machado (2017), pointing out that there were no significant impacts on the hourly remuneration of taxi drivers in Brazil, suggesting that the services of the applications added new consumers of urban transport services.

Thus, the adoption of a very restrictive legislation on the remunerated transportation of passengers would favor the rent seeking activity of a specific group of interest, to the detriment of the dispersed group of consumers and a significant number of workers who found in the activity opportunities for work and remuneration, which mitigated the situation experienced by many during one of the worst crises in Brazil. Fortunately, the legislation passed reduced many of the barriers that could make the activity unfeasible. However, the text approved still causes non-negligible damage to economic freedom. In addition to the already pointed legal risk and the possibility of unfeasible requirements, which may emerge in different locations, there is the problem of transaction costs, especially for companies that offer individual private passenger transportation applications, as the legislation leaves the regulation under the responsibility of the municipalities (and Federal District), causing them to adapt to different regulatory requirements.

CONCLUSION

As seen, the regulation of individual private passenger transportation, established by Law 13.640, of 2018, outlines the limits for the performance of drivers and regulatory bodies (municipalities and the Federal District). It is understood that the loopholes left by the federal legislator are worrying, allowing the local regulation to be so restricted that it could possibly impede the effective exercise of this type of transport activity.

The problem of regulation does not seem to have been totally solved, since the detailing of the rules is what, in fact, will dictate the real working conditions of the application drivers. Only the edition of the municipal laws and the Federal District will allow an accurate analysis regarding the greater or lesser ease of action of the professionals of this type of transport that both dynamized the life of a large part of the society and provided a source of income to people who lost their job in the course of the country's last economic crisis. It will be necessary to wait some more time to verify whether the provisions of the Constitution of the Republic of 1988 on the valorisation of work and free enterprise, freedom of work and free competition will be fully effective in pursuit of a fundamental objective set out in Article 3, subsection I, of the Major Text: the construction of a free, fair and united society.