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Regulatory barriers must be tackled for sharing economy to succeed in Europe

Sue McLean, Morrison & Foerster | March 1, 2016
European Parliament and European Commission have both released reports highlighting challenges for the sharing economy.

The study highlights concerns around social exclusion which might be created if users don't have a sufficient reputational rating score. It suggests that the EU should create a legal framework on the principles and functioning of reputational rating systems in order to ensure there isn't social exclusion and to boost the trust users have in sharing economy platforms.

Despite regular warning headlines that sharing economy platforms could become dominant and inhibit competition, the study concludes that there is no current evidence for this assertion. It believes that for the time being existing EU competition rules are sufficient to deal with the sharing economy.

The study recommends that EU employment regulations shouldn't be altered to specifically include sharing economy providers. People working for providers should be allowed to remain self-employed and platforms should be enabled (and in some cases, encouraged) to develop their own means of supplying benefits to workers, besides cash remuneration. A remaining issue is whether providers should become employees of platforms. The study recommends that the most appropriate move would be to include sharing economy providers in the scope of general rules applicable to self-employment. The best complimentary approach would be to allow (and potentially encourage) platforms to develop their own benefits options that could compete with insurance products that workers could obtain elsewhere.

Lastly, the study identifies that EU policy changes may also be needed in the following areas:

data protection
manufacturing sectors (e.g., in terms of the automotive sector)
planning (e.g., in terms of transport infrastructure)
intellectual property rules - the study suggests that ongoing reform may be needed to take account of the increased importance of a cross-border hiring model, which may render geo-blocking and related restrictions superfluous

Regulatory barriers are not the only barriers impeding the growth of the sharing economy. The study also identifies challenges, for example, in terms of digital access and skills, and tax.

European Commission Consultation

A day after the ThinkTank study, on 26 January 2016, the European Commission published the initial results of its recent public consultation which covered the sharing economy. These initial results appear to be consistent with the study, in that Commission reported that:

A large majority of businesses and consumers agreed that there are regulatory and other obstacles to the development of the sharing economy in Europe. Uncertainty over the rights and obligations of users and providers are generally considered a key obstacle hampering the sharing economy.
Sharing economy service providers, platforms and public authorities favour more guidance and better information on the application of existing rules as a policy response. Unsurprisingly, 'traditional' service providers that still mainly operate without extensive involvement of online platforms favour new rules for the sharing economy.

 

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