A French court fined Uber nearly $1 million for running an illegal taxi service

REUTERS/Gonzalo Fuentes

PARIS (Reuters) - A French court fined Uber Technologies 800,000 euros ($907,000) on Thursday for running an illegal taxi service with non-professional drivers and slapped smaller fines on two of its executives in the first such criminal case in Europe.

The Uber POP service connected clients via a smartphone app with non-professional drivers using their own cars. Uber France suspended the low-cost service last year after the government banned it under pressure from licensed taxi drivers.

A spokesman for Uber said the company and its two managers would appeal against the court ruling.

It was the first time executives from the world's most valuable venture capital-backed startup had gone on trial, although the company has become embroiled in many legal battles as it has expanded to 60 countries since its founding in 2009.

In Frankfurt, a court upheld Germany's ban on Uber POP on Thursday, rejecting the company's appeal against a ruling by a lower court which set stiff fines for any violations of local transport laws.

The Paris criminal court ordered California-based Uber to pay 400,000 euros, with the other half of the fine suspended. It also found Pierre-Dimitri Gore-Coty, director for Europe, Middle East and Africa, and Thibaud Simphal, the company's manager in France, guilty of deceptive commercial practices and being accomplices in operating an illegal transportation service and violating privacy laws.

Gore-Coty was fined 30,000 euros and Simphal 20,000 euros. In each case half of the fine was suspended.

REUTERS/Gonzalo Fuentes

"Durable disruption"

The court said in its ruling that UberPOP had caused a "durable disruption" of the transport sector, provoking violent protests by taxi drivers that had disturbed public order.

The court did not follow the prosecutor's recommendation that the managers be banned from running a company in France. They had faced a possible maximum sentence of five years in jail and a 1.5 million euro fine.

"We stopped Uber POP last summer and we are still disappointed by this judgment," an Uber spokesperson said. "It has no impact on Uber's activity in France today. The app connects 12,000 professional drivers with 1.5 million clients."

Another French court fined Uber 150,000 euros for deception last year for advertisingUber POP as a car-sharing service. French social security authorities have taken legal action against the company for failing to pay employer contributions in 2012 and 2013.Uber denies the charge.

The Uber spokesman noted that the European Commission had just published guidelines that support such innovative services.

The Commission, Europe's top business regulator, said this month that EU member states should only ban "sharing economy" services like Uber and home-rental site Airbnb as a last resort.

Uber POP has also been declared illegal by courts in Italy and Spain, while appeals are pending in Belgium and the Netherlands.

The company's problems in Europe have led it to shift its focus to its service staffed by professional drivers in black sedans, which has grown rapidly in France, Uber's second biggest market in Europe just behind Britain. The company had a turnover of about 6 million euros in France in 2014 and made a 500,000 euro profit, its legal officer told the court.

The European Union's executive is also preparing to challenge a 2014 French law on taxi services and chauffeured cars following a complaint by Uber. The so-called Thevenoud law requires chauffeured cars to return to a base between fares, restricts their use of software to find customers in the street and bans unlicensed services, among other measures.

The Commission has not yet formally launched infringement proceedings against France over the law, but sources familiar with the case told Reuters last month that a challenge was in the works.

A lawyer for two taxi drivers' unions, Jean-Paul Levy, hailed the ruling as "a landmark decision since the court stigmatized Uber's methods as running counter to economic and public order".

($1 = 0.8817 euros)

(Reporting by Chine Labbe; Writing by Paul Taylor; Editing by Dominic Evans and Gareth Jones)