Berlin has banned car service Uber, which allows users to summon a ride on their smartphone, for not offering drivers and vehicles licensed to carry passengers, or full insurance cover, the German capital said.
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The ban takes immediate effect and Uber risks fines of up to 25,000 euros each time it violates the city's Public Transport Act, Berlin authorities said in a statement.
Uber said on Thursday it would appeal against the decision, accusing Berlin of denying its people choice and mobility.
"As a new entrant we are bringing much-needed competition to a market that hasn't changed in years. Competition is good for everyone and it raises the bar and ultimately it's the consumer who wins," said Fabien Nestmann, German General Manager at Uber.
Uber Technologies Inc. is a hugely successful San Francisco-based company valued at $18.2 billion. It says that it is nothing more than a company which puts people in contact with each other - a marketplace, not a transportation service.
Drivers have to be over a certain age, have a valid driving license, and undergo background checks before they can pick up any passengers.
"Protecting passengers takes priority. As the supervisory and regulatory body, the agency for citizen's affairs and public order cannot tolerate, that passengers... are entrusted to unlicensed drivers or vehicles, and where in the case of an accident they are not insured," Berlin authorities said.
Uber has faced regulatory obstacles in some cities and lawsuits from taxi companies hoping to keep new competition out.
The service uses smartphones to connect local drivers with people in need of a ride in 80 North American cities, 24 in Europe, 7 in the Middle East, 4 in Africa and 27 in Asia.
Taxi drivers across Europe caused chaos in June by protesting against the Uber app.
Uber was banned by the Tribunal de Commerce in Paris on Aug. 1, and told to change its invoicing system if it wished to continue operating there.
Last month a court in the northern German city of Hamburg suspended a ban on Uber imposed by local regulators, while it considers a complaint by the ride service against the ban.