How the EU’s agenda might result in a common set of contract rules

With potential changes in motion for EU’s sharing economy, businesses should determine the possible consequences.

The sharing economy, sometimes called the collaborative economy, covers a great variety of sectors and is rapidly emerging. Many people have already used, or are aware of sharing economy services, which range from sharing houses and car journeys to domestic services. The sharing economy provides new opportunities for citizens and innovative entrepreneurs. One of the first issues to address when considering the sharing economy is whether there is a common understanding of what constitutes the sharing economy. Such definition is important if there is an intention to impose new laws or regulate it.

What is the sharing economy?

The EU definition is business models where activities are facilitated by collaborative platforms that create an open marketplace for the temporary usage of goods or services often provided by private individuals. The collaborative economy involves three categories of actors:

  1. Service providers who share assets, resources, time and/or skills — these can be private individuals offering services on an occasional basis (“peers”) or service providers acting in their professional capacity (“professional services providers”);
  2. users of these; and
  3. Intermediaries that connect — via an online platform — providers with users and that facilitate transactions between them (“collaborative platforms”). Collaborative economy transactions generally do not involve a change of ownership and can be carried out for profit or not-for-profit.”1 As the European Commission recognizes in offering such definition, “The term collaborative economy is often interchangeably used with the term “sharing economy”. Collaborative economy is a rapid evolving phenomenon and its definition may evolve accordingly.”

One interesting example to evidence the definitional challenge is that of a well-known hotel chain. It was faced with underutilized meeting rooms and lobby spaces at hundreds of its hotels. In 2012 it partnered with a sharing economy start-up to help it offer meeting rooms for short-term rentals through an app-based platform. The scheme was tested then rolled-out to 432 hotels in the US and Canada. The outcome was regarded as successful given that 18% of customers that booked on the app were new to the hotel chain in the US, and it had developed an incremental revenue stream.3 It is an often-quoted example of the success of the sharing economy.

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EY Law key contacts:

Kiran Desai

EY EU Competition Law Leader