PARIS—A French criminal court on Thursday convicted Uber Technologies Inc. and two of its French executives of violating transport and privacy laws, one of the more severe legal rebukes the car-hailing company has faced in legal battles from California to Catalonia.
After a high-profile trial that began with an indictment last summer, the French court found the company and two Uber executives in France, Pierre-Dimitri Gore-Coty and Thibaud Simphal, guilty of complicity in running an illegal taxi service and other violations related to the company’s UberPop service, which used drivers without professional licenses and is now closed in France and many other jurisdictions.
“The acts committed constituted violations, repeated over time, of laws related to two major and distinct areas of social life: the laws organizing the public transport of people, and those protecting personal data,” said Judge Cécile Louis-Loyant, as she delivered the verdict from the bench.
But the Paris court refrained from ordering prison time for Messrs. Gore-Coty and Simphal. It hit the company and men with total fines, damages and court fees of €964,000 ($ 1.1 million)—with nearly half of it suspended. Under French law, each man could have faced up to five years in prison, and Uber could have been fined €1.5 million, plus significant damages and court fees.
An Uber spokesman said the company “is disappointed” by the verdict and will appeal.
While Thursday’s fines are a pittance compared with Uber’s recent fundraising of €3.5 billion, the verdict is a setback for the San Francisco company in the broader legal war between Silicon Valley firms and governments world-wide over how—and whether—to regulate the digital economy.
Law-enforcement officials in France and other countries say that Uber has tried to sidestep the rules meant to ease traffic and protect riders in a race to gain market share. Uber says it is bringing innovation to the taxi sector, where regulations are protecting incumbent companies that haven’t kept pace with technology.
Opposition to Uber’s nonprofessional service UberPop in Europe has forced the company into a rare retreat. Uber ended the low-cost service in France after its executives were indicted last summer, and the country’s constitutional court last fall upheld a law banning it. Uber also has closed UberPop in the Netherlands, Spain, Belgium and Germany under pressure from regulators and courts.
On Thursday, a German court upheld its ban on the UberPop service.
But the legal fight in Europe is continuing. Uber has appealed to the European Union’s executive arm against transport laws in France, Germany and Spain, arguing the laws violate EU treaty principles like the right to free enterprise.
Uber also has asserted that the law used to bar UberPop in France wasn’t applicable because France should have notified the EU before enacting it, because the law regulates an “information-society service.” The body could decide to sue France in EU court seeking changes, and a similar question already is headed to the EU’s top court.
Uber recently scored some points on that front. France’s highest administrative court agreed with part of the company’s reasoning last month, invalidating a decree that banned Uber from showing the location of available cars on a map. The EU’s executive arm last week also warned member states not to over-regulate companies such as Uber, saying that they should turn to bans only as a last resort.
The company also faces continuing battles over whether its drivers should be categorized as employees, rather than independent contractors—something that would upend its business model. The company recently agreed to pay up to $ 100 million to settle a class-action lawsuit in California to ward off that threat. In France, meanwhile, an agency charged with conducting payroll taxes in the Paris region recently asserted that the company’s drivers are in fact employees, but Uber is appealing that decision in a case that could eventually end up in court.
In the French case decided Thursday, Uber and the two men had faced six charges on counts ranging from illicit storage of personal data to the central charge of operating a service that connects passengers with car-service drivers who have no professional licenses.
Uber had mounted a spirited defense on multiple fronts, which the court dismissed on Thursday.
Five lawyers for Uber and Messrs. Gore-Coty and Simphal argued that the illegality of the UberPop service wasn’t settled in French courts, and that the law banning it wasn’t applicable under EU treaties, an assertion disputed by the prosecutor.
Lawyers for the two men also argued that the they weren’t responsible for the alleged infractions, because the French arm of the company handles only marketing and promotion for Uber, and that all strategic decisions were made in the Netherlands or the U.S.
In the end, the court found the company and the two men guilty of all of the taxi-related charges, clearing the men on two data-protection charges and the company on one.
Uber was fined €800,000, with half the amount suspended, while Messrs. Gore-Coty and Simphal were fined €30,000 and €20,000, respectively, also with half of the amount suspended.
The court granted outside taxi unions and drivers who had asked for damages a total of €114,200 in damages and court fees, far less than the more than €100 million they had requested.