A German regional court on Wednesday imposed a nationwide ban on local transport services using Uber's uberPOP smartphone app.
The Frankfurt regional court said each violation of the Uber order was subject to a 250,000 euro ($264,825) fine. ($1 = 0.9440 euros)
The controversial online taxi service faced intense questioning on Wednesday before judges in the German regional court, who said the company violated German and European laws.
The case, brought before Frankfurt's regional court by German taxi operator group Taxi Deutschland, is one of more than a dozen lawsuits which have been filed in countries across Europe in recent months against the San Francisco-based company.
Presiding judge Joachim Nickel said in a court hearing ahead of the ruling that Uber violated German laws on commercial passenger transportation since its drivers did not have the right kinds of licenses.
"There is a violation of the passenger transport law because drivers operate without authorisation," Nickel said.
Uber, which enables users to summon taxi-like services on their phones, is under fire from taxi operators and city officials across Europe who allege that the service breaches licensing laws governing professional taxi drivers and informal ride-sharing arrangements.
Attorneys representing Uber denied it was subject to rules governing taxi operators, claiming that the company merely acts as an exchange connecting drivers with clients.
In response, Uwe Eilers, a second judge on the three-judge panel, said: "In that case, you should include in your business description that Uber offers rides for free."
Nickel said the court's decision would cover the whole of Germany. "There is a danger of repeated violations, which applies to the whole of Germany," he said.
The judge also took issue with Uber's business model, saying that the firm did not carry sufficient insurance to cover Uber's services. "In terms of constitutional and European law the business model is not approvable," he said, referring to Uber.
Taxi industry groups and some, but not all, taxi drivers complain that Uber unfairly bypasses local licensing and safety regulations by using the Internet to put drivers in touch with passengers. Many licensed taxi drivers work with Uber as a way to supplement their existing incomes.
Uber offers a range of local transport options from professional limousine services to informal ride-sharing options. UberPOP, the online service that links private drivers with passengers, is the target of many of the lawsuits, including Taxi Deutschland's.
Last September, the Frankfurt court had first issued a temporary injunction banning UberPOP, then granted the service a temporary reprieve, saying the issues in the case deserved a wider airing by the court.
UberPOP is only one of three services offered by the company in Germany. Its premium UberBlack service and its standard UberTAXI service are unaffected by the ruling.
A spokesman for the company said it's waiting to see the court papers before deciding whether to appeal the ruling.
CORRECTION: The original version of this story incorrectly reported that Uber's taxi-hailing services were also affected by the ruling. The ban only applies to UberPOP and the article has been changed to reflect that.