The Court of Justice of the EU rules that limiting the number of licences for private-hire vehicles within the AMB is contrary to European Union Law
On 8 June 2023, the Court of Justice of the European Union (CJEU) published the long-awaited judgment in case C-50/21, Prestige and Limousine, concerning the local regulation of PHV services within the Metropolitan Area of Barcelona (AMB) (Reglamento de ordenación de la actividad de transporte urbano discrecional de viajeros discrecional de viajeros con conductor de vehículos de hasta nueve plazas – RVTC), which restricts the activity of PHV within the AMB. The judgment is adopted in the framework of a preliminary ruling submitted by the High Court of Justice of Catalonia (TSJC) in the appeal against the RVTC filed by Prestige and Limousine, a company of the Cabify group, which provides PHV services in Spain.
In the context of the preliminary ruling, the CJEU analyses the restrictions imposed by the RVTC on private-hired vehicles (PHV) activity and its compatibility with EU law. That rule requires, on the one hand, that an additional licence to that provided for at national level be obtained in order to carry on PHV activity and, on the other, limits the number of PHV service licences to one for every 30 taxi service licences granted for the conurbation of the AMB.
Absence of State aid
The CJEU considers, firstly, that the regulation does not constitute State aid within the meaning of Article 107.1 of the Treaty on the Functioning of the European Union (TFEU) directed at the taxi sector, given that the RVTC does not involve the commitment of State funds, which is one of the cumulative requirements for State aid.
Restriction on freedom of establishment
On the other hand, the CJEU concludes that the two measures in question do constitute a restriction on the freedom of establishment under Article 49 TFEU and recalls that, as such, they may only be admitted on condition that they are justified by an overriding reason in the general interest, and provided that they are proportionate, i.e. they are suitable for securing, in a consistent and systematic manner, the attainment of the objective pursued and they do not go beyond what is necessary in order to attain that objective.
Existence of overriding reasons in the general interest: the CJEU accepts the objectives of sound management of transport, traffic and public space, as well as the protection of the environment, but not the objective of ensuring the economic viability of taxi services
With regard to the existence of overriding reasons in the general interest justifying the restrictive measures of the RVTC, the CJEU considers, first of all, that ensuring the economic viability of the taxi sector does not constitute an overriding reason in the general interest capable of justifying a restriction on the freedom of establishment because it is a purely economic objective. In that regard, that objective cannot be relied on to justify the preservation of a balance between the PHV service and taxi services, nor the ratio between PHV and taxi licences, both of which are purely economic considerations, according to the CJEU. Furthermore, the CJEU considers it irrelevant that the Spanish Supreme Court, in its judgment of 4 June 2018, validated the classification of taxi services as “services of general interest”, given that the objective pursued by any measure restricting freedom of establishment must pursue an objective which constitutes, as such, an overriding reason in the general interest in accordance with EU case-law, and not in accordance with domestic law. In this regard, the CJEU finds that nothing in the court’s file shows that the taxi service providers operating in the Barcelona conurbation are entrusted with the operation of a service of general economic interest (“SGEI”) within the meaning of Article 106(2) TFEU, or that the absence of a restriction on the freedom of establishment of PHV service providers would obstruct the performance of a particular public service task entrusted to taxi service providers. The fact that taxi activity is highly regulated does not lead to the conclusion that it has the characteristics of SGEIs. Moreover, in any event, SGEIs are in principle subject to competition rules.
On the other hand, the CJEU considers that the objectives of sound management of transport, traffic and public space, as well as the protection of the environment, do constitute overriding reasons in the general interest, in accordance with its own case law, and could be invoked to justify the measures in question.
Proportionality of the measures: the requirement for a second licence is accepted, but only if it is justified by the particular characteristics of the Barcelona conurbation. On the other hand, the ratio of one PHV to thirty taxis is not considered proportionate.
Having established that overriding reasons of general interest can be invoked, the CJEU proceeds to analyse the proportionality of each of the measures, i.e. the second licence and the ratio of one PHV per 30 taxi.
Regarding the licence prior to the start of VTC activity, the CJEU considers it proportionate in order to achieve the objectives of sound transport, traffic and public space management, as well as environmental protection, provided that the licences are based on objective and non-discriminatory criteria, and do not overlap with controls already carried out in the framework of the state licence procedure but respond to the particular characteristics of the Barcelona conurbation. Therefore, the referring court will have to assess, among other aspects, whether certain particularities of the Barcelona conurbation justify the imposition of a second licence in order to achieve the aforementioned objectives.
With regard to the second question, the limit on licences, the CJEU considers that it is not an appropriate limitation for achieving the aforementioned objectives, nor is it proportionate, given that it is not the least restrictive measure for freedom of establishment. The CJEU considers that the AMB has not refuted the appellant’s and the European Commission’s arguments that PHV services contribute to achieving the objectives pursued, namely that PHVs promote: a reduction in the use of private cars; efficient and inclusive mobility thanks to the digitalisation and flexibility of use of PHV platforms; and the use of vehicles that use alternative energies. It is also inconsistent to invoke problems of parking on public roads when the RVTC obliges them to have their own parking and not to park on public roads. In this regard, the CJEU notes that there is no evidence of any study of the impact of the AMB has not refuted the appellant’s and the European Commission’s arguments that PHV services contribute to achieving the objectives pursued, namely that PHVs promote: a reduction in the use of private cars; efficient and inclusive mobility, thanks to the digitalisation and flexibility of use of PHV platforms; and the use of vehicles that use alternative energies. It is also inconsistent to invoke problems of parking on public roads when the RVTC obliges them to have their own parking space and not to park on public roads. In this regard, the CJEU notes that there is no evidence of any study of the impact of the PHV fleet or of the benefits that the RVTC measures would have with respect to objectives of sound management of transport, traffic and public space, as well as environmental protection. As less restrictive measures, the CJEU cites measures to organise PHV services, limitations on certain time slots or in certain areas, and the establishment of emission limits for PHVs.
In short:
- The requirement of a double licence and the limitation of the number of PHV licences are restrictions to the freedom of establishment which can only be admitted if they are justified in order to achieve objectives related to the sound management of transport, traffic and public space, as well as the protection of the environment, and provided that they are proportionate.
- Ensuring a balance between taxi and PHV services is not a valid reason to justify restrictions on PHV services, as it is a purely economic objective, which is not accepted by EU case law.
- The taxi service is not a service of general economic interest under EU law, regardless of how it is qualified internally.
- The dual authorisation system is admissible but only if it responds to particular characteristics of the AMB that are not already covered by the state licence. Any such measure will have to be empirically justified on the grounds of sound transport, traffic and public space management, as well as environmental protection, and will have to meet objective and non-discriminatory criteria.
- The limitation of the number of PHV licences is neither appropriate nor proportionate and is therefore contrary to EU law.
The CJEU is responding to a preliminary ruling by the TSJC and is therefore not the body responsible for judging the specific case, which in this case is the TSJC. It will therefore be the TSJC that will have to rule on the annulment of the RVTC.
However, the TSJC – nor any other state court – cannot separate itself from the CJEU’s interpretation of EU law. Therefore, and despite the fact that we have to wait for the decision of the TSJC, everything seems to indicate that it will be upheld.
Júlia Samsó Lucas
Advocada
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