As part of a preliminary ruling procedure, the European Court of Justice (ECJ) clarified in its judgement of 8 June 2023 (C-50/21 – “Prestige and Limousine”) that unequal treatment between taxi companies and car hire companies (for which BOLT and UBER, among others, provide the platform) is inadmissible solely on the basis of economic arguments.
This is particularly interesting for the German market of hire car platforms such as BOLT and UBER. Against the background of the ECJ judgement, the following conclusion can be drawn:
the return obligation for hire cars enshrined in Section 49 (4) sentence 3 PBefG is inadmissible,
if it is justified solely by the economic protection of the taxi industry, as is currently the case.
A. Background
As part of a preliminary ruling procedure, the European Court of Justice had to clarify in its judgement of 8 June 2023 whether two special access restrictions for hire car companies in the Barcelona metropolitan area are compatible with the freedom of establishment enshrined in Art. 49 TFEU. Specifically, the local regulations stipulated that car hire permits may only be issued in a ratio of 30 taxi licences to a maximum of one car hire driver’s licence and that, in addition to the permit for passenger transport already required under national law, a second permit is linked to a demand-oriented quota system. The authorities determine how many licences may be issued in total on the basis of a calculated demand.
Spanish car hire companies brought an action for annulment before the Tribunal Superior de Justicia de Cataluña against these quota measures. The Spanish court had doubts as to whether the restrictions on car hire complied with EU law and referred the matter to the ECJ for a preliminary ruling.
B. Reasons for the decision
The ECJ examined the contested restrictions on car hire against the standard of freedom of establishment under Art. 49 TFEU. Freedom of establishment under Art. 49 TFEU includes the right to take up and pursue activities as self-employed persons and to set up and manage undertakings. According to the ECJ, the restrictions on car hire are in principle already affected if measures are likely to “suppress, impede or render less attractive” the exercise of the freedom of establishment.
Pure economic interests as an inadmissible justification
The Spanish government and the competent authorities in Barcelona attempted to justify the restrictions on hire cars by claiming that the regulations in question were primarily intended to protect the taxi industry economically.
The ECJ made it clear in this regard that a regulation that primarily serves the economic interests of a particular means of transport is not sufficient under EU law to justify the regulation. Purely economic reasons are not considered “overriding reasons in the public interest”.
Ergo: The mere safeguarding of the economic existence of the taxi industry is not a sufficient reason in the public interest to restrict the fundamental freedoms of hire car companies.
C. Significance for German law
The principles established by the ECJ have significant implications for the legal situation in the German Passenger Transport Act (PBefG).
Two areas of regulation in particular are therefore in focus:
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Obligation to return in accordance with Section 49 (4) sentence 3 PBefG
As early as 1983, the obligation was introduced in Germany that hire cars must return to their place of business immediately after carrying out a transport order if there is no follow-up order. In 1989, the Federal Constitutional Court (BGH) declared this obligation to return to the place of business to be constitutional, encouraging the legislator to protect the taxi industry as an indispensable part of public services. In 2021, the obligation to return was somewhat mitigated by Section 49 (5) PBefG by allowing exceptions in certain situations. Nevertheless, the primary purpose remains: To protect the economic viability of the taxi industry from competition from hire car transport. This argument is also used by the German supervisory authorities to refuse licences to hire car companies, but from the perspective of EU law, such restrictions are only permissible if they can be based on reasons that go beyond the mere protection of economic interests. If a “purely economic motive” is primarily pursued – such as the defence against cheaper offers from competitors – the obligation to return is inadmissible against the background of this ECJ ruling.
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Tariff-related regulations and minimum transport charges in accordance with Section 51a PBefG
Section 51a PBefG also represents a restriction that is difficult to justify in light of ECJ case law. Section 51a PBefG was introduced with the amendment to passenger transport law in 2021 and authorises the licensing authorities to set tariff-related regulations for hire car transport. In particular, this includes the option to set minimum transport charges, with the explanatory memorandum to Section 51a PBefG essentially stating that price regulation is intended to “ensure a ‘reasonable profit margin’ for the taxi industry” and “reconcile the economic interests of the taxi operator and the interests of the general public (…) as far as possible” and thus ensure the “preservation of a functioning taxi industry”. Based on ECJ case law, however, such measures, which only serve to safeguard the economic existence of the taxi industry, are in breach of Art. 49 TFEU.
E. Conclusion
The current ECJ ruling is a positive step for many car hire companies, as it gives hope for a broad equality with taxi companies. Nevertheless, it is unclear to what extent the Federal Government has taken note of this, as no concrete implementation measures are yet visible. There are currently no recognisable signs of a corresponding adjustment to the legal framework.