Law comes on the eve of Spain’s General Election in response to the Court of Justice of the EU ruling earlier this month
In a major blow for ridehail platforms in Spain, the Spanish Government has announced new criteria for regional authorities to restrict private hire vehicles (VTC) based on environmental needs and the effective management of public space, while establishing the taxi as a “service of public interest”.
The law comes just weeks after the Court of Justice of the European Union (CJEU) ruled on 8 June that the Metropolitan Area of Barcelona’s 2018 regulation, which restricts VTC licenses to one in 30 taxis, was not compliant with EU laws on fair competition.
The ruling was widely reported as being a game-changer for the three ridehail platforms operating in the country – Uber, Cabify and Bolt – since the 1/30 ratio was the law not just in Barcelona but across Spain, and was touted by José Manuel Berzal, president of employers’ association UNAUTO-VTC, as a “turning point”.
However, the CJEU verdict also stated that limits on the number of authorised VTCs could be justified based on “the objectives of sound management of transport, traffic and public space, on the one hand, and environmental protection on the other”, while also respecting the principle of “proportionality”.
These parameters are broadly the basis upon which the Spanish Government has adjusted its rules on VTC authorisation in the royal decree law, published on Tuesday [28 June], which modifies the Land Transport Regulation Law (LOTT). The specific regulatory regime for VTCs is left to Spain’s 17 autonomous communities to decide upon, but the central government’s law sets the framework upon which this can be decided.
Under the new law, VTCs “will be subject to compliance with criteria for improving air quality, reducing emissions and managing traffic and the public space”, a government press release stated. Specifically:
- The environmental criteria means that VTC “authorisation will be denied” if the the car in question exceeds an air quality threshold, as well as “objective criteria related to the reduction of CO2 emissions”
- On traffic management, autonomous communities must establish “an objective criterion of road congestion”
- Autonomous communities and municipalities can add additional criteria to limit VTC authorisation as long as it is “justified for reasons of public interest” and “proportionate”
- There are also VTC authorisation requirements to “avoid bad practises”, such as licenses always being attached to vehicles registered in Spain and tighter regulation of financial leasing of vehicles
The taxi has also been officially given the status of a “service of public interest”, which makes it clear that taxis have a separate function from VTCs in Spain’s transport system and requires the taxi to deliver a service with a guaranteed quality, accessibility and universality. This status will mean that taxis can, for instance, access public financing related to meeting the public transportation needs of citizens.
The regulation will affect all new license requests, including those which are pending.
Speaking shortly after the announcement, the Transport Minister, Raquel Sánchez, said that the VTC law “incorporates” the CJEU ruling into Spanish law, and aims at ensuring the “peaceful and balanced coexistence” between the taxi and the VTC.
“They are sectors that of course contribute and that are transport services and mobility services that respond to the needs of citizens, but that of course have to coexist peacefully.
“The authorisations that we regulate are those that are the responsibility of the state but that the autonomous communities and municipalities can also follow these criteria.
“I believe that this is a good regulation and a good resolution for the sector.”
READ MORE: Taxistas beat Uber in battle for Barcelona
Responding to the new law, Alberto ‘Tito’ Álvarez, leader of Elité Taxi Barcelona, the taxi union which led the push last year for Catalonia’s VTC regulation, the toughest in Spain, and who had held talks with Spain’s Transport Ministry before the announcement, said that they were “very satisfied”.
“There are nuances and things that we would have liked to improve but we cannot hide the fact that this is a blow aimed at those who would make the transport business a niche of speculation, labour exploitation and have no general interest, [their only objective being] to abuse the consumer and eliminate the taxi,” Álvarez said.
He added: “With this new modification, regulations such as the Catalan one will be sustained and they will not be able to say that there is discrimination as indicated by the CJEU.”
Catalonia’s regulation in July last year effectively limited VTCs to limousines and passenger vans, explicitly separating the role of the taxi and VTC. A public taxi app was also introduced in December in Barcelona to make it easier for citizens to access taxis. Last week, Elité Taxi Barcelona posted 250 advertisements on billboards across Barcelona encouraging VTC drivers to switch to taxis, promising 30-40% higher wages while drivers work 20-30% fewer hours.
Unauto-VTC and Feneval, two of the main associations for the VTC intermediary companies that operate between the platforms and the drivers, said they would ask the European Commission to start a procedure against the Spanish Government in response to the law, which they believe “contravenes” the CJEU ruling.
They described the law as “discriminatory and disproportionate”, and claimed that it’s real aim was not the general interest but “the economic viability of the taxi sector”, which the CJEU ruling had specified was not a legal basis for restrictions on VTCs.
They added that the law had the “undisguised objective of currying favor with the taxi and avoiding massive mobilisations” in the context of the General Election, which will be held on 23 July.
A demonstration by the taxi sector in Madrid, which has the most liberalised VTC regulations in Spain under right-wing PP President Isabel Díaz Ayuso, due to take place on 29 June has now been postponed.
With the General Election just weeks away, a right-wing coalition government of PP and Vox currently looks the most likely outcome according to opinion polls. Such a change could see the Spanish Government’s VTC regulation, introduced just in time before the official election campaign begins, quickly overturned.
However, the Spanish Supreme Court is set to give its judgement soon on the consequences of the 8 June CJEU ruling, and a legal ruling favourable to the new decree law could make it complicated for any new government to impose drastic changes.
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