Challenging TFL’s taxi proposals could be Uber difficult

The recent publication of Transport for London’s (TFL’s) proposed changes to the Private Hire Vehicles Regulations has garnered significant media attention. It has been suggested that they are a blatant attack on app innovators, including Uber. The press is awash with allegations that TFL’s proposals will severely restrict competition in the taxi market and will give black cab drivers an unfair competitive advantage. However, while this may be the case, it’s possible that, from a Competition Law perspective at least, there may be little room for legal challenge.

The Proposals

On 30 September 2015, TFL released various proposed changes to the regulations that govern the licensing and operation of Private Hire Vehicles (PHVs) in London. The changes will only apply to PHVs and not to black cabs. Among the proposed changes are:

  • A mandatory 5-minute delay between the customer ordering the car and starting their journey.
  • Operators must not show vehicles available for immediate hire, either visibly or virtually via an app.

Both of these proposals would clearly have an impact on the business model of app-based PHVs, which typically provide a virtual map showing the proximity of available cars. Uber, in particular, prides itself on supplying a car at very short notice – usually within 5 minutes.

Competition Law

In principle, public authorities like TFL can be subject to Competition Law. However, they must qualify as an “undertaking” for that purpose i.e., the public authority’s conduct would have to be shown to be an economic activity. In this case, it would need to be shown that TFL was not acting in its capacity as an official authority in order for the changes to be rejected. The Greater London Authority, which created TFL, gives the Mayor of London a general duty to develop and apply policies to promote and encourage safe, integrated and efficient transport policies. TFL has stated that the proposed changes will increase the safety of passengers who use PHVs.  This suggests that, for these purposes, TFL is unlikely to be an undertaking and therefore subject to EU/UK Competition law.

Can the State Aid provisions assist PHVs?

Article 107(1) Treaty on the Functioning of the European Union (TFEU) prohibits aid granted by Member States which “distorts or threatens to distort competition by favouring certain undertakings“.  A recent decision by the Court of Justice of the European Union involving TFL and PVHs would strongly suggest that State Aid provisions would not assist PHVs. In Eventech [2015] EUECJ C-5 18/13, a challenge was brought by Addison Lee, a London PHV operator, against the rule that PHVs were not allowed to use London bus lanes while black cabs were.

First, the Judge found that conferring the right of use of a public road did not amount to the commitment of a State resource, a necessary condition of State Aid. Second, importantly, the Judge found that “black cabs and minicabs are in factual and legal situations which are sufficiently distinct to permit the view that they are not comparable and that the bus lanes policy therefore does not confer a selective economic advantage on black cabs“.

While this ruling may sound illogical to users of PHVs, it unfortunately appears that a challenge to the new rules based on EU law will be tricky.

The article was written by Jonothan Broadbent and Gwen Ballin-Reeler.