EU court rejects Spanish cap on private hire cars transporting passengers

European authorities have rejected a limitation in Spain which caps the number of private hire vehicles, known as VTCs, such as Uber, Cabify and Bolt, in a major blow for taxis.

The Court of Justice of the EU (CJEU) on Thursday, 8 June, overturned the measure in force across Spain to protect taxis from competition from VTCs, which established a limit of one for every 30 taxis.

The court based in Luxembourg considered that a cap on granting new VTC permits merely in order to protect taxis, and without being justified by transport, traffic and environmental reasons, is contrary to EU law. It also specified that the economic viability of taxis should not be dependent on the balance between the two forms of urban transport, or a proportion between the two types of licences.

The ruling opens the floodgates for more of this type of vehicle, which have skyrocketed in recent years due to the surging popularity of ride-hailing apps such as Uber, Cabify and Bolt.

In Malaga, the establishment of 1 VTC for every 30 taxis has been long outdated, due to the liberalisation of the market between 2009 and 2015. There are 2,427 active authorisations for VTCs in the province today, compared to 2,740 active taxi licences - that’s one VTC for every 1.1 taxis.

The new ruling however does not affect other limitation measures, such as the obligation to always operate under prior contract or the ban on approaching areas of high passenger demand such as airports, stations, hotels or shopping centres without being pre-contracted.

The court placed conditions on the requirement for a second regional or municipal authorisation set by the central government to allow VTCs to continue to operate journeys entirely within the same town or city from 1 October last year, by which date the current authorisations were only valid for inter-city services. It does not oppose this second authorisation, already in place in Barcelona, but as long as it is based "on objective criteria" and responds to the "specific needs" of the region.

"The limitation of VTC licences to 1 for every 30 taxi licences does not seem suitable to guarantee the achievement of the objectives of good management of transport, traffic and public space," the CJEU pointed out. "It is possible to adopt less restrictive measures to limit the possible impact of the VTC fleet on transport, traffic and public space," it said, giving as an example "measures to organise VTC services, limitations of these services during certain time slots or even restrictions of circulation in certain areas".

In Malaga, as well as other cities such as Madrid and Barcelona, the 1:30 ratio was long forgotten in any case. The sector was liberalised between 2009 and 2015 through a law brought in by the last Socialist government under José Luis Rodríguez Zapatero. in 2013 the PP government tried to curb the increase in VTCs and new legislation came into force in 2015. Since then where the 1:30 ratio was not respected no more licences were able to be granted. However new authorisations have been gradually released as firms won court cases.

On a regional level, on 1 October 2022 a new decree controlling the VTCs came into force, allowing drivers to carry passengers to and from points within the same town or city but prohibiting cars approaching hotels, stations, airports or shopping centres without having a pre-booked passenger to pick up.