Thinking of State aid while taking a taxi in London…

On 14 January, the Court of Justice of the European Union (ECJ) ruled that the practice of allowing London taxis, the so-called Black Cabs, to use bus lanes while prohibiting private hire vehicles from doing so, except in order to pick up and set down passengers who have pre-booked such vehicles, though it is for the referring court to determine, does not appear to amount to State aid. This is because two criteria under Articles 107(1) TFEU and 61(1) EEA that spell out five cumulative criteria that must be met on order to qualify a given state measure as aid, are not met. These are a commitment of State resources and a conferral of a selective economic advantage on the recipient.

Yet, as regards the criterion of an effect on trade, it is conceivable that the practice at stake may be such as to affect trade between Member States within the meaning of Article 107(1) TFEU, which it is for the referring court to determine.

In London, both Black Cabs and private hire vehicles (minicabs) are permitted to carry passengers for remuneration. Yet, only Black Cabs are allowed to “ply for hire”, i.e. solicit or wait for passengers without any pre-booking. Minicabs can only pick up people who have pre-booked their services. Unlike drivers of minicabs, drivers of Black Cabs must comply with strict standards concerning their vehicles, fares and knowledge of London. In addition, Transport for London (TfL) and the London Boroughs, which are the traffic authorities for almost all the roads in London, allows Black Cabs to use the bus lanes that are managed by it. Minicabs are prohibited from doing so during the hours when bus lane restrictions are operational. Most London Boroughs have also adopted that policy with respect to roads for which they are responsible.

Eventech is the registered keeper of all the minicabs of its parent company, Addison Lee plc, the operator of a fleet of minicabs in London. The London Borough of Camden served two penalty charge notices on Eventech after two drivers of Addison Lee minicabs had used a bus lane in central London. Eventech challenged those notices. It argued, i.a., that the bus lanes policy constitutes State aid to the operators of Black Cabs, which is in breach of EU law. The Court of Appeal, before which an appeal was brought, referred to the ECJ questions for a preliminary ruling in order to determine the presence of aid. The ECJ considered three of five criteria of State aid under Articles 107(1) TFEU and 61(1) EEA: the presence of state resources, selectivity and effect on trade between the EU Member States.

First, according to the ECJ, allowing Black Cabs to use bus lanes, while prohibiting minicabs from doing so, does not appear to be such as to involve state resources. The fact that Black Cabs are not obliged to pay fines because of their use of bus lanes does not involve additional burdens on the public authorities that might entail a commitment of state resources. The bus lanes were not built for the benefit of taxis, but as part of the London road network to facilitate public bus transport. In the opinion of the ECJ, the state does not necessarily confer an economic advantage where it grants a right of privileged access to public infrastructure that is not operated commercially by the public authorities to some users of that infrastructure, in order to pursue an objective laid down by the State legislation. With the view of the characteristics of Black Cabs, the competent national authorities could reasonably consider the provision of access of those taxis to bus lanes to be a measure improving the efficiency of the London road transport system.

Second, the ECJ ruled that Black Cabs, because of their legal status, are in a factual and legal situation that is different from that of minicabs. Black Cabs and minicabs are thus not comparable. As the ECJ stressed, only Black Cabs can “ply for hire”, they are subject to the rule of “compellability”, they must be recognisable and capable of conveying persons in wheelchairs, and their drivers must set the fares for their services by means of a taxi meter and have a particularly thorough knowledge of the city of London. Therefore, the bus lane policy does not confer a selective economic advantage on Black Cabs.

Third, the ECJ considered that it was conceivable that the effect of the practice of permitting Black Cabs to use bus lanes while prohibiting minicabs from doing so may be to render less attractive the provision of minicab services in London, with the result that the opportunities for undertakings established in other Member States to penetrate that market are thereby reduced.