Taxi wars in London – does EU law have a role to play?

Christopher Brown

On Thursday of last week the High Court granted Transport for London (TfL) an interim injunction relating to the high-profile raising of the stakes in its battle with Addison Lee (AL), the largest “private hire” (ie minicab) operator (PHO) in London (and, it appears, Europe) over the use of bus lanes.  The application for an interim injunction came in the aftermath of a call by AL’s Chairman, John Griffin, to AL drivers (who are technically self-employed) to flout the restrictions pertaining to bus lanes, which in most cases are reserved, for at least a part of the day, to buses, taxis and bikes – “taxis” meaning black cabs.  In his statement, Mr Griffin said that AL would cover any fines imposed on drivers as a result of driving in bus lanes.

AL’s complaint is that TfL’s rules discriminate against AL and other PHOs when compared with black cabs, putting the former at a competitive advantage.  In legal terms, that sounds like a competition law case, and is redolent of the language used in Article 102(c) of the TFEU (and, in respect of domestic competition law, s 18(2)(c) of the Competition Act 1998) to describe one type of abuse of a dominant position:

“applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage”

The problem for AL is that competition law only imposes obligations on “undertakings”, which has been defined as any entity carrying on an economic activity.  Whilst that definition is a functional one, catching public authorities to the extent that they offer goods or services on a market, here the legal challenge is to secondary legislation adopted by TfL in the guise of a “traffic regulation order”.  For this reason, competition law is not a stick with which to beat TfL (or the legislation which underpins TfL’s stance).  Nor can AL say that the legislation is in breach of Article 4(3) TEU in combination with Article 101 or 102 TFEU, because the rules do not require or favour anti-competitive agreements or abuse of a dominant position by one or more undertakings (a typical example being a law which requires price agreements between competitors or fixes quotas).

AL’s claim for judicial review, which was commenced in the autumn of 2011, therefore has to look elsewhere.  The circular sent to drivers, which presumably reflects the grounds of review being pursued, alleges that the bus lane regulations breach various rights under EU law, namely the freedom of establishment, the freedom to supply services, and the general principle of equal treatment.

Whether it can seriously be argued that the bus lane regulations render less attractive the exercise of treaty freedoms – which, at its most simplest, is the basic test, prior to considering possible objective justification – is moot, however, and the general EU law principle of equal treatment cannot assist the claimant in the absence of some other nexus with EU law.  The reason I say it is moot is that TfL is likely to argue, among other things, that the effects of the regulations in question on EU trade freedoms are too remote to be vulnerable to challenge, relying on cases such as Case C-190/98 Graf [2000] ECR I-493.  In that case, Mr Graf had terminated his employment contract in Austria to take up work in Germany. Under Austrian law, he was not entitled to compensation upon termination, whereas he would have been had the termination been attributable to his employer.  He brought a claim in the Austrian courts, pleading that the domestic law was in breach of Article 45 TFEU (as it now is) governing the free movement of workers, in that it rendered less attractive his free movement rights.  He relied on the infamous Bosman ruling which led to the abolition of transfer fees for professional sportsmen. The domestic court asked the CJEU for its view.  The Court was quite clear that the rules must genuinely affect access to the labour market.  It added:

“24. Legislation of the kind at issue in the main proceedings is not such as to preclude or deter a worker from ending his contract of employment in order to take a job with another employer, because the entitlement to compensation on termination of employment is not dependent on the worker’s choosing whether or not to stay with his current employer but on a future and hypothetical event, namely the subsequent termination of his contract without such termination being at his own initiative or attributable to him.

 25. Such an event is too uncertain and indirect a possibility for legislation to be capable of being regarded as liable to hinder freedom of movement for workers where it does not attach to termination of a contract of employment by the worker himself the same consequence as it attaches to termination which was not at his initiative or is not attributable to him…”

One can envisage TfL arguing that the reservation of bus lanes to buses, taxis and bicycles is not something which will genuinely affect access of PHOs based in other Member States to the London market.  There is perhaps a further argument, familiar to competition lawyers, to the effect that a proper market analysis might suggest that PHOs and taxis do not compete head-on, bearing in mind their different characteristics and price points.  If so, that would make any impact on market access even less likely.

TfL will doubtless also raise various justifications based on the differences between black cabs and minicabs and on the effect that opening up the bus lanes to minicabs would have on congestion.

Returning to the injunction proceedings, rather unsurprisingly the Court didn’t think much of what appeared to be an offer to aid and abet the commission of a criminal offence; Joshua Rozenburg’s piece in the Guardian is worth reading on this.  The Court was also unimpressed that, rather than try to inject a sense of urgency into its own legal challenge to the regulations which it commenced 6 months ago, AL had instead sought to get its drivers to flout the regime.

Overall, therefore, AL may have its work cut out if it is going to prevail, but it is certainly an inventive use of EU law in the domestic courts. Watch this space.

4 thoughts on “Taxi wars in London – does EU law have a role to play?

  1. The problem highlighted by the post has been resolved by the French administrative judge thus: in 1997 he held that breach of competition law was a new ground for review and it can therefore quash a regulation on the ground that it breaches free and equal competition. Only if the taxis performed public service obligation could the discrimination be justified. Otherwise this kind of regulations are systematically quashed in France.

  2. Pingback: Taxi wars in London – High Court judgment | eutopialaw

  3. Pingback: It’s official: EU can’t meddle in our bus lanes | Old News

  4. Pingback: It's official: EU can't meddle in our bus lanes | Property Cloud | PropertyCloud

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