The attention raised by recent complaints and strikes against Uber's intended revolution of the local ground transportation system in big cities has put the taxi sector on the spotlight. This is a sector where competition rules have always been difficult to enforce due to the heavy regulation to which it is subjected. Some claim that it is a sector ripe for proper deregulation and liberalisation. Others claim the opposite [for recent discussion, see L Eskenazi, 'The French Taxi Case: Where Competition Meets—and Overrides—Regulation' (2014) Journal of European Competition Law & Practice].
In the middle of this turmoil, there is now a new dimension to consider: whether any of the rules concerned with the taxi activities amount to State aid. With this background in mind, it is interesting to consider AG Wahl's Opinion in Eventech, C-518/13, EU:C:2014:2239, where the CJEU has been asked by the UK's Court of Appeal (England and Wales)
whether a contested London bus lane policy adopted by Transport for London comes within the concept of ‘aid’ under Article 107(1) TFEU. Under that policy, only black cabs (that is to say, London taxis) are allowed, during certain periods of the day, to use the lane reserved for public buses on public roads, to the exclusion of private hire vehicles (PHVs).
Given that this is a very common rule in many large cities (in Europe, and elsewhere), depending on the answer, the case is bound to create a new wave of shock in the taxi sector. Indeed, as AG Wahl consciously stresses, 'taxis and PHVs are engaged in fierce competition with each other across Europe, and London is not the only city where conflicts have arisen'. In my view, there are several points of AG Wahl's Eventech Opinion worth stressing.
(1) Firstly, even if it is probably common knowledge, AG Wahl stresses the fact that black cabs hold a partial monopoly on the provision of taxi services in the UK, which creates an assymetrical access to the market between them and PHVs. Indeed, 'black cabs have a partial legal monopoly. They alone may ‘ply for hire’, that is to say, be picked up at a cab rank or be hailed from the street. However, both black cabs and PHVs may provide their services in respect of pre-booked journeys. As to the extent to which black cabs operate on the market for pre-bookings, according to evidence submitted to the High Court of Justice, a 2009 survey showed that 8 % of black cab journeys were pre-booked' (para 19).
However, it is unclear how this can be relevant for the assessment from a State aid perspective (given the fact that everyone accepts that the 'bus lane' policy has a distortive effect on competition, see para 18), if not to tilt it towards a finding against the existence of State aid on the basis of a lack of selectivity based on the different 'legal standing' of both types of taxi undertakings. In my view, this is an important logic trap in AG Wahl's Opinion.
(2) Secondly, AG Wahl engages in a rather counterintuitive approach to the issue of the transfer of State resources. The AG decides to assess the question from the perspective of the regulatory powers of the Member State and fundamentally concludes that in the exercise of those regulatory powers, there is no obligation to impose a charge for access to public infrastructure (paras 24-35). However, in my view, this is a faulty approach for two reasons.
(a) Specifically, because the 'economic' argument that AG Wahl develops is truly unfocussed. Indeed, he considers that
If, for the sake of argument, the State aid rules were interpreted as generally requiring Member States to charge for access to public infrastructure or State-controlled resources, this might deter States from creating or opening up areas to which there has previously been no, or only limited access (sic). Equally, it might deter undertakings from participating in that process. For example, in the matter under consideration, if black cabs were required to pay for access to bus lanes, that might deter certain of them from requesting access, which might result in access being given only to the economically most resourceful, thus defeating the purpose of the policy (para 30, emphasis added).
The argument is not fully developed or particularly clear, but it goes against a consideration of economic efficiency (why wouldn't we generally prefer economically resourceful over other competitors, provided there is no predation?). More importantly, it also avoids the obvious issue that, given the limited number of black cab licences and the difficulty in obtaining one (not least, due to cost issues), a benefit is implicitly being recognised in favour of black cabs over PHVs, which can be exactly advantaging the economically most resourceful (ie, those that manage to have a black cab licence) over others. Hence, on top of the argument being economically flawed, it is also myopic and internally inconsistent.
(b) More generally, and perhaps more importantly, the test being applied by AG Wahl in Eventech deviates from the general test applicable under art 102 TFEU to access to essential facilities under private property. In my view, the CJEU's Judgment in IMS Health, C-418/01, EU:C:2004:257 must be taken into consideration. Importantly, under that line of case law, one of the paramount issues when assessing the withholding of access to an essential facility that results in the reserve of an activity to the owner of the facility is to consider whether there is (potential or unsatisfied) consumer demand for a service that is not being provided (or not in sufficient amounts) [see for instance, Geradin's remarks].
Moreover, under similar regulatory conditions (ie where there is a partial reserve of certain services but an open market for others), the CJEU's Judgment in Höfner and Elser v Macrotron, C-41/90, EU:C:1991:161 is also relevant. Here, the CJEU determined that it is unjustified to reserve the provision of a given service in favour of an undertaking (or an emanation of the State) that is unable to meet demand for that service--or, in the words of the Court, where the beneficiary of the reserved activity is 'manifestly incapable of satisfying demand prevailing on the market for such activities.'
In my view, the combined rationale of these lines of case law should have been taken into account in the Eventech Opinion. Given that only 8% of pre-booked taxi services are carried out by black cabs, it is plain to see that a rule that can potentially reserve to them a larger tranche of the market is bound to create problems of sufficient provision and consumer satisfaction. Moreover, at least as a matter of principle, consistency in the rules applicable to publicly and privately owned essential facilities should be pursued.
(3) Finally, it is clear that the whole of AG Wahl's Opinion is drafted in a way that intends to make it hinge on an assessment of 'equality' or 'comparability' of legal position between black cabs and PHVs--which basically kills the issue and passes the hot potato back to the Court of Appeal. AG Wahl makes this clear in his interim conclusion by stressing that 'I propose that the Court should answer Question 1 to the effect that, on a proper construction of Article 107(1) TFEU, where State authorities make a bus lane on a public road available to black cabs but not to PHVs during the hours of operation of that bus lane, that does not involve a transfer of ‘State resources’, provided that all comparable undertakings are granted access on equal terms, which falls to be verified by the referring court' (para 46, emphasis added). He then, at points reluctantly, goes on to sketch the conditions for that assessment of 'comparability' between black cabs and PHVs (remember the logic trap).
In order to delineate the framework for analysis, AG Wahl interprets (rectius, rephrases) the questions referred by the Court of Appeal and considers that it 'in reality wishes to know whether selectivity is to be assessed solely on the basis of the market on which both black cabs and PHVs compete (that is to say, the market for pre-bookings), or whether it ought to include the ‘ply for hire’ market. This is arguably a decisive issue in the case under consideration' (para 53). That is, AG Wahl restricts the issue to the relevance of the assymetrical competition between black cabs and PHVs.
Even if he will timidly stress the need for any differences of treatment to be justified and proportionate (paras 72-73, ie the bus lane policy 'does not amount to ‘favouring certain undertakings’, provided that those authorities show (i) that taxis and private hire vehicles are not legally and factually comparable, owing to objective considerations relating to the safety and efficiency of the transport system, and (ii) that such a measure is suitable for achieving that objective and does not go beyond what is necessary in order to achieve it', para 74), the AG very easily accepts that 'although I consider black cabs to be comparable to PHVs on the market for pre-bookings, they are not comparable in all respects. I can therefore accept, as a matter of principle, that, on the combined relevant markets, the objective consisting in the creation of a safe and efficient transport system may mean that black cabs are not comparable to PHVs' (para 70, emphasis in the original).
However, in my view, this derives from a logically flawed argument that derives from the weight given to the pre-existing regulation of the taxi market. Indeed, it is worth stressing that AG Wahl accepts the lack of comparability in principle on the basis of the following:
61. [...] taxis provide a service which supplements the existing methods of public transportation and which, in some ways, can arguably be assimilated to a universal public service. At a time when methods of communication were less developed, being able to hail a taxi from the street or to pick one up from a cab rank was an essential alternative to the other methods of transportation available. This is the reason why black cabs traditionally have a monopoly on ‘ply for hire’ journeys, and the same reason why taxis in many cities across Europe enjoy similar privileges, including the right to use bus lanes.
62. Moreover [...] a mere 8 % of black cab journeys are pre-booked. Accordingly, I am not persuaded that the pre-booked market is the only significant market on which black cabs operate. In this connection, although it does not appear self-evident to me, it has not escaped my attention that the High Court in its judgment found that ‘[i]t would clearly not be possible to legislate that … black cabs could not use the bus lane when carrying a pre-booked passenger’. With that in mind, there appears to be no justification for limiting the assessment to the market for pre-bookings alone. (footnotes omitted and emphasis added).
What I think has escaped the AG's attention is that the relevant setting is not to determine where do black cabs operate, but where do they compete. If that is kept in mind, but for the anachronic and currently unjustified exclusive right to carry out 'ply for hire' journeys that black cabs retain, either all journeys would become pre-booked (if their right was simply erased and no taxi could be hailed on the streets, which is not plausible) or both black cabs and PHVs would compete for all services, which would erase the issue of comparability and assymetrical competition. Hence, making the whole analysis rely on the existence of a currently unjustified regulatory restriction makes the argument very weak and difficult to justify, particularly if a measure that distorts competition in the only market where PHVs can be present is being analysed, as is the case in Eventech.
(4) Consequently, for all the above, I would have preferred it if AG Wahl would have avoided the logic trap and more clearly emphasised that there is no good reason to provide discriminatory access to a public essential facility to black cabs over PHVs, which is plainly the conclusion that I think would derive from any other competition law assessment under a more general framework.
Implicitly, AG Wahl has been very deferential towards a sector that, as has been clear, is currently fighting to keep a monopoly that is increasingly difficult to justify (if possible at all). This is hardly a progressive Opinion. Consequently, I would like to see the CJEU deviate from his advice in Eventech and to finally rule that the State aid rules apply in this case and that the implicit extension of the reserved activities for black cabs that the bus lane rules create is contrary to the rules on State aid. I will most likely be disappointed, though.