On September 18, 2017, the Spanish Ministry of Public Works published a draft Royal Decree establishing complementary rules to the Law governing land transport services (LOTT). The draft Royal Decree proposes the introduction of the following two measures affecting authorizations for vehicle rental with driver, the so-called “VTC” (in Spanish, “vehículos de turismo con conductor”): (i) prohibiting the resale of VTC licenses within the two years after their first issue; and (ii) allowing Autonomous Communities to require VTC license holders to communicate the provision of services carried out entirely within their territory.
On November 30, 2017, the National Commission for Markets and Competition (“CNMC”) issued a report on the draft Royal Decree (PRO/CNMC/003/17) where it alerts on the potential negative impact for competition and the efficient regulation of this market derived from the proposed measures.
In its report, the CNMC states that the proposed additional requirements restrict competition in the sector and are not justified under the principles of necessity and proportionality
The CNMC considers that the prohibition to resell licenses constitutes a barrier to enter the market, as it increases the cost of new entrants to cease their activity and exit the market during this two-year period. This prohibition gives a competitive advantage to existing operators and, thus, unlawfully discriminates new entrants.
Moreover, the CNMC finds that this prohibition restricts competition in the secondary market for VTC licenses, whose ultimate function is to guarantee that there are more companies offering this service.
The CNMC considers that communication obligations imposed on VTC license operators to inform Autonomous Community of their activities in their respective territories are not justified on the basis of the principles of indispensability and proportionality, as they constitute a high administrative burden for those operators and may potentially affect their geographical mobility.
The CNMC has repeatedly expressed its concern over the regulation of VTC services in Spain. In April 2016, the CNMC challenged the measures adopted by the Spanish Government in 2015 to amend the regulatory framework governing land transport (Royal Decree 1057/2015, of November 20 and Order FOM/2799/2015, of December 18). The appeals are still pending before the Supreme Court and the Audiencia Nacional. According to the CNMC, the measures introduced in 2015 limiting the number of VTC licenses (“1:30 rule”, 1 VTC license per 30 taxi licenses) and imposing specific requirements for the provision of the services (i.e. pre-booking obligations; minimum car fleet; and geographical restrictions) constitute unjustified restrictions of competition.
In this context, the Supreme Court has recently ruled in favor of VTC operators in the context of several appeals involving requests for authorizations of VTC licenses and has confirmed the concession of almost 1,000 new VTC licenses. However, these licenses were requested before the adoption of the 1:30 limitation in 2015. Although the Supreme Court does not assess the current regulatory framework, it states that any restrictions to the provision of such services must comply with the limitations imposed by the LOTT and the Law on Market Unity. Specifically, the LOTT establishes that a quantitative limitation on authorizations for public transport shall comply with “EU law and other applicable provisions”, while the Law on Market Unity establishes that an authorization regime for these services must comply with the “principles of free economic initiative, indispensability and proportionality, to avoid unjustified or disproportionate restrictions.”