On Black Cabs and bus lanes: a middle-of-the-road judgment by the CJEU in Eventech
By Bram Nijhof
Most state aid cases seem relatively straightforward, with the most notable exception being tax cases which had their fair share of attention recently. When I read a summary of the Eventech case (C-518/13), at first glance it seemed to fall in the straightforward category. However, as one may recall from tax state aid cases, often the most difficult aspects of these cases are the criteria of selectivity and the involvement of state resources. And it just so happens that these criteria are the main issues at stake before the CJEU in Eventech, which makes it a judgment worthy of some further discussion.
Anyone who has ever been to London knows the distinctive Black Cabs which are probably as much a British symbol as their well-known bigger sisters, the red double-deckers. What you may not know (at least I didn’t) is that there are also other kinds of taxis in London called minicabs.
One of the main differences between minicabs and Black Cabs is that the latter can “ply for hire” whereas the former cannot. “Plying for hire” means that a taxi can solicit or wait for passengers regardless of whether a passenger has made a reservation in advance. Conversely, Minicabs can only pick up people which have pre-booked their services. Other notable requirements applying to Black Cabs and not to minicabs are amongst others look and fitness standards of the vehicle, a strict regulation of fares combined with the obligatory use of a taxi meter, as well as a thorough schooling of the taxi driver which can take up to four years of preparation. And then there is the difference in treatment between the two types of taxis which gave rise to the Eventech case. Black Cabs are always allowed to drive on the road lanes designated for buses at specific (rush) hours, but minicabs can only do so outside these designated hours or when they need to pick up or drop off a passenger. Although the regulations vary somewhat depending upon the local London Borough, most Boroughs apply a policy that resembles this system.
Driving on a bus lane when you are not allowed to is sanctioned with a fine. Eventech, a minicab company operating in London received several of these fines, because its drivers used the bus lanes at rush hours. Eventech challenged these decisions before the relevant local British authorities and courts, with the case eventually ending up with the Court of Appeal of England & Wales. Eventech claimed that the bus lane policy constituted unlawful state aid in the sense of Article 107(1) and 108 (3) TFEU. The Court of Appeal stayed the proceedings and asked a number of preliminary questions to the CJEU, boiling down to the following three main questions:
- Are there state resources involved in making the aforementioned bus lanes publicly available to a certain group of undertakings?
- Is the advantage granted to the Black Cabs a selective one?
- Can trade between Member States be affected by the measure at stake?
The third question is addressed last by the CJEU in a brief and clear manner: no matter the size of the company or the amount of aid granted, if aid is liable to affect trade between Member States, the condition is deemed fulfilled. The CJEU considers it likely that there are undertakings from other Member States that would very much like to enter the London taxi market, but are discouraged from doing so by the bus lane policy. The other questions are dealt with by the CJEU jointly and more extensively.
The question whether state resources are involved seemed to me a no-brainer. There is such a thing as “psychological” state aid (see case C-399/10 P Bouyges and Boygues Télécom, which the CJEU also refers to in the Eventech case), for example if a government makes a public statement that it will ensure the preservation of a company that is about to go bankrupt but does not yet take specific measures. However, the state aid rules still containthe requirement that the budget of the State has to carry a certain burden. In my view the regulation that allows Black Cabs to drive on the bus lanes at rush hour does not constitute such a burden, nor is there revenue which the state foregoes. The CJEU adopts a similar reasoning but does not seem to do so wholeheartedly. Eventech put forward the argument that its case was comparable to that of the Commission vs Netherlands case (C-279/08 P), which dealt with the Dutch Nox emission trading scheme that allowed companies to circumvent fines for their pollution emission by purchasing emission allowances from other companies that had not used up their pollution quota. The CJEU distinguishes the Dutch case from Eventech, but I have trouble establishing why. The difference with the use of the bus lanes in Eventech according to the CJEU is simple: The Nox case concerned a fine which was in principle payable, unless certain exemption conditions (the purchase of an allowance) were fulfilled. In Eventech a fine was never due by Black Cabs because Black Cabs were always allowed on the bus lanes to begin with; legislation never prevented them from doing so. I do not understand why this would make a difference for the state resources criterion.
In the Nox judgment the CJEU also deemed very relevant the fact that the State had the opportunity to commercialize emission allowances, by auctioning them of, but instead chose to make such allowances available free of charge. Again, what difference is there when you compare this to the decision not to charge (by means of a fine) a company for the use of the bus lanes during rush hours?
Since the bus lanes constitute public infrastructure which is financed through public resources, Eventech also relied on the Leipzig Halle judgment (C-288/11) (to read elsewhere on this blog: ‘The Leipzig-Halle judgment of the CJEU: is the financing of a transport infrastructure an economic activity subject to State aid rules?’). In that case the CJEU held that financing of public infrastructure by means of capital contributions by public authorities can qualify as state aid if such infrastructure is then commercially operated. In the Eventech case the CJEU is of the opinion that the bus lanes were not commercially operated by the public authorities, since use of those lanes was free of charge (for black cabs and buses that is). Therefore in contrast to the Leipzig Halle case, the authorities were not forgoing revenue they would have otherwise received.
In my opinion the CJEU is of the opinion that no state resources are involved, because of the public nature of the instrument (legislation) that determines which companies do not have to pay for the use of the lanes. However the judgment is not particularly explicit on this. I am not saying that I do not agree with the conclusion of the CJEU that state resources are probably not involved in this case (the national judge will have the final say on this matter), but then perhaps the same conclusion should have been drawn in the Nox and Leipzig Halle cases or the differences between the cases should have been better explained in the Eventech judgment. At present, I have trouble reconciling the reasoning in these three judgments.
Eventech also claimed that a budgetary burden was present because of the combination of preferential access for Black Cabs to the bus lanes without a charge for the use of such access and the exemption from fines which other traffic users have to pay. The CJEU rightfully notes that this argument did not so much pertain to the question whether state resources were present in the current case, but if such access conferred a selective economic advantage. Where the granting of such preferential access is intended to realize an objective pursued by national legislation (in this case traffic safety) and the public infrastructure to which access is given, is not commercially exploited, the State does not confer an economic advantage according to the CJEU. The CJEU then considers whether Black Cabs and minicabs companies are in fact in the same factual and legal situation. And again, the CJEU (as is usually the case with preliminary references) notes that it can only offer guidance but no final answer as to whether both groups of companies are in comparable situations.
In two brief paragraphs the CJEU then concludes that the Black Cab and minicab companies seem to be in distinct situations. The CJEU notes that the companies are only in direct competition with each other with regards to passengers who pre-book their rides, but that the identification of the factual and legal situation should not be limited to this group of passengers, since all journeys made by taxi, including the ones where passengers hail a cab in the streets, have an influence on London traffic safety. The CJEU then continues with a brief mention of the different legal requirements applying to Black Cabs and minicabs as an additional indication that their situations are distinct. I have trouble understanding what the CJEU is getting at here. It seems as if the CJEU claims that because the two types of companies only compete for a certain part of the passenger market, whilst the other part of the market is restricted to one of the two groups by the national legislation, the companies are no longer in a comparable situation. But this partitioning of the market is caused directly by the bus lane policy under discussion and not because of other factors. A lot of the passengers which might have used a pre-booked minicab probably choose to hail a Black Cab, because it is faster. Not only because they can wait on any main street until a Black Cab drives by, but also because such Black Cabs can get to another location faster during rush hours by using the bus lanes.
The academic discussion is very interesting and illustrates how blurred the application of the criteria of state resources and selectivity have become. Nevertheless, the outcome which the case will most likely have at the national Court of Appeal, is one I can live with. The bus lane policy does not seem to constitute state aid, because it does not involve state resources. I just wished the CJEU would have explained this outcome more clearly.
I have to say, the state resources question gives me more trouble than it seems to give you. Surely the answer cant depend on how the money flows are framed? From your analysis it seems like the answer in Eventech would have been different if the law had given everyone the right to use bus lanes, subject to a financial charge, but had given buses and black cabs an exemption from paying the charge. But that seems odd, because in that counterfactual the money flows would have been exactly the same: Everybody pays except the buses and black cabs.