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Court victory for French online taxi operators

Hugh Carnegy
Thursday, 6 Feb 2014 | 4:40 AM ET

An attempt by France's government to placate taxi drivers angered by a threat to their monopoly by making users of private cabs wait 15 minutes for their ride, has been thrown out by the country's highest administrative court.

The suspension of the 15-minute rule by the State Council marks an important victory for online taxi booking services in one of the most fiercely fought battles over market reforms in France.

(Read more: France: We're not a failed socialist experiment)

Loic Venance | AFP/Getty Images

François Hollande's administration has allowed the growth of private cab companies but, under furious protest from traditional licensed street cabs, it issued a decree in December forcing those reserving cars online or by phone to wait a minimum of 15 minutes before being picked up.

Licensed-taxi unions, which have bitterly opposed moves to open up the business to more competition, immediately called a demonstration in Paris for Monday to protest against the State Council's decision.

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The council said the decree was a "serious and immediate blow to the economic interests" of the private competitors and ran counter to "the principle of the freedom of commerce and industry".

Partial liberalization of the taxi market allowing the emergence of private taxi services has led to a surge in companies offering chauffeured cars, mostly via online applications.

In most cases they can supply a car within five minutes, infuriating operators of traditional licensed taxis, which have a monopoly on the right to pick up fares hailed on the street. Taxi unions have demanded an even longer pickup delay for their private competitors.

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Companies such as Uber of the US and French rivals SnapCar and Allocab appealed to the State Council to overturn the decree. They have grown swiftly recently under the category of "tourist cars with chauffeurs", or VTCs, created by the previous centre-right government to offer competition to street licensed taxis.

The VTCs say France has a big shortage of taxi services compared, for example, with the UK. There are only 55,000 licensed taxis in France, including close to 20,000 in Paris. The number of VTCs has grown to 12,400 countrywide – but that compares with about 40,000 "minicabs" in London alone.

The State Council said it would now consider whether to order a permanent lifting of the decree.

Last month, thousands of street licensed cabs jammed roads around Paris and other cities in protest at what they say is unfair competition from VTCs. Uber drivers and customers were physically attacked during the protest.

(Read more: Could 2014 be the year France reforms for real?)

The traditional cab drivers complain that they have to pay up to €200,000 to acquire one of the restricted number of street taxi licences, while car owners pay a fraction of that for a VTC licence. The government is hesitant to issue more on-street licences because many taxi drivers rely on selling their licence to fund their retirement.

Yves Weisselberger, a founder of SnapCar, said he was delighted by the council decision. "The council has simply ruled that the (taxi) reservation market should be able to compete freely," he said.

Government officials said they would study the ruling before deciding how to react.

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