Government planning to update definition of taxi dispatch to include web-based orders; unclear whether services like Uber/Taxify would be banned

The Ministry for Regional Development and Public Administration has published a draft for an Emergency Order to change Law 38/2003 regarding taxi transport.

In short, the project says that only services that work through a dispatch can obtain authorizations for the transport of persons. However, it redefines dispatch services as to include online apps. It also allows for unauthorized transporters to be fined by law enforcement on the spot, without need for proof that they practice the illegal transport of persons “repeatedly” or “permanently”, as the current law states, which made fines very difficult to apply.

However, it is unclear whether drivers using Uber/Taxify apps will be able to obtain the proper transport permits to comply with the new legislation. Furthermore, it is not specified whether having only a web-based order system, without an option of telephone orders, will be enough for a transport service to qualify as having a dispatch.

UPDATE: Lawyer Cristian Bacanu, partner at MDM Legal, said: “In my opinion, the Order project for changing the taxi law is deeply unlawful and it breaks European law (for example, the services Directive, the Directive for preventing technical barriers for trade and the Directive for e-commerce). In practice, through this Order apps like Star Taxi and Clever Taxi will be banned, although they should benefit from internet and trade freedom, as they operate as part of the informational society and of the sharing economy. These apps help Romanians order an authorised taxi in the shortest time through the internet, in maximum safety conditions and they guarantee that issues such as tax avoidance by taxi drivers or overtaxing clients are avoided. The role of these apps was repeatedly appreciated by the Competition Council, as they lead the way towards fair competition on the taxi market and lead to an improvement of services. I believe that the legislative proposal would have serious consequences for competition as well. Romania may even be subject to an infringement procedure from the European Commission.

The Order would also have the effect of eliminating ride sharing apps like Uber or Taxify from the market (completely different from Star Taxi and Clever Taxi), which have been very successful in Romania in recent years. This regulation is hard to understand as it has been proven that Uber and Taxify improve urban mobility and, at the same time, there is another legislative project by PSD in the Parliament which specifically aims to regulate ride sharing activities. It is unacceptable for the government to legislate the issue through an Emergency Order while there is another law up for debate in the Parliament and the emergency cannot be justified in any way.”

Issues with existing legislation

The current situation is described as follows in the draft order: “In recent years, the market for services for the population is in a permanent changing process as a result of the development of modern technologies, and the use of software programmes, web or mobile apps to satisfy daily needs is growing, and the taxi service market needs to adapt to new demands.

The Ministry says that current legislation has not kept up with the development of these apps and that taxi dispatch services (or their online equivalent) are practiced without the permits required by the law, and that this distorts competition on this market. “The legal framework needs to be changed and solution need to be found to maximize efficiency at the national level, and to allow legal requirements to respond to technological development and clients’ demands.”

Therefore, according to the Ministry, the legal notion of taxi dispatch needs to allow the activity to take place via mobile or web apps.

Another issue found by the Ministry in the current legal framework is that it is difficult to prove that those who practice unauthorized taxi/ride-sharing services are doing so “permanently” and “repeatedly”, which is what the current law sanctions through fines.

Proposed solutions

“Through the proposed changes, taxi dispatch activities will also be able to be done through mobile and web apps,” the project reads. Dispatch services are defined as an authorized activity related to transport services which allows transport orders to be made using mobile or other internet-based apps.

The draft law also establishes a clear ban for taxis to be active in localities other than the one in which they are authorized – drivers who do this no longer have to be proven to doing it “permanently” in order to be fined. The law also states that fines for illegal transport services can be applied on the spot by law enforcement without requiring proof that they are being done “repeatedly”.

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