Iceland‘s taxi license rules in breach of EEA law

The EFTA Surveillance Authority (ESA) has today delivered a reasoned opinion to Iceland for breaching EEA rules on the freedom of establishment in the taxi sector. 

The current legal framework in Iceland limits the number of taxi licenses available in certain districts, making it difficult or even impossible for new operators to enter the market. The current legislation also requires taxi operators in certain districts to be connected to a dispatch central and to have taxi driving as a principal profession. Placing undue restrictions on the freedom of establishment and barring new entrants to the market impedes competition, hampers innovation and leads to higher prices for customers.

In its reasoned opinion delivered to Iceland today, ESA concludes that these limitations constitute an undue restriction on the freedom of establishment under Article 31 of the EEA Agreement.

Restrictions on the freedom of establishment are lawful only if they can be justified by overriding reasons in the public interest. In its letter, ESA notes that the Icelandic government has not presented justifications for its restriction on the freedom of establishment in the taxi sector or taken appropriate steps to fix the situation. In addition, the Icelandic Government has not contested that the national legislation covering taxi services is incompatible with EEA rules. 

ESA issued a letter of formal notice to Iceland in January 2021, and is today taking the next step in the infringement procedure by adopting a reasoned opinion. ESA may bring the matter before the EFTA Court if Iceland fails to comply within two months.

Read ESA's reasoned opinion here. 

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