On July 19, 2024, Italy’s Constitutional Court issued Decision No. 137 of July 3, 2024 (in Italian), declaring unconstitutional a law that froze the issuance of new licenses for chauffeured car services until a national computerized register is fully operational.
Constitutional Question
The Constitutional Court was asked to declare the constitutional illegitimacy of article 1 of Law No. 16 of the Calabria Region of April 20, 2023, on the Authorization for the Exercise of Rental Services with Drivers (noleggio con conducente) (NCC services) (in Italian).
The constitutional challenge originated in a request by the President of the Council of Ministers, who asked whether the challenged provision was contrary to provisions of the Italian Constitution, specifically article 117, second paragraph, letter (e) (guarantee of market competition), and article 118, first and second paragraphs (on the powers and functions of municipalities), as well as Article 49 of the Treaty on the Functioning of the European Union (freedom to establish a business). (Considerations of Fact No. 1.)
The President noted that the contested provision prohibited the issuance of new authorizations for operating an NCC service until the full operation of a national computer registry of taxis and NCC services established under article 5 of Law No. 21 of January 15, 1992 (Framework Law for the Transportation of Persons by Non-Scheduled Public Bus Services) and article 10-bis, paragraph 6, of Legislative Decree No. 135 of 2018, as converted, with amendments, into Law No. 12 of February 11, 2019 [L.D. No. 135]. (No. 1, para. 2 & No. 2.1, para. 2.)
While the constitutional challenge was directed at Law No. 16 of the Calabria Region, the court found this necessarily implied a review of the constitutionality of L.D. No. 135, art. 10-bis, para. 6, because that national provision prohibited the issuance of new licenses for taxis and NCC services until the full operation of the digital registry. (No. 2.1, para. 4.)
The President recalled that the Constitutional Court in a 2020 case had rejected a challenge to the contested provision in L.D. No. 135 on the basis that it would only be in effect “for the technical time strictly necessary to actually adopt the new registry.” (No. 2.2, para. 3.) The President argued that this prior decision meant that the temporal restriction could not last indefinitely. (No. 2.2, paras. 4 and 5.) The President argued the continuing inoperability of the national registry after more than five years from the entry into force of L.D. No. 135 violated the reasoning of the 2020 case. (No. 2.2, para. 6.)
Furthermore, the President argued that the challenged provision resulted in an undue barrier to entry into the market, thus violating constitutional guarantees on freedom and market access and EU competition guarantees. (No. 2.2, para. 9.)
Reasoning of the Constitutional Court
The Constitutional Court found that the challenged measure created an undue barrier to entry into the market that was not justified by any social utility or collective interest. (Considerations of Law No. 2, para. 3.) It said the provision allowed the administrative authority to raise a barrier to the entry of new operators into the NCC market simply by blocking the full operation of the computerized register through a succession of decrees. (No. 4, para. 2.)
The Court also noted that this deficiency had been the subject of several reports from the Italian Competition and Market Authority since 1995, highlighting the insufficient number of licenses issued by municipalities relative to the rapidly growing demand for NCC services, especially in metropolitan areas. (No. 5, para. 1.) The Court held that the blocking of new licenses created an improper barrier to freedom of access to the market, gave a privileged position for operators already present in the market, and caused serious harm to the interest of the entire community. (No. 6.2, para. 2.)
The Court said the challenged provision particularly harmed the elderly and persons with disabilities, who have pressing mobility needs, especially in the metropolitan areas. (No. 6.2.1, para. 2.) Additionally, the restriction damaged tourism and the international image of Italy, compromising the possibility of easily reaching holiday destinations. (No. 6.2.1, para. 3.) Ultimately, the restriction negatively affected the well-being of consumers, their enjoyment of constitutional rights, and the country’s economic development. (No. 6.2.1, para. 4.)
Decision of the Constitutional Court
The Constitutional Court declared the constitutional illegitimacy of article 10-bis, paragraph 6, of L.D. No. 135, lifting the restriction to the issuance of new licenses for chauffeur-driven car rental services. (Holding, and Considerations of Law No. 9.)
Dante Figueroa, Law Library of Congress
August 30, 2024
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