ESA takes further steps against Iceland for restricting access to taxi market

The EFTA Surveillance Authority (ESA) has today sent a supplementary letter of formal notice to Iceland for not complying with EEA rules on the freedom of establishment in the taxi sector.

In 2017, ESA opened an own initiative case regarding access to the taxi market in Iceland as the national legal framework limited the number of taxi licences available in certain districts, making it difficult for new operators to enter the market. It also required taxi operators in certain districts to be associated with a dispatch central, and to have taxi driving as principal profession.

In its letter of formal noticeand reasoned opinion, which were sent in January and November 2021, ESA concluded that these limitations constituted unjustified restrictions to the freedom of establishment under the EEA Agreement.

Following ESA's reasoned opinion, the Icelandic authorities adopted a new legal act on taxi services in December 2022, which entered into force in April 2023.

According to the new act, there are no longer any restrictions on the number of licence, and taxi licence holders are no longer required to have taxi driving as their main profession. These changes have, therefore, addressed some of the concerns ESA had raised in this case.

However, while the dispatch central requirement has been amended, the new legislation has a general requirement for taxi operators to be connected to a dispatch central or to hold such a licence in addition to their operating licence. The Icelandic authorities have been unable to properly justify the need for this additional requirement or how the new legal framework is suitable and proportionate to address the stated aim, which is that these services shall be safe and of sufficient quality.

In ESA's view, the new legislation continues to result in an unjustified restriction on the freedom of establishment. Furthermore, ESA finds that the Icelandic rules concerning dispatch centrals also result in a duplication of controls, which runs contrary to the fundamental freedoms of the EEA Agreement.

Following the issuance of today's supplementary letter of formal notice, Iceland now has two months to express its views before ESA decides whether to take the case further.

Read the supplementary letter of formal notice here.

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