According to the Spanish media outlet El Confidencial, ride-hailing service Cabify could see one-third of its fleet in Madrid drive away as of January 20. The blow to the company stems from an ongoing legal dispute with Grupo Auro, holder of some 2,000 VTC (vehículos de transporte con conductor) licenses, more specifically Cibeles Comfort Cars, and the latters’ ability to offer its services to Cabify competitors
The entire legal tennis match stems from two key factors: While Auro, and thus Cibeles, began operations with Cabify back in 2017, the group has clearly recognised the value of the licenses they hold, and want to be able to offer these licenses to competing ride-hailing services in Madrid. However, the contract signed with Cabify stipulates a non-compete clause.
So far, so fair, right?
Well, yes and no, depending on how you look at it. Cibeles is arguing that Cabify is in breach of contract, specifically in regards to a change of control clause, triggered by the departure of CFO Juan Ignacio García back in April of 2021.
Now, this isn’t the first time Cibeles and Cabify have gone around this argument, with the former initially winning the argument in an arbitration proceeding, however, ultimately losing in a case presented to The Superior Court of Justice of Madrid.
Regardless, it would appear as though they’re still trying to get out of the contract and offer those VTC licenses to the highest bidder.
With 10%-20% of Cabify's revenues derived within their home market of Spain, the company noted in a letter sent to the courts that the loss off Cibeles would have a possible impact of €13 million - almost 9% of the company’s total turnover.