EU: Transfer of a bus company without transfer of buses can still be qualified as a transfer of undertaking
The decisive criterion for a transfer of undertaking is, according to Article 1, §1, b) of Directive 2001/23/EC, the fact that the entity retains its identity, as indicated inter alia by the fact that its operation is actually continued or resumed. In previous case law, the Court of Justice of the European Union (“CJEU”) ruled that a bus company cannot be seen as an activity which principally relies on manpower, but that the transfer of its assets (mostly the buses) are the relevant factor to be taken into consideration. However, in the current case the buses have not been transferred, and yet the Court of Justice still takes into consideration the transfer of the employees, to allow for a qualification as a transfer of undertaking.
Südbrandenburger Nahverkehrs (SBN) operated public bus transport a rural German district since 2008. When the district issued a new tender in September 2016, SBN did not participate (because of economically viability). The contract to provide public bus transport services was awarded as of 1 August 2017 to Kraftverkehrsgesellschaft Dreiländereck mbH (hereafter: “KD”), which set up the subsidiary OSL for this purpose. OSL employed the majority of the drivers and management staff of SBN. In April 2017, KD informed SBN that it did not intend to buy or rent SBN’s buses, depots and other commercial installations, or to use its services.
In a previous case, called “Oy Liikenne” or the “Finnish bus case”(CJEU25 January 2001, No. C 172/99), the Court of Justice stressed that bus transport is not an activity in which the workforce is the main factor, since it requires a significant deployment of equipment and resources. The Court added at the time, that the fact that no tangible assets had been transferred from the previous contractor to the new contractor for the operation of the bus routes in question, was a circumstance which must be taken into account for classification as a transfer of undertaking. The transfer of material assets was therefore crucial in that case.
However, SBN indicated in this case that it would not take over the assets (buses) as they did not meet the technical and environmental standards in force, as the tender requirements stipulated that the buses could not be older than 15 years, and had to meet at least the ‘Euro 6’ environmental standard. Furthermore, they did not meet the requirements regarding accessibility for people with disabilities. Additionally, SBN stressed that the use of bus depot services was no longer necessary, as the maintenance or repair of buses can be entrusted to specialised workshops.
In that regard, the German court had already noted that the presence of experienced bus drivers in a rural region was decisive, in order to guarantee the quality of the public transport service in question. It pointed out, in particular, that they must have sufficient knowledge of the routes, timetables in the area covered and fare arrangements, as well as information concerning the other regional bus routes, rail routes and existing connections, in order not only to be able to sell tickets, but also to provide passengers with the information they need in order to make their planned journey.
Taking this into account, the CJEU has ruled that such an award of a public bus transport contract may be regarded as a transfer of an undertaking.
To read the full text of the judgement, click here.
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