The Court of Justice of the European Union (CJEU) has today delivered a verdict to annul the return of vehicle provision, a core element of the Mobility Package. This decision is a significant setback for efforts to combat unfair competition and labor rights violations, as well as a serious blow to the economic and social sustainability of the industry.
The return of vehicle provision was designed to ensure that transport companies are established in the Member States where they conduct their business activities. It is an important instrument in tackling harmful business practices for the purpose of exploiting differences in working conditions, social security obligations and income and corporate tax regimes which ultimately lead to a race to the bottom. By requiring that a company regularly returns the vehicle to the Member State of establishment, the provision ensures that there is a direct and genuine link between the Member State of establishment and the company’s economic activity in another Member State.
The rule combats the proliferation of letterbox companies, a practice through which companies are established in low-wage countries in Central and Eastern Europe, while conducting business in more profitable markets of Western Europe. This business model takes advantage of wage disparities, enables the evasion of regulatory oversight, and relies on cross-border subcontracting to keep the price of road transport artificially low.
The ETF is deeply concerned over the CJEU’s ruling. Scrapping the return of vehicle rule will perpetuate the harmful practices in the sector; companies can now continue to station entire fleets in Western Europe, with no real connection to their country of establishment. As a result, the race to the bottom will persist; and cases like Grafenhausen strikes will continue to occur.
Enforcing the return of vehicle rule is entirely feasible and the rule has been successfully checked since its introduction. For instance, during a May 2023 inspection in a parking lot in Antwerp, Belgium, authorities successfully identified violations of this provision, proving its enforceability in practice.
Arguments from some industry players and Member States about the climate impact of the return of vehicle provision are unfounded. If companies were established where the majority of their operations occur, the need for long return trips would be eliminated. The existing business model—driven by unsustainably low costs—directly hampers the green transition. By keeping road transport costs artificially low, the model discourages the necessary shift toward more sustainable transport modes. Greening the freight transport sector will only be achievable when road transport prices reflect the true environmental and labor costs involved in these operations.
In response to the ruling, the ETF reiterates its strong support for the Mobility Package in its entirety, and its broader objectives to reform the road transport sector. That being said, it is important to consider that the Court does not contest the legal nature of this provision, but only underlines the lack of sufficient information; therefore, it is the Commission’s responsibility to address these insufficiencies and reinstate this measure.
