Germany's highest court said on Thursday that taxi-hailing app Mytaxi was allowed to offer discounts because it was not subject to the same pricing rules as taxi companies, overturning a lower court ruling.
The app "is itself not a taxi company, to which fixed prices would apply. It only acts as an agent for taxi orders that are independently carried out by taxi companies," the Federal Court of Justice said in a statement.
The ruling comes as a victory for Mytaxi, a day after parent Daimler and peer BMW announced plans to merge their units offering new services such as taxi-hailing, car sharing and electric vehicle charging.
The case had been brought by German taxi operator group Taxi Deutschland, which offers an app that competes with Mytaxi and which had said Mytaxi's discounts undercut official taxi fares.
Mytaxi had offered cab rides for half the regular price in several German cities if customers paid electronically instead of in cash. It paid the difference to the full fare itself, minus a commission fee.
Also, it had distributed vouchers that could be used toward taxi fares.
A lower court in Frankfurt had ruled in 2016 that the discounts were illegal, saying they were an "unfair commercial practice".
But the supreme court said on Thursday it saw no reason to limit competition among agents relaying orders to taxi companies.
Taxi companies still received the full fare under the discount scheme, and Mytaxi's services did not interfere with the normal functioning of the taxi market, it said.
Also, the price cuts had only been available in some cities and only for a limited period of time, which meant they did not crowd out competitors.
(Reporting by Maria Sheahan; Editing by Alexandra Hudson)