Daimler subsidiary mytaxi has regularly offered 50-percent deals over short time spans to interest more customers in booking their rides using the app.
But taxi companies took the newcomer to court over the discounts, saying that they infringed on Germany's legally defined, standardized taxi prices.
They said that the discounts represented unfair competition, as customers could only get the discount by ordering their cab via the mytaxi app, which connects them directly with drivers – bypassing the dispatch centres and their own app, Taxi Deutschland.
Although the drivers still earned their entire fee – with mytaxi paying them the 50 percent saving offered to the customer – the dispatchers said mytaxi was unfairly driving passengers away from their own system.
First-ever ruling against discounts
Now customers will find themselves paying full price for their taxi rides however they order the cab, while mytaxi faces a fine of up to €250,000 or even a prison sentence for managers if it ignores the court ruling.
It's the first time a court has decided that the app's rebates were infringing against the standardized fare laws.
A challenge by the Taxi and Hire Car Association (BZP) failed to convince Hamburg's state court, while the Baden-Württemberg upper state court in Stuttgart also rejected an injunction against mytaxi awarded by a lower-ranking judge.
But the North Rhine-Westphalia upper state court in Cologne has issued a temporary injunction forbidding discounts.
Now mytaxi must decide whether to appeal against the Frankfurt court's ruling, which does not yet have the force of law.
The ghost of Uber
Story continues below…
It's a case with echoes of the legal battles taxi drivers and companies have fought against car-hailing app Uber, whose expansion into Germany has been fraught with resistance.
But the battle against Uber has largely been fought on more fundamental grounds, with taxi organizations arguing that its drivers don't have to meet the same standards for insurance and qualifications as they do.
Uber's most controversial service, UberPop, is no longer available in Germany following a court ruling in Frankfurt last March.