Authorities in Madrid asked Spain's anti-trust watchdog on Saturday to investigate whether Uber's new low-cost airport transfer service constitutes unfair competition.
The city council's request follows the ride-hailing app's return to the Spanish capital last year after the CNMC competition regulator called for the government to lift a ban on the U.S. company.
The firm's recently launched Uber Airport service offers a tariff of 15-29 euros for a ride between Madrid's Barajas international airport and the city center. Standard taxi fares for the trip are fixed at 30 euros.
"(Uber Airport) could violate several articles of the Law of Unfair Competition and consumer rights, if it is proven that the service is being operated at prices below operational costs and with the sole intention of gaining customers through unfair competition," Madrid City Council said in statement.
No one at Uber could immediately be reached to comment.
Uber, which expanded into Europe six years ago, has come under attack from established taxi companies and some EU countries because it is not bound by strict local licensing and safety rules that apply to some of its competitors.
Spanish taxi drivers have held three strikes so far this year, arguing that ride-hailing apps, which are regulated in Spain under VTC licenses typically used for private, chauffeur-driven vehicles, constitute unfair competition because they do not meet current regulations and pay less tax.
According to taxi unions, in Spain there is one VTC license for every 11 regular taxis, well over the 1/30 ratio established under Spanish law in 2015.
In Madrid, the only Spanish city where Uber is currently active, there are more than 2,000 VTC-licensed taxis and about 15,000 traditional taxis, according to figures from the Ministry of Public Works.
In May, the European Court of Justice (ECJ) dealt a blow to the company by ruling that it should be considered a transport service and not an app.