Opinion of the Advocate-General

Opinion of the Advocate-General

I – Introduction

1. The Vergabekontrollsenat des Landes Wien (Procurement Review Tribunal of the Province of Vienna) has referred three questions on the interpretation of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts and Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors. (2)

2. Those questions provide the Court with the opportunity to delimit the scope of the aforementioned directives and to define, once again, the concept of a ‘body governed by public law’ when that body acts as a ‘contracting authority’.

3. The object of this reference for a preliminary ruling is to ascertain whether a public undertaking, as defined in Article 2(1)(b) of Directive 2004/17, is caught by the provisions of that directive when it carries out activities which are not included in Articles 3 to 7 (first question). If the reply to that question is negative, the order for reference asks whether, in any event, such an undertaking must be classified as a ‘body governed by public law’ on the grounds that it is engaged, without any real competition, in satisfying needs in the general interest, not having an industrial or commercial character (the supply of district heating in the City of Vienna), which are governed by Directive 2004/18, despite the fact that it also carries out activities in a different market in competitive conditions (second question). Finally, the referring court enquires whether, if the undertaking demonstrated that the two activities are managed financially as watertight compartments, it would not be caught by those provisions (third question).

4. At the heart of those questions lies the ‘infection theory’ (formulated in the judgment in Mannesmann Anlagenbau Austria and Others ), (3) which states that all the activities of a contracting authority are governed by the procurement directives, unless (qualification introduced by Advocate General Jacobs in the opinion in Impresa Portuale di Cagliari , (4) removed from the register) it can be shown that there is no cross-subsidisation between contracts for activities carried out on the open market and contracts concluded in non-competitive conditions.

5. However, under Austrian law, the Vergabekontrollsenat des Landes Wien does not have the status of a court or tribunal; moreover, appeals against its decisions may be brought before the Verwaltunsgerichtshof (Administrative Court). My stance on the definition of court or tribunal for the purposes of Article 234 EC, which I explained in the opinion in De Coster , (5) being well-known, I feel obliged, in order to avoid inconsistency, to advise the Court to dismiss this reference for a preliminary ruling at the outset.

II – The legal framework

A – Austrian legislation

6. The Wiener Vergaberechtschutzgesetzes (6) (Law of Vienna on remedies in procurement law) confers on the Vergabekontrollsenat des Landes Wien jurisdiction to review the award of contracts by the Province of Vienna and by other contracting authorities in the water, energy, transport and postal services sectors (Paragraph 1).

7. In accordance with Paragraph 2, that independent administrative chamber exercises jurisdiction at first and sole instance and its decisions are not subject to review by administrative action (subparagraph 2), although a judicial appeal may be brought before the Verwaltunsgerichtshof (subparagraph 4).

8. The Vergabekontrollsenat is composed of seven members, nominated by the Government of the Province for a renewable mandate of six years (Paragraph 3(1)). The members must possess specific economic or technical knowledge in the field of public contracts (Paragraph 3(2)); they must carry out their functions independently and are not bound by any instructions (Paragraph 3(3)), and they do not receive any remuneration (Paragraph 3(4)).

B – Community law

1. Directive 2004/18

9. Directive 2004/18 consolidates the pre-existing secondary legislation in a single text, (7) harmonising at Community level the national procurement procedures in order to bring them into line with the principles of the Treaty which govern the award of public contracts (recitals 1 and 2). The directive governs contracts which it classifies as ‘public’ in Article 1(2), which are not excluded by Articles 12 to 18, which are for amounts equal to or greater than those indicated in Article 7, and which are concluded by contracting authorities.

10. Under Article 1(9), ‘contracting authorities’ means regional or local authorities, bodies governed by public law, and associations thereof. A ‘body governed by public law’ means any body: (1) established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character; (2) having legal personality; and (3)(a) financed, for the most part, by regional or local authorities, or other bodies governed by public law; or (3)(b) subject to management supervision by those bodies; or (3)(c) having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law.

2. Directive 2004/17

11. Directive 2004/17 (8) pursues a similar aim to that of Directive 2004/18 in respect of supply, works and service contracts (which are defined in Article 1(2)) in certain sectors characterised by their closed nature, due to the grant of special or exclusive rights (recitals 1 to 3).

12. In accordance with Article 2(2), the directive applies to ‘contracting entities’ which pursue one of the activities referred to in Articles 3 (gas, heat and electricity), 4 (water), 5 (transport), 6 (postal services) and 7 (exploration for, or extraction of, oil, gas, coal or other solid fuels, as well as ports and airports), unless those activities are performed under competitive conditions on markets to which access is not restricted (Article 30(1)).

13. In addition to ‘contracting authorities’ (which are defined, in Article 2(1)(a), in the same terms as in Directive 2004/18), the directive also classifies ‘public undertakings’ as ‘contracting entities’. A public undertaking is any undertaking over which the contracting authorities may exercise, directly or indirectly, a dominant influence by virtue of their ownership of it, their financial participation therein, or the rules which govern it. They exercise such an influence when (1) they hold the majority of the undertaking’s subscribed capital, or (2) they control the majority of the votes attaching to shares issued by the undertaking, or (3) they appoint more than half of the undertaking’s administrative, management or supervisory body.

14. The directive also defines as ‘contracting entities’ organisations which, while they are not ‘contracting authorities’ or ‘public undertakings’, carry out any of the activities referred to in Articles 3 to 7 on the basis of special or exclusive rights (Article 2(2)(b)).

15. Article 20(1) excludes from the scope of the directive contracts which the contracting entities award for purposes other than those referred to in Articles 3 to 7.

III – The facts of the main proceedings and the questions referred for a preliminary ruling

16. Fernwärme Wien GmbH is an undertaking established on 22 January 1969 and duly registered in the Vienna Companies Register, so acquiring legal personality. Its object is the supplying of district heating to homes, public institutions, offices, undertakings and other premises in the municipal district of Vienna. Without prejudice to that activity, the company is also engaged, in competition with other operators, in the general planning of refrigeration plants for large real estate projects.

17. Following successive amendments of the founding contract, in which its objects remained unchanged, the undertaking is currently a limited liability company and is wholly owned by Vienna City Council. (9) The Kontrollamt (Monitoring Office) of Vienna checks the undertaking’s finances while the municipality, exercising its rights in the general meeting, appoints and removes the directors, approves their management, and does the same in respect of the members of the supervisory board.

18. By announcement in the Amtsblatt der Stadt Wien (Official Journal of the City of Vienna) of 1 March 2006, Fernwärme Wien published an invitation to tender for the construction of a refrigeration plant for an office and shopping centre in Vienna (called ‘Town‑Town’), stating that national procurement law did not apply.

19. Ing. Aigner, Wasser-Wärme-Unwelt GmbH, which accepted the published conditions, participated in the selection process by submitting two tenders – a main tender and an alternative. On 18 May 2006, Fernwärme Wien informed the applicant that the second tender had been rejected, a decision which the applicant challenged before the Vergabekontrollsenat des Landes Wien.

20. Fernwärme Wien called into question that body’s jurisdiction, which is conditional on the defendant undertaking’s being a ‘contracting entity’ or a ‘contracting authority’ for the purpose of Directives 2004/17 and 2004/18. In view of the nature of the dispute before it, the Vergabekontrollsenat des Landes Wien has stayed the proceedings and referred the following questions to the Court of Justice for a preliminary ruling:

‘(1) Must Directive 2004/17/EC … be interpreted as meaning that a contracting entity which carries out activities in the sectors referred to in Article 3 … also falls within the scope of that directive in relation to an activity pursued in parallel under competitive conditions?

(2) In the event that this is the case only in respect of contracting authorities: must an undertaking such as Fernwärme Wien Ges.m.b.H. be characterised as a body governed by public law within the meaning of Directive 2004/17/EC or Directive 2004/18/EC if it provides district heating in a given area without any real competition, or must the market for domestic heating, which also includes energy sources such as gas, oil and coal, be taken into account?

(3) Must an activity pursued under competitive conditions by a company which also pursues activities of a non‑industrial or non‑commercial nature be included within the scope of Directive 2004/17/EC or Directive 2004/18/EC if, through effective precautions such as separate balance sheets and accounts, cross‑financing of the activities pursued under competitive conditions can be excluded?’

IV – The procedure before the Court of Justice

21. The parties to the main proceedings, the Commission, and the Austrian, Hungarian and Finnish Governments submitted written observations, and the representatives of Ing. Aigner, the Austrian Government and the Commission presented oral argument at the hearing on 11 October 2007.

V – The jurisdiction of the Court of Justice

22. In HI , (10) the Court held that the Vergabekontrollsenat des Landes Wien must be regarded as a court or tribunal within the meaning of Article 234 EC (paragraph 28). In accordance with its settled case-law on that definition, the Court found that the Vergabekontrollsenat complies with the criteria of being established by law, having compulsory jurisdiction and an inter partes procedure, and applying rules of law (paragraph 26), and that, on account of its composition and functioning, it satisfies the requirements of permanence and independence (paragraph 27).

23. Six months earlier, in my Opinion in De Coster , I criticised that case-law for being ‘too flexible and not sufficiently consistent’, (11) and I proposed a change of bearing with a view to taking a firmer course (12) which, by focusing on the raison d’être of the preliminary ruling, would encourage fruitful cooperation between courts.

24. For that purpose, I propose that, as a general rule, Article 234 EC should cover only bodies forming part of the judicial power of every State, when they carry out their judicial duties in the proper sense, including, by way of an exception, those bodies which, while not belonging to that structure, have the final word in the national legal order, provided that they satisfy the requirements laid down in case-law, in particular, the requirements of independence and the adversarial nature of the proceedings.

25. In accordance with that stricter interpretation, the Vergabekontrollsenat des Landes Wien is not included in the definition because it is not part of the Austrian judicial structure (‘independent administrative chamber’) and its decisions, which exhaust the administrative remedies available, may be challenged by judicial action before the Verwaltunsgerichtshof. (13)

26. It is not appropriate to reproduce here the points I made in the De Coster Opinion (paragraphs 75 to 79) concerning the undesirability of an administrative authority, no matter how independent, intervening in a dialogue between courts, and repeated in the Opinion in Case C‑195/06 Österreichischer Rundfunk (ÖRF) (14) (paragraphs 35 to 36). Nor is it appropriate to overlook the fruitful collaboration of the Vergabekontrollsenat des Landes Wien in the interpretation of public procurement law. (15) However, even entering into the realms of legal possibilism, the arguments which justified opening up the preliminary ruling dialogue to bodies which are not strictly judicial in nature lose much of their force in a Community of 27 States at a time when that field of Community law and its interpretation are fully consolidated. (16)

27. Recent developments in case-law reveal (17) greater zeal in identifying the features which define the concept of a court or tribunal, especially independence, allowing a glimpse of a position close to that in De Coster . (18) Thus, in Schmid , (19) the Court held that it lacked jurisdiction to hear a reference from the Berufungssenat V der Finanzlandesdirektion (Fifth Appeal Chamber of the Regional Finance Authority) for Vienna, Lower Austria and Burgenland, while, in Syfait and others , (20) the Court likewise ruled inadmissible a reference from the Epitropi Antagonismou (Greek Competition Commission). (21)

28. That trend is abundantly clear if regard is had to the fact that, in the past, the Court did deal with questions referred for a preliminary ruling by bodies similar to the ones mentioned, such as the Spanish economic and administrative courts (22) and the Spanish Tribunal de Defensa de la Competencia (Competition Court). (23)

29. The years have gone by and the Opinion in De Coster (24) is still quite valid, for which reason, not only for the sake of consistency but also with total conviction, I maintain that the Vergabekontrollsenat des Landes Wien is not a court or tribunal for the purposes of Article 234 EC and I propose that the Court should declare that it lacks jurisdiction to consider the questions which that body has referred for a preliminary ruling.

30. I cherish the hope that the judges whom I address will be persuaded of the virtues of the proposal set out in De Coster , (25) but, in case they do not follow my recommendation, I shall now go on to analyse, in the alternative, the substance of the present reference for a preliminary ruling, with the intention of fulfilling my duty, acting with complete impartiality and independence, to deliver an opinion in open court.

VI – Analysis of the questions referred for a preliminary ruling

A – Directives 2004/17 and 2004/18: two routes towards a single objective (first question)

31. Community public procurement law pursues an immediate, limited aim: coordination of the procedures for the award of public contracts. However, as may be deduced from recital 2 in the preamble to Directive 2004/18 and recital 9 in the preamble to Directive 2004/17, and also from the case-law of the Court, (26) that is nothing more than an instrument for the achievement of a more important objective, namely, the development of effective competition in the sector, in the interests of establishing the fundamental freedoms in European integration. The purpose is, therefore, to eliminate barriers to freedom of movement by protecting the interests of economic operators in one Member State who wish to sell goods or services to contracting entities in other Member States. Accordingly, it is necessary to avoid the risk of preference being given to national tenderers (‘buy national’), excluding the possibility that the body responsible for awarding the contract may be guided by considerations other than economic (27) (for that reason, the essential criterion when awarding a contract is that of the lowest or economically most advantageous tender).

1. A personal dimension

32. Like its predecessors, Directive 2004/18 delimits its scope as follows: subjectively, by defining, on the one hand, the terms ‘contractor’, ‘supplier’ and ‘service provider’, and, on the other, the term ‘contracting authority’ (Article 1(8) and (9)); and objectively, by defining ‘public works contracts’, ‘public service contracts’ and ‘public supply contracts’, together with ‘public works concession’ and ‘service concession’ (Article 1(2) to (4)).

33. So, contracts governed by Directive 2004/18, which are approved by a contracting authority, must be awarded in all the Member States in accordance with the principles and the procedural rules laid down in the directive.

34. The emphasis is thus placed on the personal dimension, since the conclusive criterion is not the nature of the activity but rather who performs it, because all public procurement is subject to the procedural coordination undertaken by the secondary legislation.

35. That requirement is so fundamental that, in Mannesmann Anlagenbau Austria and Others , the Court extended the application of the Community legislation (in that case, Directive 93/37) to all the activities of bodies governed by public law, arguing that the legislature does not make a distinction between contracts relating to needs in the general interest and contracts which are unrelated to that task, and citing the interests of legal certainty (paragraphs 32 and 34).

2. A material harmonisation

36. However, that ‘intersectoral’ (the adjective used by the Commission in its written observations) harmonisation was abandoned in Directive 2004/17 which, rather than applying to all the activities of the contracting entities, concerns only those activities set out in Articles 3 to 7.

37. The reason that the subject-matter of Directive 2004/17 is so specific is that, originally, contracts in the water, energy, transport and telecommunications sectors were not harmonised (28) owing to the diverse nature of the legal status (public or private) of the bodies responsible for those services. It was necessary to avoid making those services subject to different systems depending on whether they come under the State, regional or local authorities or other bodies governed by public law, or whether they come under bodies governed by private law, and the hope was that experience would provide a definitive solution. (29)

38. The opportunity arose on the adoption of Directive 93/38, which coordinated public procurement procedures in those excluded markets and defined the contracting bodies without reference to their legal status (public or private). The directive also took into account the capacity of national authorities to influence the behaviour of such entities, due to the closed nature of the markets concerned and to the existence of special or exclusive rights, for the purposes of also opening up those markets to competition (recitals 9, 11 and 12). That was the justification for the fact that, in addition to the entities referred to in the standard directives in the field, the scope ratione personae of the directive included public undertakings and affiliated undertakings (Article 1(2) and (3)), and care was taken to specify that such undertakings were governed by the directive only if they carried out activities in the sectors referred to therein (recital 13 (30) and Article 2).

39. Directive 2004/17 follows the same course (recitals 2 and 3) and identifies contracting entities without reference to their legal status (recital 10). Therefore, in addition to contracting authorities, which are identified in the same terms as in Directive 2004/18, the directive defines as contracting entities public undertakings and entities which have special or exclusive rights, provided that they carry out the activities referred to in Articles 3 to 7 (Articles 2(1) and (2) and 20(1)).

40. Accordingly, Directive 2004/17 governs procurement in what are traditionally known as ‘excluded sectors’, and its spirit is different to that prompting Directive 2004/18. The conclusive criterion is not the contracting entity but rather the nature of the activity to which the contract concerned relates, and the directive applies only to the sectors concerned.

41. That view is based on a twofold approach. On the one hand, the first paragraph of Article 12 of Directive 2004/18 excludes from its ambit contracts awarded by contracting authorities exercising the activities referred to in Articles 3 to 7 of Directive 2004/17, which draws attention to the importance of the material scope in the application of the latter provision. On the other hand, Directive 2004/17 is aimed at promoting the establishment of free competition, for which reason, pursuant to Article 30(1) thereof, it does not apply where the activities concerned are carried out on markets to which access is not restricted.

42. Therefore, the contracting authorities referred to in Directive 2004/18 are subject to Directive 2004/17 if they fall within its material scope, whereas the same does not apply to public undertakings and the holders of special or exclusive rights per se.

43. Those factors support the view that the infection theory does not apply to the present case. In the Opinion in Mannesmann Anlagenbau Austria and Others , Advocate General Léger pointed out that the scope of Directive 93/37 (and that of Directive 2004/18) is not determined according to the activity in respect of which contracts are awarded but rather by reference to the characteristics of the body entering into the contract (paragraph 81). In other words, whereas Directive 2004/18 focuses on the concept of a ‘contracting authority’, in respect of which, for reasons of legal certainty, it is not appropriate to embark on the task of determining which part of the organisation is aimed at meeting needs in the general interest and which part is aimed at other objectives, Directive 2004/17 enables perfect delimitation of the material sphere of the activities of the ‘contracting entities’, by providing specific guidelines in that regard in Article 9.

44. To put it another way, if a ‘contracting authority’, in the strictest sense, within the meaning of Article 1(9) of Directive 2004/18 and Article 2(1)(a) of Directive 2004/17, invites tenders for activities not mentioned in Articles 3 to 7 of the latter directive, the former will apply. However, if the body which pursues activities outside that sphere is a public undertaking or holds special or exclusive rights (Article 2(1)(b) and 2(b) of Directive 2004/17) neither of the two directives applies.

45. In short, I propose that the Court should reply to the first of the three questions submitted by the Vergabekontrollsenat des Landes Wien, declaring that Directive 2004/17 does not govern contracts which ‘contracting entities’, within the meaning of Article 2(2), conclude in respect of activities not mentioned in Articles 3 to 7.

46. That solution is founded on Community case-law. In the judgment in Strabag and Kostmann , (31) the Court held that Directive 93/38 (and therefore Directive 2004/17 too) applies to ‘contracting entities’ in so far as they carry out activities in the material sectors provided for therein. Otherwise, contracts concluded by those entities are subject, where applicable, to the legislation on public procurement (paragraph 37).

B – The concept of a body governed by public law: the significance of the level of competition in the market (second question)

47. All those who have taken part in these preliminary ruling proceedings are agreed that the contract in the main proceedings concerns an activity of Fernwärme Wien which does not come under Directive 2004/17 (the construction of a refrigeration plant for an office and shopping centre), for which reason, in line with the reply I have proposed to the first question, it is appropriate to ascertain, as the referring court requests, whether the undertaking is a contracting authority because, if it were, it would be governed by Directive 2004/18.

48. Specifically, it is necessary to determine whether Fernwärme Wien is a body governed by public law. It is not in dispute that the undertaking has legal personality and is closely connected with Vienna City Council, which owns its capital, directly and indirectly. The uncertainty concerns the first legislative requirement, which is whether its particular aim is to satisfy needs in the general interest, not having an industrial or commercial character.

49. Further, it is common ground that the object of the undertaking is in the general interest, since it provides a district heating service by means of an environmentally friendly system, such as waste combustion. (32) The core of the dispute is therefore merely to decide whether that service has an industrial or commercial character.

50. For that purpose, it is necessary to take into account all the relevant legal and factual circumstances, such as those prevailing at the time of establishment of the body concerned and the conditions under which it exercises its activity, (33) including, in particular, the fact that it does not aim primarily at making a profit, the fact that it does not bear the risks, and any public financing of the activity in question. (34)

51. In that connection, it is necessary to examine the effect on the concept of the structure of the sector in which the body concerned carries out its activity. First of all, the wording of the directive makes no reference at all to whether or not there may be competition with private undertakings, (35) a situation which might be indicative that the public interest to be satisfied is industrial or commercial in nature (36) but would be insufficient to exclude considerations other than the economic, (37) since the fact that it pursues its activity in a closed market is not essential for the purposes of identifying a body as one governed by public law. (38)

52. The second question referred by the national court falls within the ambit of that case-law; it seeks to delimit the market concerned with a view to establishing the level of competition, but it starts from an erroneous premiss (which has been adopted by all those who have participated in these preliminary ruling proceedings), as is clear from the considerations I set out in my analysis of the first question.

53. In fact, Directive 2004/18 is founded on a subjective theory, applying to any organisational structure which acts as a ‘contracting authority’, regardless of the material sphere in which it operates (infection theory), unless it awards contracts that are excluded pursuant to Articles 12 to 18. In the case of ‘bodies governed by public law’, the directive requires such bodies to have been specifically established for the purpose of meeting needs in the general interest, not having an industrial or commercial character, so the market to be taken into consideration in order to assess the level of competition and identify whether the activity of such a body is industrial or commercial is the market for which the body was founded, (39) which, in the case of Fernwärme Wien, is the supply of district heating by means of waste combustion.

54. Any other approach would lead to a result at odds with the functional interpretation put forward in Community case-law, (40) thereby compromising the effectiveness of Directive 2004/18. In order to avoid the application of that provision, it would suffice for a body established solely to meet needs in the general interest, not having an industrial or commercial character, to pursue strictly commercial activities while retaining its initial objects, and, when it increases the markets in which it participates, that body would avoid being classified as a body governed by public law, with the result that all its contracts, regardless of their nature, would be concluded free from the requirements of the harmonised Community legislation. In essence, my view supplements the solution in Universale-Bau , (41) which concerned a converse situation in which the undertaking in question had been established for an exclusively private activity and subsequently became responsible for running a public service. In both cases, the functional interpretation is guided by the fact that undertakings which meet needs in the general interest and are capable of operating outside market forces may award contracts without having regard to those forces.

55. Directive 2004/18 leaves no alternative, since, just as the State and regional or local authorities continue to be classified as contracting authorities when they award contracts in open sectors, so do the structures which those regional or local authorities establish with legal personality and under their control for the purposes of ‘meeting needs in the general interest, not having an industrial or commercial character.’ That interpretation is redolent of aspects of the case-law of the Court. In Mannesmann Anlagenbau Austria and Others , the Court noted that the condition that the body must have been established for the specific purpose of meeting such needs does not mean that it may meet only such needs (paragraph 26) and may not engage in other activities, even when such tasks constitute the greater part of its activity, because the legal definition does not take into account the relative importance of such tasks within its overall business (paragraphs 25, 26 and 31). (42)

56. In the light of those considerations, I propose that the Court should inform the Vergabekontrollsenat des Landes Wien that the supply of district heating is the market which it must examine for the purposes of determining whether Fernwärme Wien is to be classified as ‘a body governed by public law’, within the meaning of Article 1(9) of Directive 2004/18.

57. In any event, the examination to which the second question relates appears to be immaterial because, in the light of the information set out in the order for reference, regardless of which sector is delimited (district heating alone or heating produced by means of other fuel as well), Fernwärme Wien is currently the only undertaking capable of meeting that need in the general interest, being able to act in line with criteria other than strictly economic, a situation which justifies the intervention of Community law in order to harmonise the award criteria, open up the market to competition, and guarantee its transparency.

C – Whether there has been an infringement of the infection theory (third question)

58. The Commission has failed to grasp correctly the point of the third question. The Vergabekontrollsenat des Landes Wien does not seek to ascertain the importance of the level of competition in the market concerned in order to establish whether the public procurement directives apply, which is the subject-matter of the second question. More simply, the referring court asks whether a contracting entity or a contracting authority which carries out in parallel industrial or commercial activities in an open market, is, with regard to the those activities, subject to the 2004 directives if, by using mechanisms such as separate balance sheets and accounts, it eliminates the risk of cross-financing between the different spheres of its business activity.

59. The question is without pertinence so far as Directive 2004/17 is concerned, for, as I have indicated, contracting entities are governed by its provisions only when they carry out activities in the material sectors which form the subject-matter of the directive, unless those activities are pursued in conditions of free competition, in which case, pursuant to Article 30(1), the harmonising provisions of the directive do not apply.

60. The analysis is restricted, therefore, to establishing whether contracting authorities, in particular bodies governed by public law, which carry on activity in both competitive and closed markets, must comply with Directive 2004/18 when they award contracts in open markets in the circumstances set out in the third question (absence of cross-financing).

61. The infection theory is based on the objectives of the Community legislation harmonising public procurement, which are set out in paragraph 31 of this Opinion. The intention is that those who have the capacity to award contracts should be guided by economic criteria, thereby avoiding the temptation to follow other guidelines which give preference to national tenderers to the detriment of foreign ones, so ‘contracting authorities’ which, by definition, are capable of avoiding market forces, must in all cases comply with Directive 2004/18. In its definition of a public contract, that directive does not require the contract to be related to the contracting authority’s task of meeting needs in the general interest (Article 1(2), in conjunction with Annexes I and II). The Court previously put forward that reasoning in the judgment in Mannesmann Anlagenbau Austria and Others (paragraph 32) in connection with Directive 93/37.

62. As the Court pointed out in paragraph 34 of that judgment, the infection theory is also based on the principle of legal certainty, in accordance with which the definition of a body governed by public law must not take into account the specific proportion of the industrial or commercial activities concerned.

63. In the Opinion in Impresa Portuale di Cagliari (paragraph 68), Advocate General Jacobs suggests an exception for cases where it may be demonstrated that there is complete economic, financial and accounting separation between the different types of activity of a body governed by public law.

64. I see no problem in accepting his suggestion in theory; (43) the prudence which must guide the framers of case-law requires it to be dismissed for, as the Community market now stands, experience teaches us that economic activities and business relationships are highly complex, making it extremely difficult to effect such a radical separation as that proposed by my colleague, which, as the order for reference states, appears possible only between independent undertakings, and, even then, not always. Even if the accounts are kept separately and cross-subsidisation is excluded, the strategic management, the structural decisions and the assets are one and there is nothing to guarantee that the different spheres of activity are watertight or that, in crisis situations, the rules of conduct of a closed market will not have an effect on those of an industrial or commercial activity, leading the contracting body governed by public law to be guided by ‘sub-economic’ criteria – a risk which would give rise to the application of the Community provisions harmonising the award of public contracts. Thus, the principle of legal certainty, on which the position of the Court in this area is founded, calls for those rules to be maintained.

65. In that regard, there are also many other practical obstacles, since the burden of proving that the activity concerned is independent from the other sectors of activity falls to the ‘body governed by public law’, so that it would be necessary to establish a method of reviewing (in advance or a posteriori ) the initial decisions on procurement taken by that body and of verifying, first of all, that its different areas of activity are completely separate and, next, that the contract awarded falls within the sector excluded from Community harmonisation; otherwise, it would be possible to exclude at will the application of that body of rules. That approach complicates the intricate Community system of public procurement, (44) and it would not, therefore, be appropriate to adopt a solution which, without bestowing any benefit whatsoever, jeopardises a fundamental principle such as that of legal certainty.

66. In summary, I consider that, in any event, a ‘body governed by public law’ falls under Directive 2004/18, regardless of the nature of the contracts it concludes, unless those contracts are expressly excluded by the Directive (Articles 12 to 18).

VII – Conclusion

67. In the light of the foregoing considerations, I propose that the Court should:

(1) Declare that it lacks jurisdiction to answer the questions referred for a preliminary ruling by the Vergabekontrollsenat des Landes Wien, because that body is not a court or tribunal within the meaning of Article 234 EC.

(2) In the alternative, if it were to hold the reference admissible, declare that:

‘(a) A “contracting entity”, within the meaning of Article 2(2) of Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors, is not subject to the provisions of that directive when it carries out activities other than those referred to in Articles 3 to 7 thereof.

(b) The market which must be analysed for the purpose of determining its level of competition and ascertaining whether the undertaking Fenwärme Wien GmbH is a “body governed by public law”, for the purposes of Article 1(9) of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, is the market for the supply of district heating in the City of Vienna.

(c) Where tenders are invited by a “body governed by public law” for the contracts referred to in Directive 2004/18, those contracts are always governed by the provisions of that directive, even when they are performed in competitive conditions.’

(1) .

(2)  – OJ 2004 L 134, pp. 114 and 1 respectively.

(3)  – Case C‑44/96 [1998] ECR I‑73.

(4)  – Case C‑174/03, not published in the European Court Reports (paragraph 68).

(5)  – Case C‑17/00 [2001] ECR I‑9445.

(6)  – LGBl., No 25/2003.

(7)  – In the field of public procurement, the approximation of laws began with Council Directive 71/305/ EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (OJ English Special Edition: Series I Chapter 1971(II), p. 682), which, after a number of amendments, was consolidated under the same title in Directive 93/37/EEC of 14 June 1993 (OJ 1993 L 199, p. 54). The coordination of procedures for the award of public supply contracts was initially governed by Council Directive 77/62/EEC of 21 December 1976 (OJ 1977 L 13, p. 1) and subsequently by Council Directive 93/36/EEC of 14 June 1993 (OJ 1993 L 199, p. 1). Public service contracts were subject to Council Directive 92/50/EEC of 18 June 1992 (OJ 1992 L 209, p. 1). Prior to their inclusion in Directive 2004/18, the foregoing provisions were updated in European Parliament and Council Directive 97/52/EC of 13 October 1997 (OJ 1997 L 328, p. 1).

(8)  – The directive succeeds Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (OJ 1993 L 199, p. 84).

(9)  – A 99.999% stake is held by Wien Energie GMBH and a 0.001% stake by Wiener Stadwerke Holding AG. The former is owned by the latter, whose sole shareholder is the City of Vienna.

(10)  – Case C‑92/00 [2002] ECR I‑5553.

(11)  – Barav, A., ‘Tâtonnement préjudiciel. La notion de juridiction en droit communautaire’, Liber amicorum Bo Vesterdorf, Emile Bruylant, Brussels, 2007 (printing underway), draws attention to the ambiguous inconsistency of the case‑law which persists in focusing on characteristics which, for the most part, are neither specific nor exclusive to the concept of a court or tribunal, thereby making it more difficult to define the term correctly.

(12)  – Moitinho de Almeida, J.C., ‘La notion de juridiction d´un Etat membre (article 177 du traité CE)’, Mélanges F. Schockweiler, Baden-Baden, Nomos Verlagsgesellschaft, pp. 463, 464 and 478, observes that the development of Community case-law has given rise to a number of uncertainties which the Court must resolve.

(13)  – That fact is not mentioned in the judgment in HI .

(14)  – [2007] ECR I‑00000.

(15)  – By way of example, in addition to HI , attention should also be drawn to Case C‑470/99 Universale-Bau [2002] ECR I‑11617.

(16)  – In the Opinion in Case C‑54/96 Dorsch Consult [1997] ECR I‑4961, Advocate General Tesauro observed that, if a body is not a judicial body, ‘it does not become one simply because there is no better solution’ (paragraph 40).

(17)  – As I pointed out in the Opinion in Case C‑259/04 Emanuel [2006] ECR I‑3089, paragraph 26.

(18)  – Sarmiento, D., Poder Judicial e integración europea. La construcción de un modelo jurisdiccional para la Unión, Thomson-Civitas, Madrid, 2004, pp. 201 to 203, analyses the influence of the De Coster Opinion on subsequent case-law.

(19)  – Case C‑516/99 [2002] ECR I‑4573.

(20)  – Case C‑53/03 [2005] ECR I‑4609.

(21)  – In connection with that administrative body, Lenaers, K., Arts, D., and Maselis, I., ‘Procedural Law of the European Union’, Robert Bray editor, London, Sweet & Maxwell, 2006, pp. 40 and 41, describe the transition of the Court of Justice towards a more restrictive construction of the concept of court or tribunal.

(22)  – Joined Cases C‑110/98 to C‑147/98 Gabalfrisa and Others [2000] ECR I‑1577.

(23)  – Case C‑67/91 Asociación Española de Banca Privada and Others [1992] ECR I‑4785.

(24)  – Sarmiento, D., op. cit., p. 200, asserts that the De Coster opinion ‘amounted to the strongest attack on the case-law of the Court of Justice in that area’ and that it provides ‘some order in the chaos of the case-law’.

(25)  – Cienfuegos, M., ‘La noción comunitaria de órgano jurisdiccional de un Estado miembro ex artículo 234 del Tratado CE y su necesaria revisión’, Gaceta Jurídica de la Unión Europea y de la Competencia, July/August 2005, No 238, p. 26, warns of the insufficiency of interim solutions, such as making stricter the traditional criterion of the independence of the referring court, by tailoring its application to each individual case, and proposes, in line with the De Coster Opinion, a general alteration of the definition of court or tribunal.

(26)  – Inter alia , the judgments in Case 103/88 Fratelli Costanzo [1989] ECR 1839, paragraph 18 in fine; Case C‑360/96 BFI Holding [1998] ECR I‑6821, paragraph 41; Case C‑380/98 University of Cambridge [2000] ECR I‑8035, paragraph 16; and Case C‑237/99 Commission v France [2001] ECR I‑939, paragraph 41.

(27)  – Judgments in Mannesmann Anlagenbau and Others , paragraph 33; BFI Holding , paragraph 42; University of Cambridge , paragraph 17; and Commission v France , paragraph 42.

(28)  – Articles 3(4) and (5) of Directive 71/305 and 2(2) of Directive 77/62.

(29)  – Fourth to sixth recitals in the preamble to Directive 71/305 and sixth to eighth recitals in the preamble to Directive 77/62. That view is confirmed in the recital 8 in the preamble to Directive 93/38.

(30)  – That recital excludes from the scope of Directive 93/38 ‘… activities of those entities which either fall outside the sectors of water, energy and transport services or outside the telecommunications sector, or which fall within those sectors but are nevertheless directly exposed to competitive forces in markets to which entry is unrestricted’.

(31)  – Joined Cases C‑462/03 and C‑463/03 [2005] ECR I‑5397, which, by decision of the Court, was decided without an advocate general’s opinion.

(32)  – The Court has taken a generous approach to the definition of ‘needs in the general interest’. The Court has not restricted the definition to the institutional operation of the State or to the concept of public order (judgments in Mannesmann Anlagenbau Austria and Others paragraph 24, and Case C‑283/00 Commission v Spain [2003] ECR I‑11697, paragraph 85), and has extended it to the organisation of fairs, exhibitions and other similar initiatives (judgment in Joined Cases C‑223/99 and C‑260/99 Agorà and Excelsior [2001] ECR I‑3605, paragraphs 33 and 34); to the buying, selling and leasing of properties and the supply of property management services for a local authority (judgment in Case C‑18/01 Korhonen and Others [2003] ECR I‑5321, paragraphs 41 and 45); and to the construction of housing intended for selling or leasing to families of low means (judgment in Commission v France , paragraph 47).

(33)  – Judgments in Case C‑373/00 Adolf Truley [2003] ECR I‑1931, paragraph 66, and Korhonen and Others , paragraphs 48 and 59.

(34)  – Judgment in Korhonen and Others , paragraph 59.

(35)  – Judgment in BFI Holding , paragraph 40.

(36)  – Judgments in BFI Holding , paragraph 49; Agorà and Excelsior , paragraph 38 in fine ; and Adolf Truley , paragraph 60.

(37)  – Judgments in BFI Holding , paragraph 43, and Adolf Truley , paragraph 61. According to paragraph 44 of the judgment in BFI Holding , it is hard to imagine any activities that could not be carried on by private undertakings, and therefore the absence of competition would render meaningless the term ‘body governed by public law’ used in the directives.

(38)  – Judgment in BFI Holding , paragraph 47 in fine.

(39) – In BFI Holding , the Court noted that the absence of an industrial or commercial character is a criterion intended to clarify the meaning of the term ‘needs in the general interest’ (paragraph 32).

(40)  – Judgments in Case C‑353/96 Commission v Ireland [1998] ECR I‑8565, paragraph 36; BFI Holding , paragraph 62; Commission v France, paragraph 43; Case C‑214/00 Commission v Spain [2003] ECR I‑4667, paragraph 53; and Commission v Spain (C‑283/00), paragraph 73.

(41)  – In that case the Court held that the activities pursued by a body should be taken into account to establish whether the body was established to meet needs in the general interest, not having an industrial or commercial character (paragraph 56).

(42)  – For similar reasoning see the judgments in BFI Holding (paragraphs 55 and 56), Adolf Truley (paragraph 56) and Korhonen and Others (paragraph 58).

(43)  – In fact, Advocate General Jacobs seeks to transfer to the field of public procurement concepts from the field of State aid which is incompatible with the common market, which is the subject-matter of Commission Directive 2006/111/EC of 16 November 2006 on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings (OJ 2006 L 318, p. 17), and of its identically titled predecessor Commission Directive 80/723/EEC of 25 June 1980 (OJ 1980 L 195, p. 35).

(44)  – In the Opinion cited (paragraph 60), Advocate General Jacobs draws attention to that complexity, which is also pointed out by the Commission in its Communication – Public procurement in the European Union, COM(98) 143 final, of 11 March 1998, p. 3, and in the Green Paper – Public procurement in the European Union: exploring the way forward, COM(96) 583 final, of 27 November 1996, p. 5, point 2.10, and p. 8, point 3.6.