Case C‑388/12

Comune di Ancona

v

Regione Marche

(Request for a preliminary ruling from the Tribunale amministrativo regionale per le Marche)

‛Structural Funds — European Regional Development Fund (ERDF) — Financial contribution from a Structural Fund — Criteria for the eligibility of expenditure — Regulation (EC) No 1260/1999 — Article 30(4) — Principle of durability of the operation — ‘Substantial modification’ of an operation — Award of a concession contract without advertisement or a competitive tendering procedure’

Summary — Judgment of the Court (Fourth Chamber), 14 November 2013

1. Economic, social and territorial cohesion — Structural assistance — Financing by the European Union — Regulation No 1260/1999 — Financial contribution from the Funds — Eligibility of expenditure — Conditions — Durability of the operation — Scope — Lack of substantial modifications within the period of five years from the decision of the national authorities or the managing authority on the contribution of the Funds

   (Council Regulation No 1260/1999, Art. 30(4))

2. Economic, social and territorial cohesion — Structural assistance — Financing by the European Union — Regulation No 1260/1999 — Financial contribution from the Funds — Eligibility of expenditure — Conditions — Durability of the operation — Lack of substantial modification — Element constituting such a modification — Grant of an unfair advantage — Determination by the national court

   (Council Regulation No 1260/1999, Art. 30(4))

3. Economic, social and territorial cohesion — Structural assistance — Financing by the European Union — Regulation No 1260/1999 — Financial contribution from the Funds — Eligibility of expenditure — Conditions — Durability of the operation — Lack of substantial modification — Concept of substantial modification — Use of works for activities other than those envisaged in the project submitted for funding — Included — Conditions

   (Council Regulation No 1260/1999, Art. 30(4))

4. Freedom of establishment — Freedom to provide services — Award, without a call for tenders, of a public service concession — Lawfulness — Conditions — Compliance with the obligation of transparency — Certain cross-border interest — Assessment by the national court

   (Arts 49 and 56 TFEU)

1.  Article 30(4) of Regulation No 1260/1999 laying down general provisions on the Structural Funds must be interpreted as meaning that the modifications referred to in that provision include not only those that take place during the performance of a project but also those that take place afterwards, in particular in the course of the project’s management, provided that those modifications take place within the five-year period specified in that provision.

   The Structural Funds pursue objectives that cannot be achieved unless the grants made by those funds and the related controls cover not only the measures and expenditure connected with the carrying out of an operation, but also the measures and expenditure connected with the procedures for the operation’s implementation and management, within the five-year period specified in Article 30(4) of Regulation No 1260/1999. That is the only way of ensuring that action under the funds is efficient, by preventing them from being used to fund projects which, once carried out, undergo a modification to their management, as a result of which they no longer contribute to the objectives for which the funding was granted.

   (see paras 28, 29, operative part 1)

2.  The existence of an undue advantage is one of the factors which potentially constitute a substantial modification for the purposes of Article 30(4) of Regulation No 1260/1999 laying down general provisions on the Structural Funds. Accordingly, before making a finding as to the existence or not, in the circumstances of the case before it, of a substantial modification for the purposes of that provision, the referring court must, in particular, determine whether the contested modification has given rise to an undue advantage and/or whether it has affected the nature or implementation conditions of the operation.

   Therefore, that provision must be interpreted as meaning that in order to undertake an assessment as to whether the grant of the concession generates substantial revenue for the contracting authority or undue advantage for the concessionaire, it is not first necessary to establish whether the works under concession have undergone a substantial modification.

   (see paras 31-33, operative part 2)

3.  Article 30(4) of Regulation No 1260/1999 laying down general provisions on the Structural Funds must be interpreted as referring both to physical modifications — where the works carried out are not as specified in the project approved for funding — and to modifications affecting function, it being understood that, in the case of a modification consisting in the use of works for activities other than those originally envisaged in the project submitted for funding, such a modification must be capable of significantly reducing the capacity of the operation in question to attain its designated objective.

   In the light of the second condition laid down in point (b) of the first subparagraph of Article 30(4) of that regulation, it must also be pointed out that, for it to be possible to classify the modification consisting in the use of the works for activities other than those envisaged in the project submitted for funding as a ‘substantial modification’ for the purposes of Article 30(4) of that regulation, that modification must have been brought about as a result of the — at least partial — cessation of some of the activities envisaged in the project submitted for funding.

   (see paras 41, 42, operative part 3)

4.  EU law does not preclude the award, without a call for tenders, of a public service concession relating to works, provided that that award is consistent with the principle of transparency, observance of which, without necessarily entailing an obligation to call for tenders, must make it possible for an undertaking located in the territory of a Member State other than that of the contracting authority to have access to appropriate information regarding that concession before it is awarded, so that, if that undertaking so wishes, it would be in a position to express its interest in obtaining that concession — it being for the referring court to determine whether that was the position in the case before it.

   To the extent that a concession may also be of interest to an undertaking located in a Member State other than the Member State of the contracting authority, the award, in the absence of any transparency, of that concession to an undertaking located in the latter Member State amounts to a difference in treatment to the detriment of the undertakings located in other Member States. In the absence of any transparency, the undertakings located in those other Member States have no real possibility of manifesting their interest in obtaining the concession in question. Unless it is justified by objective circumstances, such a difference in treatment, which, by excluding all undertakings located in another Member State, operates mainly to the detriment of the latter undertakings, amounts to indirect discrimination on the basis of nationality, prohibited under Articles 49 TFEU and 56 TFEU.

   In that respect, the fact that a concession is not capable of generating substantial net revenue or an undue advantage for an undertaking or for a public body does not, in itself, support the inference that the concession is of no economic interest for undertakings located in Member States other than that of the contracting authority. In the context of an economic strategy to extend part of its activities to another Member State, an undertaking may take the tactical decision to seek the award in that State of a concession despite the fact that that concession is incapable as such of generating sufficient profit, since that opportunity could nevertheless enable the undertaking to establish itself on the market of that State and to make itself known there with a view to preparing its future expansion.

   (see paras 47, 48, 51, 52, operative part 4)

Case C‑388/12

Comune di Ancona

v

Regione Marche

(Request for a preliminary ruling from the Tribunale amministrativo regionale per le Marche)

‛Structural Funds — European Regional Development Fund (ERDF) — Financial contribution from a Structural Fund — Criteria for the eligibility of expenditure — Regulation (EC) No 1260/1999 — Article 30(4) — Principle of durability of the operation — ‘Substantial modification’ of an operation — Award of a concession contract without advertisement or a competitive tendering procedure’

Summary — Judgment of the Court (Fourth Chamber), 14 November 2013

1. Economic, social and territorial cohesion — Structural assistance — Financing by the European Union — Regulation No 1260/1999 — Financial contribution from the Funds — Eligibility of expenditure — Conditions — Durability of the operation — Scope — Lack of substantial modifications within the period of five years from the decision of the national authorities or the managing authority on the contribution of the Funds

   (Council Regulation No 1260/1999, Art. 30(4))

2. Economic, social and territorial cohesion — Structural assistance — Financing by the European Union — Regulation No 1260/1999 — Financial contribution from the Funds — Eligibility of expenditure — Conditions — Durability of the operation — Lack of substantial modification — Element constituting such a modification — Grant of an unfair advantage — Determination by the national court

   (Council Regulation No 1260/1999, Art. 30(4))

3. Economic, social and territorial cohesion — Structural assistance — Financing by the European Union — Regulation No 1260/1999 — Financial contribution from the Funds — Eligibility of expenditure — Conditions — Durability of the operation — Lack of substantial modification — Concept of substantial modification — Use of works for activities other than those envisaged in the project submitted for funding — Included — Conditions

   (Council Regulation No 1260/1999, Art. 30(4))

4. Freedom of establishment — Freedom to provide services — Award, without a call for tenders, of a public service concession — Lawfulness — Conditions — Compliance with the obligation of transparency — Certain cross-border interest — Assessment by the national court

   (Arts 49 and 56 TFEU)

1.  Article 30(4) of Regulation No 1260/1999 laying down general provisions on the Structural Funds must be interpreted as meaning that the modifications referred to in that provision include not only those that take place during the performance of a project but also those that take place afterwards, in particular in the course of the project’s management, provided that those modifications take place within the five-year period specified in that provision.

   The Structural Funds pursue objectives that cannot be achieved unless the grants made by those funds and the related controls cover not only the measures and expenditure connected with the carrying out of an operation, but also the measures and expenditure connected with the procedures for the operation’s implementation and management, within the five-year period specified in Article 30(4) of Regulation No 1260/1999. That is the only way of ensuring that action under the funds is efficient, by preventing them from being used to fund projects which, once carried out, undergo a modification to their management, as a result of which they no longer contribute to the objectives for which the funding was granted.

   (see paras 28, 29, operative part 1)

2.  The existence of an undue advantage is one of the factors which potentially constitute a substantial modification for the purposes of Article 30(4) of Regulation No 1260/1999 laying down general provisions on the Structural Funds. Accordingly, before making a finding as to the existence or not, in the circumstances of the case before it, of a substantial modification for the purposes of that provision, the referring court must, in particular, determine whether the contested modification has given rise to an undue advantage and/or whether it has affected the nature or implementation conditions of the operation.

   Therefore, that provision must be interpreted as meaning that in order to undertake an assessment as to whether the grant of the concession generates substantial revenue for the contracting authority or undue advantage for the concessionaire, it is not first necessary to establish whether the works under concession have undergone a substantial modification.

   (see paras 31-33, operative part 2)

3.  Article 30(4) of Regulation No 1260/1999 laying down general provisions on the Structural Funds must be interpreted as referring both to physical modifications — where the works carried out are not as specified in the project approved for funding — and to modifications affecting function, it being understood that, in the case of a modification consisting in the use of works for activities other than those originally envisaged in the project submitted for funding, such a modification must be capable of significantly reducing the capacity of the operation in question to attain its designated objective.

   In the light of the second condition laid down in point (b) of the first subparagraph of Article 30(4) of that regulation, it must also be pointed out that, for it to be possible to classify the modification consisting in the use of the works for activities other than those envisaged in the project submitted for funding as a ‘substantial modification’ for the purposes of Article 30(4) of that regulation, that modification must have been brought about as a result of the — at least partial — cessation of some of the activities envisaged in the project submitted for funding.

   (see paras 41, 42, operative part 3)

4.  EU law does not preclude the award, without a call for tenders, of a public service concession relating to works, provided that that award is consistent with the principle of transparency, observance of which, without necessarily entailing an obligation to call for tenders, must make it possible for an undertaking located in the territory of a Member State other than that of the contracting authority to have access to appropriate information regarding that concession before it is awarded, so that, if that undertaking so wishes, it would be in a position to express its interest in obtaining that concession — it being for the referring court to determine whether that was the position in the case before it.

   To the extent that a concession may also be of interest to an undertaking located in a Member State other than the Member State of the contracting authority, the award, in the absence of any transparency, of that concession to an undertaking located in the latter Member State amounts to a difference in treatment to the detriment of the undertakings located in other Member States. In the absence of any transparency, the undertakings located in those other Member States have no real possibility of manifesting their interest in obtaining the concession in question. Unless it is justified by objective circumstances, such a difference in treatment, which, by excluding all undertakings located in another Member State, operates mainly to the detriment of the latter undertakings, amounts to indirect discrimination on the basis of nationality, prohibited under Articles 49 TFEU and 56 TFEU.

   In that respect, the fact that a concession is not capable of generating substantial net revenue or an undue advantage for an undertaking or for a public body does not, in itself, support the inference that the concession is of no economic interest for undertakings located in Member States other than that of the contracting authority. In the context of an economic strategy to extend part of its activities to another Member State, an undertaking may take the tactical decision to seek the award in that State of a concession despite the fact that that concession is incapable as such of generating sufficient profit, since that opportunity could nevertheless enable the undertaking to establish itself on the market of that State and to make itself known there with a view to preparing its future expansion.

   (see paras 47, 48, 51, 52, operative part 4)