Action brought on 8 October 2010 — European Commission v Federal Republic of Germany

(Case C-486/10)

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2011/C 13/28

Language of the case: German

Parties

Applicant: European Commission (represented by: G. Wilms and C. Zadra, acting as Agents)

Defendant: Federal Republic of Germany

Form of order sought

Pleas in law and main arguments

The subject-matter of the present claim is the contracts for pecuniary interest for waste water collection and disposal and the servicing, operation, maintenance and monitoring of the sewage system of the City of Hamm, which that City concluded with a legally-constituted sewage group, the Lippeverband. The Lippeverband is a public-law body required to fulfil tasks prescribed by law in the field of water management. Around 25 % of its members are private undertakings. Under the contracts at issue, the Lippeverband was to have taken over the collection and disposal of waste water in the area of the City of Hamm on 1 January 2004, for which purpose the City set up a remuneration package declared as a ‘special-interest contribution’. In order to have that service responsibility undertaken, the City of Hamm transfers the right to exclusive, long-term and comprehensive use of its sewage installations, for which the Lippeverband is to make a compensatory payment.

Although the service contracts in question are public service contracts within the meaning of Article 1(a) of Directive 92/50/EEC, they were concluded directly with the Lippeverband without a formal contract award procedure or a Europe-wide invitation to tender. The contracts are clearly to be classified as service contracts for pecuniary interest. They have been concluded by a public contracting authority for an unspecified period, have as their subject-matter the supply of waste-water disposal services within the meaning of Category 16 of Annex IA to that directive, and significantly exceed the threshold for application of the directive. Conclusion of the contracts should therefore have been subject to a Europe-wide invitation to tender.

Contrary to the assertions of the German Government, the transfer of the supply of services in question is neither a State measure of organisation nor a so-called ‘in-house’ award.

Firstly, it is doubtful whether a service responsibility can be transferred to a semi-public water authority such as the Lippeverband by a measure of State organisation, with approximately 25 % of private investors, without there being a Community contract award procedure. In the Commission’s view, measures of State organisation, to which the provisions on the award of public contracts do not apply, are conceivable only between public institutions, whose activities serve exclusively the public interest. The fact that water authorities are entrusted by law with certain responsibilities in respect of sewage management does not alter in any way the fact that the Lippeverband is not part of the national administrative organisation for the purposes of Community law. Irrespective, however, of whether that responsibility can be transferred to the Lippeverband by a measure of State organisation, in the present case there is no such transfer of responsibility. The fact that the City of Hamm pays an annual remuneration for the supply of the services by the Lippeverband clearly places those contracts in the category of service contracts for pecuniary interest and excludes the possibility of there being a transfer of responsibility as part of public administration.

Secondly, as regards the exclusion of a so-called ‘in-house’ transaction from application of the rules governing the award of public contracts, in accordance with the case-law of the Court of Justice, those exceptions cannot apply where a private undertaking has a holding, even a minority one — in the institution given that responsibility. In such a case, the public awarding authority cannot have the same control over the undertaking in question as over its own services.

It follows from that analysis that this is a public service contract for pecuniary interest and no exempting provisions apply. Thus, by the direct award by the City of Hamm of the city sewage contracts, the Federal Republic of Germany has infringed the provisions of Directive 92/50.

(1)  Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts (OJ 1992 L 209, p. 1).