Keywords
Summary

Keywords

1. Approximation of laws – Procurement procedures of entities operating in the water, energy, transport and postal services sectors – Directive 2004/17 – Scope

(European Parliament and Council Directives 2004/17, Arts 3 to 7 and 20(1), and 2004/18, Art. 12(1))

2. Approximation of laws – Procurement procedures of entities operating in the water, energy, transport and postal services sectors and public works contracts, public supply contracts and public service contracts – Directives 2004/17 and 2004/18 – Contracting authorities

(European Parliament and Council Directives 2004/17, Art. 2(1)(a), second subpara., and 2004/18, Art. 1(9), second subpara.)

3. Approximation of laws – Procurement procedures of entities operating in the water, energy, transport and postal services sectors and public works contracts, public supply contracts and public service contracts – Directives 2004/17 and 2004/18 – Scope

(European Parliament and Council Directives 2004/17 and 2004/18)

Summary

1. A contracting entity, within the meaning of Directive 2004/17 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors, is required to apply the procedure laid down in that directive only for the award of contracts which relate to activities carried out by that entity in one or more of the sectors listed in Articles 3 to 7 of that directive.

Article 20(1) of Directive 2004/17 provides that the latter does not apply to contracts which the contracting entities award for purposes other than the pursuit of their activities as described in Articles 3 to 7 thereof. The equivalent of that provision in Directive 2004/18 is the first paragraph of Article 12, which provides that that directive does not apply to public contracts which are awarded by contracting authorities exercising one or more of the activities referred to in Articles 3 to 7 of Directive 2004/17. Thus, the field of application of Directive 2004/17 is strictly circumscribed, which does not permit the procedures laid down therein to be extended beyond that field of application.

(see paras 28-29, operative part 1)

2. Under the second subparagraph of Article 2(1)(a) of Directive 2004/17 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors and the second subparagraph of Article 1(9) of Directive 2004/18 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, a ‘body governed by public law’ is any body which, first, was established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character, secondly, has legal personality and, thirdly, is financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law, or subject to management supervision by those bodies, or 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. Those three conditions are cumulative.

An entity established specifically for the purpose of supplying district heating to homes, public institutions, offices, undertakings in a local authority area by means of the use of energy produced by the destruction of waste, which has legal personality and of which the local authority wholly owns the share capital and monitors its economic and financial management, meets the two latter conditions laid down by those directives.

With regard to the first condition, it cannot be disputed that such an entity was established specifically to meet needs in the general interest. To provide heating for an urban area by means of an environmentally-friendly process constitutes an aim which is undeniably in the general interest. In that regard, it is immaterial that such needs are also met or can be met by private undertakings. It is important that they should be needs which, for reasons in the general interest, the State or a regional authority generally chooses to meet itself or over which it wishes to retain a decisive influence.

In order to ascertain whether the needs met by the entity in question have a character other than industrial or commercial, account must be taken of all the relevant law and facts such as the circumstances prevailing at the time when the entity concerned was established and the conditions under which it exercises its activity. In that regard, it is common ground that the pursuit of profit did not underlie its establishment. With regard, subsequently, to the relevant market which must be considered in order to ascertain whether the entity in question is exercising its activities in competitive conditions, account must be taken, having regard to the functional interpretation of the concept of a ‘body governed by public law’, of the sector for which that entity was created, that is to say, the supply of district heating by means of the use of energy produced by the burning of waste. In the sector under consideration, the entity in question enjoys a virtual monopoly. Furthermore, there is a considerable degree of autonomy in this sector, since it would be very difficult to replace the district heating system by another form of energy, and the local authority in question attaches a particular importance to this heating system, not least for reasons of environmental considerations, such that it would not permit it to be withdrawn, even if that system were to operate at a loss. Thus, since the entity in question is currently the only undertaking capable of meeting such needs in the general interest in the sector under consideration, it might choose to be guided by considerations other than economic ones in the award of its contracts.

It is immaterial whether, in addition to its duty to meet needs in the general interest, an entity is free to carry out other profit-making activities, provided that it continues to attend to the needs which it is specifically required to meet. The proportion of profit-making activities actually pursued by that entity as part of its activities as a whole is also irrelevant for its classification as a body governed by public law.

(see paras 36-45, 47-48, operative part 2)

3. All contracts awarded by an entity which is a body governed by public law, within the meaning of Directive 2004/17 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors or Directive 2004/18 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, which relate to activities carried out by that entity in one or more of the sectors listed in Articles 3 to 7 of Directive 2004/17 must be subject to the procedures laid down in that directive. However, all other contracts awarded by such an entity in connection with the exercise of other activities are covered by the procedures laid down in Directive 2004/18. Each of these two directives applies without distinction between the activities carried out by that entity to accomplish its task of meeting needs in the general interest and activities which it carries out under competitive conditions, and even where there is an accounting system intended to make a clear internal separation between those activities in order to avoid cross financing between those sectors.

(see para. 59, operative part 3)