1.

In Belgium, a public housing developer and a municipality decided to conclude a framework procurement agreement. Under that agreement, a contract for technical assistance in connection with the building of housing and a contract for asbestos surveying services were to be granted not by competitive tendering but by direct award to a third party, which was also a public entity.

2.

The authority commissioned by the Walloon Government to supervise the performance of public housing undertakings cancelled the aforementioned agreement on the ground that the conditions for a direct contract award were not met in that case.

3.

The two signatories to that agreement each challenged its cancellation on the ground that, in their view, the direct award was compatible with Directive 2014/24. ( 2 ) The dispute has now reached the highest administrative court in Belgium, which has in each case made a reference to the Court for a preliminary ruling.

4.

According to recital 31:

‘There is considerable legal uncertainty as to how far contracts concluded between entities in the public sector should be covered by public procurement rules. The relevant case-law of the Court of Justice of the European Union is interpreted differently between Member States and even between contracting authorities. It is therefore necessary to clarify in which cases contracts concluded within the public sector are not subject to the application of public procurement rules.

Such clarification should be guided by the principles set out in the relevant case-law of the Court of Justice of the European Union. The sole fact that both parties to an agreement are themselves public authorities does not as such rule out the application of procurement rules. However, the application of public procurement rules should not interfere with the freedom of public authorities to perform the public service tasks conferred on them by using their own resources, which includes the possibility of cooperation with other public authorities.

…’

5.

Recital 33 states:

‘Contracting authorities should be able to choose to provide jointly their public services by way of cooperation without being obliged to use any particular legal form. Such cooperation might cover all types of activities related to the performance of services and responsibilities assigned to or assumed by the participating authorities, such as mandatory or voluntary tasks of local or regional authorities or services conferred upon specific bodies by public law. The services provided by the various participating authorities need not necessarily be identical; they might also be complementary.

Contracts for the joint provision of public services should not be subject to the application of the rules set out in this Directive provided that they are concluded exclusively between contracting authorities, that the implementation of that cooperation is governed solely by considerations relating to the public interest and that no private service provider is placed in a position of advantage vis-à-vis its competitors.

In order to fulfil those conditions, the cooperation should be based on a cooperative concept. Such cooperation does not require all participating authorities to assume the performance of main contractual obligations, as long as there are commitments to contribute towards the cooperative performance of the public service in question. In addition, the implementation of the cooperation, including any financial transfers between the participating contracting authorities, should be governed solely by considerations relating to the public interest.’

6.

Article 12 (‘Public contracts between entities within the public sector’) provides:

‘1.   A public contract awarded by a contracting authority to a legal person governed by private or public law shall fall outside the scope of this Directive where all of the following conditions are fulfilled:

…

3.   A contracting authority, which does not exercise over a legal person governed by private or public law control within the meaning of paragraph 1, may nevertheless award a public contract to that legal person without applying this Directive where all of the following conditions are fulfilled.

4.   A contract concluded exclusively between two or more contracting authorities shall fall outside the scope of this Directive where all of the following conditions are fulfilled:

…’

7.

The company Société de logement de service public Sambre & Biesme ( 3 ) is a public entity in the legal form of a limited-liability cooperative society. Its main shareholders are the municipalities of Farciennes and Aiseau-Presles. It forms part of the network of public housing development companies in the Walloon Region (Belgium).

8.

In 2015, SLSP Sambre & Biesme and the municipality of Farciennes decided to create an ‘ecodistrict’ comprising some 150 public and private housing units in Farciennes. Given the scale of the project, the parties sought the assistance of the Intercommunale pour la gestion et la réalisation d’études techniques et économiques, ( 4 ) an entity also in the legal form of a limited-liability cooperative society.

9.

IGRETEC is comprised exclusively of legal persons governed by public law. In 2016, its members included more than 70 municipalities (including Farciennes) and more than 50 other ‘public authorities’. The municipalities held 5054351 voting shares, with the remaining public authorities holding 17126 such shares.

10.

Under IGRETEC’s articles of association, most of the votes and chairmanship of the various management bodies are reserved for the municipalities. The decisions of these bodies are adopted by majority of the votes cast by the municipal members.

11.

At the material time, a councillor from the Municipality of Farciennes, who was also a director of SLSP Sambre & Biesme, was a member of IGRETEC’s board of directors.

12.

On 29 October 2015, SLSP Sambre & Biesme decided to buy a single share in IGRETEC, for EUR 6.20, in order to benefit from its services. It thus became a member of the inter-municipal company, although its shareholding was purely symbolic. ( 5 )

13.

In January 2017, the Municipality of Farciennes and SLSP Sambre & Biesme drew up a draft framework agreement in order to establish their respective rights and obligations in the design and construction of the ecodistrict in Farciennes. The agreement contained the following clauses:

14.

On 9 February 2017, the board of directors of SLSP Sambre & Biesme decided: (a) ‘to approve the conclusion of a framework agreement on the conclusion of contracts in conjunction with the Municipality of Farciennes’; and (b) ‘not to issue a public call for tenders for asbestos surveying services’, the specifications for which it had previously approved, ‘in view of the in-house relationship between [SLSP Sambre & Biesme] and IGRETEC’. Those specifications are described as the first stage in the implementation of the ecodistrict project in Farciennes.

15.

On 10 February 2017, the SWL representative assigned to SLSP Sambre & Biesme challenged the aforementioned decisions (‘the contested decisions’) before SWL itself. SWL acts on behalf of the Walloon Government as the oversight authority responsible for supervising public housing development companies.

16.

On 25 February 2017, SWL annulled the contested decisions on the ground that the contracts for technical assistance (Article 5 of the framework agreement) and the contract for asbestos surveying had been awarded to IGRETEC without a public procurement procedure.

17.

In the view of SWL:

18.

As the SWL agreements are actionable before the administrative courts, SLSP Sambre & Biesme and the Municipality of Farciennes, proceeding separately, challenged the annulment of the contested decisions.

19.

The Conseil d’État (Council of State, acting as supreme administrative court, Belgium), to which it falls to rule on those actions, has made two references to the Court of Justice for a preliminary ruling.

20.

By the first reference (Case C‑383/21), it raises the following questions:

21.

In the second reference for a preliminary ruling (Case C‑384/21), the referring court raises the following questions in addition to those set out above:

22.

The requests for a preliminary ruling were registered at the Court on 24 June 2021. They were joined for the purposes of the written and oral stages of the procedure and the judgment.

23.

Written observations have been lodged by SLSP Sambre & Biesme, the Municipality of Farciennes, the Belgian Government and the Commission. All of those parties attended the hearing held on 30 March 2022.

24.

In accordance with the Court’s direction, this Opinion will deal with the first question in each case and with the fourth and fifth questions in the second case.

25.

The referring court explains that the Belgian law incorporating Directive 2014/24 into domestic law was not yet in force at the time of the facts forming the subject of the dispute, even though the time limit for transposition had already expired. ( 8 )

26.

The applicants in the two cases each maintain that that Article 12(3) and (4) of Directive 2014/24 has direct effect, since it contains unconditional and sufficiently precise provisions which establish rights for individuals which the latter may enforce against the State and all of the bodies comprising its administration. ( 9 )

27.

The Belgian Government and the Commission ( 10 ) take the opposite view. They argue that Article 12(3) and (4) of Directive 2014/24 does not fulfil the conditions for producing direct effect, inasmuch as, in essence:

28.

The outcome which I shall advocate below (that Article 12(3) and (4) of Directive 2014/24 is applicable to this dispute) would be arrived at in practice whether via the route of accepting that the benefit of any direct effect produced by those paragraphs extends to the public entities concerned, and is capable of being relied on by them against the State, or by simply arguing that, since that directive was not transposed within the time limit, those entities were bound by the aforementioned provisions. In my view, the latter proposition is correct.

29.

To my mind, the premiss underlying the aforementioned questions referred is not entirely sound. If it were, the answer would have to be along the lines of that which SWL advocated in the dispute in the main proceedings and which the Belgian Government and the Commission are putting forward in these proceedings.

30.

In support of that answer, I would recall that the primary purpose of the ‘direct effect’ doctrine developed by the Court in connection with directives is to protect individuals. It allows them to exercise the rights which directives confer on them and which they could not otherwise assert in the absence of the necessary implementing measures at national level.

31.

The Court’s settled case-law on the direct effect of directives, in particular those not transposed in time or not correctly transposed, establishes who can rely on such direct effect and under what conditions.

32.

In the recent judgment of 8 March 2022, the Court held:

33.

On that basis, I take the view that public entities such as the Municipality of Farciennes and SLSP Sambre & Biesme, which are simply an emanation of the State in a broad sense, cannot rely as against the latter on the (hypothetical) direct effect of Article 12 of Directive 2014/24.

34.

For one thing, even if that article were regarded as containing a ‘sufficiently precise’ form of words in paragraphs 3 and 4 thereof, it could not readily be said to be of an ‘unconditional nature’ or to impose an unequivocal obligation on Member States. On the contrary, it authorises those States, should they deem it appropriate to do so, to exclude contracts concluded between public-sector entities from the scope of Directive 2014/24.

35.

The Court explains that Article 12(1) of Directive 2014/24, ‘which … does no more than state the conditions which a contracting authority must observe when it wishes to conclude an in-house transaction, … empower[s] the Member States to exclude such a transaction from the scope of Directive 2014/24’. ( 14 )

36.

In the same vein, the Court states that Directive 2014/24 ‘does not require the Member States to have recourse to a public procurement procedure’ and ‘it cannot compel them to have recourse to an in-house transaction where the conditions laid down in Article 12(1) are satisfied’. ( 15 ) The same is true of paragraphs 3 and 4 of that article.

37.

That statement is consistent with the freedom of the Member States ‘as to the choice of means of providing services whereby the contracting authorities meet their own needs’. ( 16 )

38.

For another thing, as I have already said, municipal entities and bodies governed by public law (even if they take the form of commercial companies) cannot rely as against the State on the alleged ‘direct effect’ of Article 12(3) and (4) of Directive 2014/24. In their relations with the State bodies that control their decisions, municipal entities are not ‘individuals’ who are able to invoke that effect.

39.

For those reasons, and notwithstanding that I consider an answer to the question of the direct effect of Article 12(3) and (4) of Directive 2014/24 to be unnecessary in this dispute, my view, should the Court decide to address this question, which was extensively debated at the hearing, is the same as that expressed at that hearing by the Belgian Government and the Commission.

40.

Article 12 of Directive 2014/24 lays down the minimum conditions attached to a power the exercise of which, as I have said, the Member States may completely exclude. If they do not opt for exclusion, the only imaginable scenario in which Article 12 would have direct effect (on which only an economic operator considering itself to have been harmed would be eligible to rely) would be one in which a contracting authority sought to evade the public procurement rules and to have recourse to an in-house transaction or to horizontal cooperation in the absence of the minimum conditions laid down by the aforementioned article.

41.

The foregoing does not mean, however, that Article 12(3) and (4) of Directive 2014/24 is not applicable in this case.

42.

The requirement for public authorities to comply with Article 12(3) and (4) before the directive has been transposed derives not from any direct effect which those paragraphs might have, but from ‘the obligation imposed on all State authorities to comply with the provisions of directives (third paragraph of Article 288 TFEU) as well as to adhere to the duty of sincere cooperation and to ensure complete fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions (Article 4(3) TEU)’. ( 17 )

43.

The correct answer to the first question referred in each of the two references for a preliminary ruling should therefore, preferably, focus on the link that exists between public authorities and Directive 2014/24 (what might be called its binding effect, as the Commission described it at the hearing) in the case where that directive has not yet been transposed notwithstanding that the time limit for its transposition has expired.

44.

The Court has confirmed that requirement of compliance. ( 18 )

45.

So far as concerns the contracting authorities involved in these two disputes, the public nature of which is not in issue, this means that they were bound by Directive 2014/24 as from the date on which that directive should have been transposed. ( 19 )

46.

In the absence of transposition and irrespective of whether or not Article 12(3) and (4) of Directive 2014/24 had direct effect such as to enable individuals to rely on those provisions as against the public authorities or the entities answerable to them, the latter, in so far as they were acting as contracting authorities, were obliged to comply with the conditions laid down in that article.

47.

If, with a view to obtaining the services necessary to implement their respective projects, the Municipality of Farciennes and SLSP Sambre & Biesme preferred not to have recourse to the market and wished to avoid the customary public procurement procedures, they were, at the material time, subject to the conditions laid down in Article 12 of Directive 2014/24.

48.

Once the directive has been transposed, cooperation between public entities, whether vertical (in-house) or horizontal, will not be subject to the public procurement procedures if the Member State, exercising its freedom to do so, has decided to avail itself of the options for exclusion from the scope of Directive 2014/24 that are afforded to it by Article 12 as interpreted by the Court. ( 20 )

49.

Accordingly, where a Member State has chosen to permit the mechanisms for inter-administrative cooperation that are excluded from the formalised procedures laid down in Directive 2014/24, its contracting authorities must comply with the conditions laid down in Article 12(3) and (4) thereof, whether or not they intend to have recourse to the market in order to obtain particular services or supplies.

50.

The fifth question in Case C‑384/21 concerns the exclusion from the scope of Directive 2014/24 that is provided for in Article 12(4) thereof.

51.

Unlike the exclusion envisaged in Article 12(2) and (3) of Directive 2014/24, whereby a contracting authority (or a number of contracting authorities) must exercise control over a tenderer which has been awarded a public contract, the exclusion provided for in paragraph 4 is based on cooperation among contracting authorities between which no such relationship of control exists.

52.

The question referred arises from the arguments which the Municipality of Farciennes put forward in the alternative, in the event that it is concluded that, in the light of the relationship between SLSP Sambre & Biesme and IGRETEC, the conditions laid down in Article 12(3) of the directive are not met. ( 21 )

53.

The Municipality of Farciennes submits that, in the absence of the joint control provided for in that paragraph, horizontal cooperation between contracting authorities is still possible under Article 12(4) of Directive 2014/24. The cooperation between itself, SLSP Sambre & Biesme and IGRETEC is of this nature.

54.

I infer from reading its observations that the Municipality of Farciennes advocates two ways of understanding the relationship between the public entities in question:

55.

In both configurations, the relationship is covered by Article 12(4) of Directive 2014/24. Consequently, a public call for tenders is unnecessary.

56.

According to Article 12(4), a public contract does not fall within the scope of Directive 2014/24 if the three conditions laid down in points (a), (b) and (c) of that paragraph are cumulatively met. ( 24 )

57.

The national court’s doubts revolve around the concept of ‘cooperation’ within the meaning of that article, which must be interpreted independently. ( 25 )

58.

I explained on a different occasion ( 26 ) that the provision in question incorporates the Court’s case-law prior to codification but expands upon that case-law by clarifying it and making it more flexible, bringing the conditions it lays down into line to some extent with those applicable to the other scenarios in which certain contracts concluded by public-sector entities may be excluded from Directive 2014/24. ( 27 )

59.

This explains the following characteristics of horizontal cooperation that is not subject to the formalised public procurement procedures under Directive 2014/24:

60.

It is essential, on the other hand, that the collaboration between the parties should be intended to achieve objectives common to all of them. This is a key element of horizontal cooperation that differentiates the latter from the direct award of contracts to entities controlled by the contracting authority.

61.

This was the view taken by the Court in the judgment in Remondis II when referring to the ‘inherently collaborative dimension’ of the cooperation provided for in Article 12(4) of Directive 2014/24. That dimension can be seen in particular in the fact that, when drawing up the cooperation agreement, the parties define common needs and identify solutions to them. ( 33 )

62.

What is more, horizontal cooperation is based on a cooperative concept, meaning that it takes the form of reciprocal commitments on the part of those participating in it. Those commitments go beyond the performance of a particular service, on the one hand, and the remuneration for that service, on the other, as the judgment in Remondis II makes clear. ( 34 )

63.

The expression ‘cooperative concept’ explicitly contained in recital 33 of Directive 2014/24 is equivalent to the proposals for the requirement of a ‘genuine cooperation’‘involving mutual rights and obligations of the parties’. ( 35 ) It is not possible for one of the contracting authorities to be ‘a mere “buyer”’ ( 36 ) of the work, service or supply in question.

64.

The genuine nature of the cooperation is fundamental in any agreement that seeks to benefit from Article 12(4) of Directive 2014/24. That feature will make it possible to distinguish this form of horizontal cooperation from vertical (in-house) cooperation, as well as from contracts subject to public procurement procedures, whereby one party performs a task in accordance with specifications laid down by the other, which, in turn, simply pays for the performance of that task. ( 37 )

65.

The Municipality of Farciennes presents an initial scenario in support of its argument as to the existence of a relationship of horizontal cooperation between itself, SLSP Sambre & Biesmes and IGRETEC.

66.

In summary, I would recall that:

67.

In my opinion, the trilateral relationship as described above is not covered by Article 12(4) of Directive 2014/24. I concur in my assessment with the referring court, which takes the view that ‘the mere fact that [IGRETEC] performs, in the context of the agreement concluded between the Municipality of Farciennes and SLSP Sambre & Biesme, tasks aimed at implementing a joint project for the creation of the ecodistrict in Farciennes does not mean that IGRETEC itself cooperates on that project, or that it pursues an objective in common with the signatories to that agreement’. ( 38 )

68.

There are several reasons why I endorse that assessment by the referring court, with which the Commission concurs, in the light of the description of the facts provided by that court. I should emphasise that it is for that court alone to establish the factual framework for the dispute, and, in doing so, to evaluate the actions of the parties to the dispute and the purpose pursued by each of them in taking those actions.

69.

First, as the referring court notes in the terms I have just reproduced, there is no commonality of objectives that would warrant the existence between the three entities of cooperation within the meaning of Article 12(4) of Directive 2014/24. ( 39 )

70.

Following its analysis of IGRETEC’s articles of association and its involvement in the projects at issue, the Conseil d’État (Council of State, Belgium) notes that the tasks performed by IGRETEC in this case fall under ‘sector I’ of its corporate purpose, that is to say activities carried out on the market by consultancy and management firms specialising in the implementation of projects, not ‘sector II’, which is concerned with the region’s development from an economic, social and tourism point of view, and, in particular, the construction, financing and use of certain properties. ( 40 )

71.

Second, the collaborative dimension evidenced at the initial stage by the definition of needs and solutions common to the parties looking to cooperate is also lacking. At that stage, IGRETEC’s professional intervention may serve to enable the Municipality of Farciennes and SLSP Sambre & Biesme to identify and understand the needs of the ecodistrict project which they both wish to create. IGRETEC’s needs, on the other hand, are different.

72.

Third, the strategy for how best to share and pool the parties’ resources seems to me to be confined to the Municipality of Farciennes and SLSP Sambre & Biesme, even though they are working on the basis of options proposed by IGRETEC. ( 41 ) The latter does not actually provide any public service jointly with the municipality and SLSP Sambre et Biesme.

73.

Finally, IGRETEC’s incorporation into the relationship between the two contracting authorities ( 42 ) by way of the agreement on assistance with project management and legal and environmental services does not meet the requirements of genuine cooperation. By that agreement, the Municipality of Farciennes and SLSP Sambre & Biesme do not make, in relation to IGRETEC, any commitments that they would not make in a public call for tenders: they require services which IGRETEC offers and the sole obligation into which they enter in return is to pay for those services.

74.

The second scenario envisages a combination of horizontal and vertical cooperation whereby IGRETEC, controlled by one of the two participants in the horizontal cooperation (the Municipality of Farciennes), provides a service for the other participant (SLSP Sambre & Biesme) too and is paid by both.

75.

The Municipality of Farciennes takes the view that, when it commissions IGRETEC to provide assistance with project management and legal and environmental services, the latter uses the municipality’s own resources. That fact should also be taken into account in the context of the cooperation between itself and SLSP Sambre & Biesme.

76.

I cannot accept that argument, which the Municipality of Farciennes itself puts forward in the alternative (in the course of a submission which is itself ancillary to the main proposition) and on which, perhaps for that reason, it does not elaborate further.

77.

If I understand it correctly, the position of the Municipality of Farciennes is that the two entities party to the vertical cooperation relationship (IGRETEC and the municipality itself) are, by virtue of that relationship, a single entity for the purposes of horizontal cooperation with a third party. ( 43 ) There is therefore no need for both entities to sign the framework agreement with SLSP Sambre & Biesme.

78.

I do not concur with that argument. In the context of vertical (in-house) cooperation, the contracting authority and the delivery body over which it exercises a control similar to that which it holds over its own departments are formally distinct entities both before and after they conclude a public contract.

79.

Thus, the existence of an in-house relationship between the Municipality of Farciennes and IGRETEC is not sufficient to support the view that the requirements attached to the presence of horizontal cooperation with SLSP Sambre & Biesme are met.

80.

In the light of the foregoing, I propose that the Court’s answer to the Conseil d’État (Council of State, acting as supreme administrative court, Belgium) should be as follows: