1 Fair competition between the public and the private sector - Community law on public contracts and concessions Florian Ermacora European Commission, DG MARKT.C2

2 The principles of equal treatment and transparency have to be applied whenever a public authority entrusts the supply of economic activities to a third party.

3 The following situations do not constitute per se exceptions to the competition rule: 1.Award of public tasks to mixed capital companies (Institutionalised Public-Private Partnerships) 2.Award of service concessions 3.Award of public tasks to public authorities or public companies (public-public co-operation / intermunicipal co-operation)

4 1) Award of public tasks to mixed capital companies – Institutionalised Public Private Partnerships The EC Treaty applies when a public authority entrusts the supply of economic activities to a third party. The EC Public Procurement Directives apply to the award of public contracts independently of whether this award is combined with the establishment of a company or not. Any private participation in the capital of a company excludes the in-house status of this company (ECJ, C-26/03, Stadt Halle).

5 The process of founding Institutionalised Public Private Partnerships (IPPP) Community law requires a contracting entity to follow a fair and transparent procedure  either when selecting the private partner, who supplies goods, works or services through his participation in the IPPP,  or when granting a public contract or concession to the public-private entity. No double tendering procedure required.

6 The phase after founding the IPPP IPPP must remain within the scope of their initial object and can as a matter of principle not obtain any further public contracts or concessions without a procedure respecting EC law. But they must be able as well to adjust – within certain limits – to changes in the economic, legal or technical environment.

7 2) The award of service concessions Definition of service concession: Contract of the same type as a public contract except for the fact that the consideration for the services consists either solely in the right to exploit the services or in this right together with payment.

8 Legal regime for the award of service concessions The fundamental rules of the Treaty, in particular the principle of non discrimination apply to the award of service concessions (ECJ, C-324/98, Telaustria) The fundamental rules of the Treaty include: equality of treatment, transparency, proportionality Advertising must be sufficient to open the services market up to competition Applicable regime further spelt out in Commission Interpretative Communication on concessions under Community law of April 2000

9 3) Award of public tasks to public authorities or to public companies – Intermunicipal co-operation The national legislator could not a priori exclude relations between public bodies from the scope of procurement rules (ECJ, C-84/03, Commission vs Spain). Thus, the award of an economic activity from a contracting authority to another public entity is in principle covered by procurement rules.

10 Forms of intermunicipal co-operation not covered by procurement rules  In-house situations Contracting authority has a power of decisive influence over both strategic objectives and significant decisions of the third party (ECJ, C- 458/03, Parking Brixen) or third party is an instrument and technical service of the contracting authority.  Transfer of competences One contracting authority transfers completely public tasks to another public entity which performs these tasks thereafter in full independence.

11 Contact European Commission Directorate General for Internal Market and Services (Unit MARKT.C2) Florian Ermacora Tel.: Fax.: