European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

To constitute a public contract, the contract in question must be entered into by “one or more contracting authorities”. Pursuant to paragraph 1 of Article 2(1) of Directive No 2014/24, the State, regional or local authorities , bodies governed by public law and associations formed by one or several of such authorities or one or several of such bodies governed by public law are deemed to be contra …

Contracting authority

To constitute a public contract, the contract in question must be entered into by “one or more contracting authorities”. Pursuant to paragraph 1 of Article 2(1) of Directive No 2014/24, the State, regional or local authorities , bodies governed by public law and associations formed by one or several of such authorities or one or several of such bodies governed by public law are deemed to be contracting authorities. 

The concept of State or local or regional authority has a functional non-organic definition. Thus, in addition to the State and its authorities  under the traditional meaning, all bodies having legislative, executive and judicial powers, including bodies which, in a federal State, exercise those powers at federal level  are described as State authorities. A local land consolidation committee also falls within that category where its composition and functions are laid down by law, its members are appointed by the public authorities and the observance with its obligations are ensured by those authorities . The functional definition of the State body makes any objection derived from the absence of legal personality of the entity in question inoperative .

A body governed by public law is defined as any body: a) established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character; (b) having legal personality; and  (c) financed, for the most part, by the State, regional or local authorities, or by other bodies governed by public law; or are subject to management supervision by those authorities or bodies; or have 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 (Article 2(4)). Lists of those bodies notified by the Member States are set out in the Annex to the directive and are periodically supplemented. 

However, the lists of entities are not exhaustive and qualification problems have inevitably arisen for those not included in them. Even if the fact of appearing on those lists suggests what capacity the body concerned has, the bodies mentioned must, in all events, according to the European court, fulfill three cumulative criteria set by Article 1(9) . The issue of the legal personality is governed by the statutes of the body concerned. By contrast, the concept of establishment for the specific purpose of meeting needs in the general interest, not having an industrial and commercial character and the condition of control or financing, for the most part, by the State or regional or local authorities have been specified by the Court of Justice. Directive No 2014/24 clarifies in recital 10 that “a body which operates in normal market conditions, aims to make a profit, and bears the losses resulting from the exercise of its activity should not be considered as being a ‘body governed by public law’ since the needs in the general interest, that it has been set up to meet or been given the task of meeting, can be deemed to have an industrial or commercial character” adding that there is no longer any doubt that “being financed for the most part”, as the Court of Justice has clearly laid down, means “for more than half, and that such financing may include payments from users which are imposed, calculated and collected in accordance with rules of public law”.

1) Body established for specific purposes 

It is not necessary to have the body created by a law or a regulation  or established from the origin to meet needs in the general interest, not having an industrial or commercial character, provided that it has subsequently taken responsibility for such needs . The activity of the body may be divided and the fulfillment of needs in the general interest may only be incidental . As the concept of contracting authorities is functional, the mission may even be entrusted to a commercial company under public supervision where the cumulative conditions in Article 1(9) are fulfilled . Needs in general interest, not having an industrial and commercial character, may be defined as needs which are satisfied otherwise than by the supply of goods or services in the marketplace and which, for reasons associated with the general interest, the State chooses to provide itself or over which it wishes to retain a decisive influence . The general interest is assessed depending on the circumstances prevailing when the body was created and the conditions under which it exercises its activity. In this respect, the absence of competition on the market in question , of profit-making as a principal matter and of assumption of risks associated with the activity are decisive criteria . Activities falling within the category of needs in the general interest have included: production of documents which are closely linked to public order or the institutional operation of the State , removal and treatment of household refuse , organization of fairs and exhibitions , terracing, large-scale and specialist works for the construction of the second biological treatment phase of a sewage treatment plant , contribution to the prison policy of a Member State , activity of funeral undertaker , heating for an urban area by means of an environmentally-friendly process , and sports .

2) Financed for the most part or supervised by the State, regional or local authorities

The body must be supervised or financed for the most part by the State. Financing for the most part by the State shall mean in excess of 50% of all the body's resources . The condition of public financing only covers payments without consideration. It may be direct in case of university awards and grants  or indirect, such as a fee or contribution paid by users since it is charged, assessed and collected under public law rules . In any event, where the methods of financing of the body are highly changeable, this body must be regarded as a contracting authority until the procurement procedure has been completed, where it could be described as such at the date of commencement of the invitation to tender . Supervision by the State is established where the tasks of the body are determined and its agents are appointed by the State which gives it instructions . Thus, the supervision exercised by a minister on the compliance, by certain bodies, of very detailed management rules imposed on them by national law is sufficient to characterize the fact that the public body is supervised by the State . The situation in which, on the one hand, the public authorities supervise not only the annual accounts of the body concerned but also its conduct and, on the other hand, where they are authorized to inspect the business premises and facilities of that body and to report the results of those inspections to a regional authority which holds all the shares through another company, characterizes the supervision as required by the directive, unlike a mere ex-post review . Further, a company which, on the one hand, is wholly owned by a contracting authority whose activity consists of meeting needs in the general interest and which, on the other, carries out both transactions for that contracting authority and transactions on the competitive market is  a body governed by public law within the meaning of Article 2(1), provided that the activities of that company are necessary for the contracting authority to exercise its own activity and, in order to meet needs in the general interest, that company is able to be guided by non-economic considerations .

The expression "regional authorities" includes authorities listed non-exhaustively in NUTS 1 and 2, as referred to in  Regulation (EC) No 1059/2003 of the European Parliament and of the Council of 26 May 2003, while "local authorities" includes all authorities of the administrative units falling under NUTS 3 and smaller administrative units, as referred to in that regulation (Dir. No 2014/24, Art. 2(2)).

Case C-126/03 Commission v Germany [2004] ECR I-11197, LawLex200900000444JBJ: a town is obviously a regional authority.

Case C-283/00 Commission v Spain [2003] ECR I-11697, LawLex200900001405JBJ.

Compare Case C-373/00 Adolf Truley [2003] ECR I-1931, LawLex201100000404JBJ, retaining that the existence of significant competition in the sector does not necessarily exclude the concept of needs in the general interest.

Case C-223/99 Agorà and Excelsior [2001] ECR I-3605, LawLex200900001007JBJ: excluding the description of contracting authority for a body the management of which is based on performance, efficiency and cost-effectiveness and which operates in a competitive environment.

Case C-44/96 Mannesmann Anlagenbau Austria and others v Strohal Rotationsdruck [1998] ECR I-73, LawLex200900000829JBJ.

Case C-360/96 Gemeente Arnhem and Gemeente Rheden v BFI Holding [1998] ECR I-6821, LawLex200900000513JBJ.

Case C-223/99 Agorà and Excelsior [2001] ECR I-3605, LawLex200900001007JBJ.

Case C-470/99 Universale-Bau and others [2002] ECR I-11617, LawLex200900000948JBJ.

Case C-373/00 Adolf Truley [2003] ECR I-1931, LawLex201100000404JBJ.

Case C-393/06 Ing. Aigner [2008] ECR I-2339, LawLex200900000660JBJ.

Case C-323/96 Commission v Belgium [1998] ECR I-5063, LawLex200900000282JBJ: regarding the Flemish Parliament.

Joined Cases C-155/19 and C-156/19 Federazione Italiana Giuoco Calcio and others, Judgment of 3 February 2021, , finding that, pursuant to Article 2(1)(4)(c) of Directive No 2014/24, a sports federation entrusted with tasks of a public nature exhaustively defined by national law may be regarded as having been  established for the specific purpose of meeting needs in the general  interest, i.e. sport, not having an industrial or commercial character, within the meaning of that provision, even though it was established not in the form of a public authority but of an association governed by private law and some of its activities, for which it enjoys a self-financing capacity, are not public in nature.

Case C-380/98 University of Cambridge [2000] ECR I-8035, LawLex200700001638JBJ.

Case C-337/06 Bayerischer Rundfunk and others [2007] ECR I-11173, LawLex200900000383JBJ: fee payable by persons who possess a receiver in favor of a broadcasting body; C-300/07 Hans & Christophorus Oymanns [2009] ECR I-4779, LawLex201100000476JBJ: contributions payable by insured persons to a sickness insurance fund.

Case C-306/97 Connemara Machine Turf [1998] ECR I-8761, LawLex200900001446JBJ and C-353/96 Commission v Ireland [1998] ECR I-8565, LawLex200900000461JBJ.

Case C-237/99 Commission v France [2001] ECR I-939, LawLex200900000840JBJ: particularly where the minister has the possibility to order the winding-up of one of the bodies and to appoint a liquidator or to suspend the managerial organs and to appoint a provisional administrator.

Case C-567/15 LitSpecMet UAB, Judgment of 5 October 2017, LawLex201700001592JBJ. 

Case 31/87 Beentjes v Netherlands State [1988] ECR 4635, LawLex200900002329JBJ.

Case C-272/91 Commission v Italy [1994] ECR I-1409, LawLex200900002115JBJ: the absence of legal personality of a department of the Finance Ministry of a Member State far from enabling it to escape the obligations laid down by the directive, gives the Ministry itself the capacity of contracting authority.

Case C-44/96 Mannesmann Anlagenbau Austria and others v Strohal Rotationsdruck [1998] ECR I-73, LawLex200900000829JBJ; C-84/03 Commission v Spain [2005] ECR I-139, LawLex200900001196JBJ; C-300/07 Hans & Christophorus Oymanns [2009] ECR I-4779, LawLex201100000476JBJ; Case C-300/07 Hans & Christophorus Oymanns [2009] ECR I-4779, LawLex201100000476JBJ: the criteria set out in points (a) relating to the conditions for the creation of the body, (b) relating to its legal personality, and (c) specifying its method of financing, must be met cumulatively, although point (c) offers an alternative as to the method of financing the public body.

Case C-44/96 Mannesmann Anlagenbau Austria and others v Strohal Rotationsdruck [1998] ECR I-73, LawLex200900000829JBJ; C-360/96 Gemeente Arnhem and Gemeente Rheden v BFI Holding [1998] ECR I-6821, LawLex200900000513JBJ.

European Business Law

288. Contracting authority

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Les décisions de justice citées dans ce paragraphe :

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288. Contracting authority

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise