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

The award of concessions contracts was up to recently subject to the basic rules of Directive No 2004/18/EC, while the award of services concessions with a cross-border interest is subject to the principles of the Treaty on the Functioning of the European Union. Directive No 2014/23 of 26 February 2014 on the award of concession contracts creates a legal framework specific to those contracts. Its  …

Scope of application

The award of concessions contracts was up to recently subject to the basic rules of Directive No 2004/18/EC, while the award of services concessions with a cross-border interest is subject to the principles of the Treaty on the Functioning of the European Union. Directive No 2014/23 of 26 February 2014 on the award of concession contracts creates a legal framework specific to those contracts. Its purpose is to ensure effective and non-discriminatory access to the market to all Union economic operators and legal certainty, favoring public investments in infrastructures and strategic services to the citizen. 

The directive applies to the awarding of works or services concessions, concluded in writing by one or more contracting authorities or contracting entities (Art. 1). The directive gives the Member States the freedom to define what they consider to be services of general economic interest, how those services should be organized and financed and what specific obligations they should be subject to in conformity with the general principles of the TFEU (Art. 4). Contracting entities are either the State, regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law, or entities which operate on the basis of special or exclusive rights, with some exceptions (Art. 7) . 

A works concession consists in entrusting the execution of works to one or more economic operators the consideration for which consists either solely in the right to exploit the works that are the subject of the contract or in that right together with payment; a services concession is the entrusting of the provision and the management of services to one or more economic operators, the consideration of which consists either solely in the right to exploit the services that are the subject of the contract or in that right together with payment. 

The directive defines “exclusive rights” and “special rights”, which are crucial to determining its scope of application. An “exclusive right” is a “right granted by a competent authority of a Member State by means of any law, regulation or published administrative provision which is compatible with the Treaties the effect of which is to limit the exercise of an activity to a single economic operator and which substantially affects the ability of other economic operators to carry out such an activity”. “Special right” means a right granted by a competent authority of a Member State by means of any law, regulation or published administrative provision which is compatible with the Treaties the effect of which is to limit the exercise of an activity to two or more economic operators and which substantially affects the ability of other economic operators to carry out such an activity" (Art. 5, 10) and 11)). 

Directive No 2014/23 applies to concessions the value of which is equal to or greater than EUR 5 186 000. The value of a concession is “the total turnover of the concessionaire generated over the duration of the contract, net of VAT, as estimated by the contracting authority or the contracting entity, in consideration for the works and services being the object of the concession, as well as for the supplies incidental to such works and services” (Art. 8(1) and (2)). The estimated value of the concession includes the value of any form of option and any extension of the duration of the concession, revenue from the payment of fees and fines by the users of the works or services other than those collected on behalf of the contracting authority or contracting entity, payments or any financial advantage made by the contracting authority or contracting entity or any other public authority to the concessionaire, the value of grants or any other financial advantages, revenue from sales of any assets which are part of the concession, the value of all the supplies and services that are made available to the concessionaire by the contracting authorities or contracting entities provided that they are necessary for executing the works or providing the services and, lastly, any prizes or payments to candidates or tenderers.

Directive No 2014/23 does not apply to services concessions awarded to a contracting authority or a contracting entity on the basis of an exclusive right or to those awarded to an economic operator on the basis of the TFEU in the energy sector . Nor does it apply to concessions for air transport services or contracts involving defense or security aspects. Legal, financial or banking services are also excluded (Art. 10). Lastly, the directive is not applicable to concessions for the provision or exploitation of public communications networks, or to provide to the public one or more electronic communications services (Art. 11) . 

Entities awarded procurement procedures with a prior call for competition in conformity with Directive No 2014/24/EU or procedures pursuant to other legal acts of the Union listed in Annex III, ensuring adequate prior transparency for granting authorisations on the basis of objective criteria are excluded.

Article 12 provides for specific exceptions in the field of water. See earlier Case C-206/08 Wasser- und Abwasserzweckverband Gotha und Landkreisgemeinden v Eurawasser Aufbereitungs- und Entsorgungsgesellschaft mbH, Judgment of 10 September 2009, LawLex201100000499JBJ, finding that a contract for the distribution of drinking water and the disposal of sewage, according to which the service provider is entitled to receive payment from a third party to be a service concession, where the supplier assumes all, or at least a significant share, of the operating risk faced by the contracting authority, even if that risk is, from the outset, very limited on account of the detailed rules of public law governing that service.  

Telecom sector, see case law prior to Directive No 2014/23: Case C-324/98 Telaustria Verlags v Telekom Austria [2000] ECR I-10745 LawLex200700001626JBJ: the rules do not apply to such contracts even if they fall within the concept of "contracts for pecuniary interest concluded in writing".

The duration of a concession must be limited. For concessions with a duration greater than five years, the contracting authority must fix a maximum duration not exceeding the time that a concessionaire could reasonably be expected to take to recoup the investments made in operating the works or services together with a return on invested capital (Art. 18) . 

Directive No 2014/23 allows Member States to reserve the right for certain economic operators to participate in concession award procedure in the social services sector (Art. 24). In other cases, economic operators that, under the law of the Member State in which they are established, are entitled to provide the relevant service, may not be rejected solely on the ground that, under the law of the Member State in which the contract is awarded, they would be required to be either natural or legal persons (Art. 26). 

Contracting authorities have considerable flexibility with regard to selection procedure for concession contracts subject to their compliance with the principles of equal treatment and transparency, as set out specifically in Directive No 2014/23. The contracting authority wishing to award a concession contract makes known its intention by means of a concession notice which contains the information referred to in Annex V and any other useful information. The publication of a concession notice is not required where:

- the aim of the concession is the creation or acquisition of a unique work of art or artistic performance;

- the absence of competition for technical reasons;

- the protection of intellectual property rights.

From the date of publication of a concession notice, the contracting authorities and contracting entities must offer by electronic means with unrestricted and full direct access free of charge to the concession documents, setting out the technical and functional requirements of the works and services that are the subject-matter of the concession (Art. 34). The contracting authorities may, according to the terms of Article 38, require candidates to meet conditions for participation relating to their professional and technical ability and their financial and economic standing. Like Directive No 2014/24, a group of economic operators may rely on the capacities of participants in the group or of other entities in order to meet those conditions. 

Concessions must be awarded on the basis of objective criteria which ensure that tenders are assessed in conditions of effective competition (Articles 37 and 41). The award criteria must be linked to the subject-matter of the concession and may include environmental, social or innovation-related criteria (Art. 41). They must be disclosed in advance to all potential candidates or tenderers.

The contracting authorities must send a concession award notice on the results of the concession award procedure (art. 32). 

A new concession procedure is required in the case of material changes to the initial concession during the term of the contract. Under Article 43 of Directive No 2014/23, concessions may be modified without a new concession award procedure in the following cases:

- where the modifications, irrespective of their monetary value, have been provided for in the initial concession documents in clear, precise and unequivocal review clauses; 

-  for additional works or services by the original concessionaire that have become necessary where a change of concessionaire cannot be made for economic or technical reasons or would cause significant inconvenience or substantial duplication of costs;

-  where the need for modification has been brought about by circumstances which a diligent contracting authority or contracting entity could not foresee, the modification does not alter the overall nature of the concession and any increase in value is not higher than 50% of the value of the initial concession;

- where a new concessionaire replaces the one to which the contracting authority or the contracting entity had initially awarded the concession;

- where the modifications are not substantial .

Concessions may equally be modified without a new concession award procedure where the value of the modification is below EUR 5 186 000 euro and 10% of the value of the initial concession. 

The concession can be terminated under the conditions determined by the applicable national law where one or more of the following conditions is fulfilled:

- a modification of the concession has taken place, which would have required a new concession award procedure;

-  the concessionaire is in one of the situations referred to in Article 38 (participation in a criminal organization, corruption etc.) and should therefore have been excluded from the concession award procedure;

- the Court of Justice of the European Union finds that a Member State has failed to fulfill its obligations under the Treaties by the fact that a contracting authority or contracting entity belonging to that Member State has awarded the concession in question without complying with its obligations under EU law.

The investments taken into account for the purposes of the calculation include both initial investments and investments during the life of the concession.

A modification of a concession during its term is considered to be substantial where it renders the concession materially different in character from the one initially concluded. A modification is considered to be substantial where one or more of the following conditions is met: a) the modification introduces conditions which, had they been part of the initial concession award procedure, would have allowed for the admission of applicants other than those initially selected or for the acceptance of a tender other than that originally accepted or would have attracted additional participants in the concession award procedure; b) the modification changes the economic balance of the concession in favor of the concessionaire in a manner which was not provided for in the initial concession; c) it extends the scope of the concession considerably; d)  where a new concessionaire replaces the one to which the contracting authority or contracting entity had initially awarded the concession in other cases than those provided for under point (d) of paragraph 1) of Article 43.

European Business Law

301. Scope of application

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

301. Scope of application

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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