CJEU, 1st chamber, September 10, 2026, No C-11/25

The dispute in the main proceedings and the question referred for a preliminary ruling

10 Jelgavas komunālie pakalpojumi SIA (‘Jelgava SIA') is a company incorporated under Latvian law engaged in the collection and treatment of waste. It is jointly owned by the municipality of Jelgava, which owns 51% of its share capital, and by Kulk SIA, a legal person governed by private law, which holds the remaining 49%.

11 That municipality decided to allocate municipal waste management to Jelgava SIA. On 1 November 2004, it concluded with that company a contract for services in the field of waste management and the improvement and promotion of the waste management system in the administrative territory of the city of Jelgava, which was due to expire on 31 December 2029. That service contract was concluded in accordance with the in-house procedure, that is to say, without a prior competitive tendering process, on the basis of the exception provided for in national law in Article 4(1)(6) of the Law on Public Procurement for State or Municipal Requirements.

12 On 22 July 2021, the Competition Council adopted a decision imposing a fine on the municipality of Jelgava for infringement of Article 13(1) of the Competition Law. First of all, it defined the relevant market as that for the collection and transport of municipal waste in the administrative territory of the city of Jelgava. Next, it found that, by deciding to entrust the operation of the waste management service to Jelgava SIA and by participating in the activities of that company, the municipality of Jelgava had acted as an ‘undertaking', with the result that such a decision had to be reviewed in the light of the Competition Law. In the latter regard, the Competition Council found that that municipality and Jelgava SIA held a dominant position on the relevant market as a result of the latter's exclusive right to provide the services concerned. Lastly, it concluded that that municipality had abused a dominant position by awarding Jelgava SIA the exclusive right to provide municipal waste management services through the in-house procedure, even though that municipality did not exercise full control over Jelgava SIA, excluding other potential service providers from the market concerned.

13 The municipality of Jelgava brought an action against that decision before the competent administrative court. It claimed that, in awarding the contract to Jelgava SIA, it had not acted as an ‘undertaking' but as a legal person governed by public law.

14 On 28 June 2022, the Administratīvā apgabaltiesa (Regional Administrative Court, Latvia) dismissed that action, finding that the municipality of Jelgava had acted as an ‘undertaking', within the meaning of the Competition Law, by concluding a contract with Jelgava SIA, in which it was a shareholder.

15 The municipality of Jelgava brought an appeal against that judgment before the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia), which is the referring court.

16 That court finds that the applicability of the prohibition on abuse of a dominant position laid down in Article 13(1) of the Competition Law presupposes that the municipality of Jelgava carries out an economic activity and, therefore, must be classified as an ‘undertaking' within the meaning of Article 102 TFEU.

17 That court finds that the case in the main proceedings raises the question whether, in taking a decision on how waste management is to be organised within its territory, an entity, such as the municipality of Jelgava, carries out an economic activity or acts in the exercise of public powers.

18 According to that court, the organisation of municipal waste management falls, under Latvian law, within the scope of the functional autonomy of a municipality. The obligation imposed on the municipality to organise that management corresponds to the obligations imposed on Member States by Directive 75/442. It follows that that organisation of municipal waste management falls within the exercise of public powers.

19 In those circumstances, the Augstākā tiesa (Senāts) (Supreme Court (Senate)) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Must Article 102 [TFEU] be interpreted as meaning that, in view of the circumstances of the case, the scope of that provision includes a decision made by a subsidiary legal person under public law about how waste management in a municipal area is organised, which, in the present case, consisted of the decision to organise the provision of services through an in-house procedure, awarding the right to provide those services to a company partially owned by a [municipality]?

In particular, can a [municipality] be considered as acting as a market operator or undertaking within the meaning of Article 102 [TFEU] when it takes a decision to organise the provision of municipal waste management services by awarding, through an in-house procedure, the right to provide those services to a company that is partially owned by that [municipality]?'

The jurisdiction of the Court

20 The referring court notes that the abuse of a dominant position in the main proceedings, penalised by the Competition Council on the basis of Article 13(1) of the Competition Law, concerns a purely internal situation and has no effect on trade between Member States. However, that court emphasises that, in such a situation, that law is consistent with the approach adopted by EU law.

21 According to settled case-law, in the context of the cooperation between the Court and the national courts provided for in Article 267 TFEU, it is solely for the national court before which a dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted by the national court concern the interpretation of EU law, the Court is, in principle, bound to give a ruling (judgment of 5 December 2024, Tallinna Kaubamaja Grupp and KIA Auto, C‑606/23, EU:C:2024:1004, paragraph 16 and the case-law cited).

22 However, it is also settled case-law that it is for the Court to examine the conditions in which the case has been referred to it by the national court, in order to assess whether it has jurisdiction (judgment of 5 December 2024, Tallinna Kaubamaja Grupp and KIA Auto, C‑606/23, EU:C:2024:1004, paragraph 17 and the case-law cited).

23 In that regard, it should be borne in mind that the Court has held that it had jurisdiction to give preliminary rulings on questions concerning provisions of EU law in situations in which the facts of the cases before the national courts fell outside the direct scope of that law, provided that those provisions had been rendered applicable by national law, which had adopted, for purely internal situations, the same approach as that provided for under EU law (see judgments of 18 October 1990, Dzodzi, C‑297/88 and C‑197/89, EU:C:1990:360, paragraph 36, and of 5 December 2024, Tallinna Kaubamaja Grupp and KIA Auto, C‑606/23, EU:C:2024:1004, paragraph 18 and the case-law cited).

24 Such jurisdiction is justified by the fact that it is clearly in the interest of the EU legal order that, in order to forestall future differences of interpretation, the provisions taken from EU law should be interpreted uniformly (see judgments of 18 October 1990, Dzodzi, C‑297/88 and C‑197/89, EU:C:1990:360, paragraph 37, and of 5 December 2024, Tallinna Kaubamaja Grupp and KIA Auto, C‑606/23, EU:C:2024:1004, paragraph 19 and the case-law cited).

25 In the present case, the referring court notes that the Competition Law was drafted taking into account the need for the provisions of Latvian competition law to be harmonised with the relevant EU legislation and, in the case of purely internal situations, adopted the same approach as that provided for under EU law. That court states, in particular, that Article 13(1)(2) of the Competition Law corresponds to point (b) of the second paragraph of Article 102 TFEU, with the result that the application of national law should not depart from the way in which EU law is applied.

26 It follows that, in the present case, the Court has jurisdiction to rule on the question posed by the referring court.

Consideration of the question referred

27 By its single question, the referring court asks, in essence, whether Article 102 TFEU must be interpreted as meaning that the decision taken by a municipality to award to a legal person that is partially owned by that municipality the right to provide municipal waste management services constitutes the exercise of an economic activity.

28 Under Article 102 TFEU, any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it is to be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

29 In order to answer the question referred, it is necessary to ascertain whether a legal person acting in circumstances such as those in the main proceedings may be regarded as an ‘undertaking' within the meaning of Article 102 TFEU. It is only if that legal person were an undertaking that the activity which it is required to carry out could be classified as an economic activity.

30 It is apparent from the settled case-law of the Court that, in the field of EU competition law, the concept of ‘undertaking' within the meaning of Article 102 TFEU covers any entity engaged in an economic activity, irrespective of its legal status and the way in which it is financed (judgments of 23 April 1991, Höfner and Elser, C‑41/90, EU:C:1991:161, paragraph 21, and of 10 July 2025, INTERZERO and Others, C‑254/23, EU:C:2025:569, paragraph 47).

31 Any activity consisting in offering goods or services on a given market, that is to say, services normally provided for remuneration, is an economic activity. In that regard, the essential characteristic of remuneration lies in the fact that it constitutes consideration for the service in question (judgment of 10 July 2025, INTERZERO and Others, C‑254/23, EU:C:2025:569, paragraph 48).

32 By contrast, the rules of the Treaties may not apply to an activity which, by its nature, its aim and the rules to which it is subject, does not belong to the sphere of economic activity, or which is connected with the exercise of the powers of a public authority (judgment of 10 July 2025, INTERZERO and Others, C‑254/23, EU:C:2025:569, paragraph 49).

33 In addition, a public entity may be regarded as an undertaking in relation to those activities which must be classified as economic activities and in so far as those activities may be separated from the exercise of public powers (see, to that effect, judgments of 12 July 2012, Compass-Datenbank, C‑138/11, EU:C:2012:449, paragraphs 37 and 38, and of 24 March 2022, GVN v Commission, C‑666/20 P, EU:C:2022:225, paragraph 71).

34 The Court has thus held that the activities connected with the exercise of public powers include, inter alia, Eurocontrol's activities relating to the control and supervision of airspace (judgment of 19 January 1994, SAT Fluggesellschaft, C‑364/92, EU:C:1994:7, paragraph 30); the anti-pollution surveillance which a body governed by private law was entrusted by the public authorities to carry out in an oil port (judgment of 18 March 1997, Diego Calì & Figli, C‑343/95, EU:C:1997:160, paragraphs 23 to 25); or the collection of data relating to undertakings on the basis of a statutory obligation on those undertakings to disclose the data and powers of enforcement related thereto (judgment of 12 July 2012, Compass-Datenbank, C‑138/11, EU:C:2012:449, paragraph 40).

35 In the present case, as the referring court states, and as all the participants in the proceedings before the Court agree, municipal waste management services constitute an economic activity.

36 By contrast, it is apparent from the order for reference that the decision of the municipality of Jelgava to award to a legal person that is partially owned by that municipality the right to provide that service was adopted on the basis of the Law on Waste Management which provided that municipalities were to organise the management of municipal waste in their administrative territory.

37 The referring court states that the Law on Waste Management contributes to the implementation of Directive 75/442.

38 It should be borne in mind that, in accordance with Article 4(1) of that directive, Member States were to take the necessary measures to ensure that waste is recovered or disposed of without endangering human health and without using processes or methods which could harm the environment. Under Article 6 of that directive, Member States were to establish or designate the competent authority or authorities to be responsible for the implementation of that directive.

39 In those circumstances, it must be held that, where a municipality, which is competent under national law to determine the detailed rules for the management of the waste service in its administrative territory, decides to award to a legal person the right to provide that service in that territory, it does not offer goods or services on a market for remuneration. It does not engage in an economic activity but acts, as a competent authority, within the framework of public powers conferred on it by law and in accordance with the requirements laid down for that purpose by Directive 75/442.

40 Such an assessment is also necessary where the municipality, acting as the competent authority, decides to award such a right to a legal person that is partially owned by it.

41 Furthermore, in the context of that assessment, the fact that the municipality's decision may be contrary to the national and EU rules on public procurement, on the ground that the conditions for the implementation of the in-house procedure referred to in Article 4(1)(6) of the Law on Public Procurement for State or Municipal Requirements are not met, is irrelevant. The possible infringement of the rules on the award of public contracts by an entity acting within the framework of public powers cannot be regarded as abuse, on the part of that entity, of a dominant position within the meaning of Article 102 TFEU. It should also be noted, as the Advocate General observed in point 85 of his Opinion, that such a decision may, where appropriate, be challenged before the bodies responsible, under national law, for assessing the legality of acts of public authorities in relation to the award of contracts.

42 Similarly, the fact that the contract concluded between the municipality and the undertaking responsible for managing municipal waste must be classified as a ‘public service concession' or a ‘public service contract' has no bearing on the classification of a decision, such as that at issue in the main proceedings, by which that municipality exercises public powers.

43 First, in the first situation referred to in paragraph 42 of the present judgment, it must be held that Article 102 TFEU does not, in principle, concern the award, by a municipality acting in its capacity as a public authority, of a concession contract to the concessionaire entrusted with a public service (see, to that effect, judgments of 4 May 1988, Bodson, 30/87, EU:C:1988:225, paragraph 18, and of 21 July 2005, Coname, C‑231/03, EU:C:2005:487, paragraph 12).

44 Second, in the second situation referred to in paragraph 42 of the present judgment, it must be borne in mind that, according to the case-law, there is no need to dissociate the activity of purchasing services from the subsequent use to which they are put in order to determine the nature of that activity and that the nature of the purchasing activity must be determined according to whether or not the subsequent use of the purchased services amounts to an economic activity (see, to that effect, judgment of 11 July 2006, FENIN v Commission, C‑205/03 P, EU:C:2006:453, paragraph 26). However, that case-law is not applicable in circumstances such as those in the main proceedings. Where a municipality, acting in the exercise of public powers, awards the right to provide municipal waste management services through a public service contract, it cannot be considered that that service is the subject, on the part of that municipality, of subsequent use which amounts to an economic activity.

45 It follows from all the foregoing considerations that Article 102 TFEU must be interpreted as meaning that the decision taken by a municipality to award to a legal person that is partially owned by that municipality the right to provide municipal waste management services does not constitute the exercise of an economic activity.

Costs

46 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (First Chamber) hereby rules:

Article 102 TFEU must be interpreted as meaning that the decision taken by a municipality to award to a legal person that is partially owned by that municipality the right to provide municipal waste management services does not constitute the exercise of an economic activity.