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Financing Services of General Economic Interest pp 69–84Cite as

The Role of Procurement and SGEI After Altmark

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Part of the book series: Legal Issues of Services of General Interest ((LEGAL))

Abstract

This chapter examines the role of public procurement in the financing of Services of General Economic Interest (SGEI) following the Altmark judgment. The chapter explores the interplay between the application of State aid, service concessions and the use of procurement Directives in financing SGEI against a backdrop of public sector austerity measures and the privatisation of some public service obligations. The author charts how the Commission and the Courts have interpreted the landmark judgment both through case law and the application of soft law communications and Frameworks. The chapter focuses on the often complex issues that arise in interpreting the four Altmark conditions and the resulting stages in the evolution of the Commission’s guidance on the financing of SGEI, culminating in the 2011 ‘Almunia Package’. The author argues that whilst the Altmark judgment was a step in the right direction, it also added a level of ambiguity, particularly in the interpretation of the fourth Altmark condition where the CJEU adopted a hybrid public procurement/compensation mechanism for determining whether the financing of SGEI was State aid. Clarke argues that there is a case for contracting authorities to apply a public procurement process as a default position for the financing of SGEI unless specific exemptions apply. He suggests that this would reduce the level of control currently being applied by the Commission and reporting would be by exception.

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Notes

  1. 1.

    As defined in EU Directives 2004/17 EC, OJ 2004 L134/1 and 2004/18 EC, OJ 2004 L134/114. The Directives are currently under review by the Commission following the publication of the Green Paper on the modernisation of EU public procurement policy: Towards a more efficient European Procurement Market, COM 2011 15 Final.

  2. 2.

    SGEI constitute a legal concept and are included in the wording of Article 106(2) TFEU, Article 14 TFEU, Protocol No 26 of the Treaty of Lisbon 2009 and Article 36 CFEU. Neergaard 2012 suggests there is an emerging typology in the definition of an SGEI and highlights the difficulties in defining the concept of SGEI as shown in GC, Case T-289/03 BUPA and Other v. Commission [2008] ECR II-81, para 165 and the Commission’s expanded list of inclusions in the Staff Working Paper, The Application of State Aid Rules on Services of General Economic Interest since 2005 and the Outcome of Public Consultation, SEC(2011) 397.

  3. 3.

    CJEU, Case C-280/00 Altmark Trans GmbH v Nahverkehrsgesellschaft Altmark GmbH [2003] ECR I-7747.

  4. 4.

    Communication from the Commission to the Council and the European Parliament. The Reform of State-Owned Enterprises in Developing Countries with focus on public utilities: The Need to Assess All the Options COM (2003) 326 Final, para 50.

  5. 5.

    See the Opinion of AG Tizzano in CJEU, Case 53/00 Ferring v Agence Centrale des Organismes de Securite Sociale (ACOSS) [2001] ECR I-9067 and the Opinion of AG Jacobs in CJEU, Case C-126/01 Ministre de l'économie, des finances et de l'industrie v GEMO SA [2003] ECR I-13769.

  6. 6.

    Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest, OJ 2012 C 8/4.

  7. 7.

    Modernising State aid control, Speech by Joaquín Almunia, Vice President of the European Commission responsible for Competition Policy to European Economic and Social Committee—plenary meeting, Brussels, 23 February 2012, SPEECH/12/117.

  8. 8.

    Ibid.

  9. 9.

    Bartosch 2002, p. 507.

  10. 10.

    The Commission issued an interpretative communication on concessions under Community law in the OJ 2000 C 121/02.

  11. 11.

    Article 1(4) of Directive 2004/18 EC.

  12. 12.

    See CJEU, Case C-107/98 Teckal Srl v Comune di Viano [1999] ECR I-8121, para 51; CJEU, Case C-94/99 ARGE Gewasserschutz v Bundesministerium fur Land- und Forstwirtschaft [2000] ECR I-11037, para 40; CJEU, Case C-220/05 Auroux v Commune de Roanne [2007] ECR I-389, para 62.

  13. 13.

    Ibid.

  14. 14.

    A minority share in the capital of the distinct entity by a private undertaking has been interpreted by the CJEU as the public authority not having full control over the entity and therefore the Procurement Directives and Transparency principle do apply. See Case C-26/03 Stadt Halle v RPL Recyclingpark Lochau [2005] ECR I-1, paras 49–50.

  15. 15.

    Hatzopoulos and Stergiou 2011, p. 438.

  16. 16.

    Nicolaides 2003.

  17. 17.

    As defined in CJEU, Case C-280/00 Altmark Trans GmbH [2003] ECR I-7747 paras 88–93.

  18. 18.

    Paragraph 86.

  19. 19.

    Santamato and Pesaresi 2004.

  20. 20.

    Ibid at 3.2.

  21. 21.

    Szyszczak 2011.

  22. 22.

    The Transparency Directive 80/723/EEC (OJ 1980 L195/35) includes a requirement for internal accounts to show separately the costs and receipts associated with the SGEI and those of other services.

  23. 23.

    For example, see CJEU Case C-234/03 Contse SA v. Instituto Nacional de Gestion Sanitaria (INGESA) (formerly Instituto Nacional de la Salud (INSALUD)) [2005] ECR I-9315, para 79 and CJEU, Case C-70/95 Sodemare SA v. Regione Lombardia [1997] ECR I-3395.

  24. 24.

    CJEU, Case C-34/01 Enirisorse SpA v. Ministero delle Finanze [2003] ECR I-14243.

  25. 25.

    CJEU, Case T-157/01 Danske Busvognmaend v Commission of the European Communities [2004] ECR II-917.

  26. 26.

    Paragraphs 96 and 97.

  27. 27.

    Commission Decision N 282/2003 Cumbria Broadband, Project Access, Advancing Communication for Cumbria and Enabling Sustainable Services, Brussels, 10 December 2003 C(2003)4480fin.

  28. 28.

    Boyd and Teal 2004.

  29. 29.

    CJEU, Joined Cases C-83/01 P, C-93/01 P and C-94/01 P Chronopost v Ufex and Others [2003] ECR I-6993.

  30. 30.

    Paragraph 38.

  31. 31.

    Community Framework for State aid in the form of public service compensation OJ 2005 C 297/04.

  32. 32.

    OJ 1999 C 377/2.

  33. 33.

    Commission Decision of 28 November 2005 on the application of Article 86(2) EEC to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest, Document number C(2005) 2673, OJ L 2005 L312/67.

  34. 34.

    Community Framework for State aid in the form of public service compensation, OJ 2005 C 297/4.

  35. 35.

    Szyszczak 2012.

  36. 36.

    Commission Staff Working Document, Guide to the application of the European Union rules on State aid, public procurement and the internal market to services of general economic interest, and in particular to social services of general interest, SEC(2010) 1545 final.

  37. 37.

    Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest, OJ 2012 C 8/4.

  38. 38.

    Commission Decision of 20 December 2011 on the application of Article 106(2) TFEU to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest, OJ 2012 L 7/3.

  39. 39.

    Communication from the Commission, European Union framework for State aid in the form of public service compensation, OJ 2012 C 8/15.

  40. 40.

    Draft Commission Regulation on the application of Articles 107 and 108 TFEU to de minimis aid granted to undertakings providing services of general economic interest, OJ 2012 l C 8/23; Commission Regulation on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid granted to undertakings providing services of general economic interest, OJ 2012 L 114/8.

  41. 41.

    Report to the President of the Commission, Barroso on 9 May 2010: A New Strategy for the Single Market at the Service of Europe’s Economy and Society. Available at http://ec.europa.eu/bepa/pdf/monti_report_final_10_05_2010_en.pdf (accessed 10 April 2012).

  42. 42.

    Section 3.3.

  43. 43.

    The Commission responded to the Monti Report 2010 with a consultation on modernising procurement law (which ended in April 2011). Available at http://ec.europa.eu/internal_market/publicprocurement/modernising_rules/consultations/index_en.htm (accessed 10 April 2012).

  44. 44.

    The Single Market Act: Twelve levers to boost growth and confidence COM (2011) 206.

  45. 45.

    Modernising European public procurement to support growth and employment, available at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1580&format=HTML&aged=0&language=EN&guiLanguage=en (accessed 10 April 2012).

  46. 46.

    Ibid.

  47. 47.

    Ibid.

  48. 48.

    Directive 2007/66 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts, OJ 2007 L335/31.

  49. 49.

    Small value local services contracts would probably not have a cross-border interest, but value alone is not sufficient to indicate that there is no cross-border interest, see CJEU, Joined Cases C-147/06 SECAP SpA v Comune di Torino and C-148/06 Santorso Soc. Coop. Arl v. Comune di Torino (Bresciani Bruno Srl and Others, intervening) [2008] ECR I-3565, para 31.

  50. 50.

    See CJEU, Case C-324/98 Telaustria Verlags GmbH v. Telekom Austria AG [2000] ECR. I-10745.

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Authors and Affiliations

  1. School of Law, University of Leicester, Leicester, LE1 7RH, UK

    Ian Clarke

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  1. Ian Clarke
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Editors and Affiliations

  1. , School of Law, University of Leicester, University Road, Leicester, LE1 7RH, United Kingdom

    Erika Szyszczak

  2. , Faculty of Law, Radboud University, Comeniuslaan 4, Nijmegen, 6525 HP, Netherlands

    Johan Willem van de Gronden

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Clarke, I. (2013). The Role of Procurement and SGEI After Altmark . In: Szyszczak, E., van de Gronden, J. (eds) Financing Services of General Economic Interest. Legal Issues of Services of General Interest. T.M.C. Asser Press, The Hague, The Netherlands. https://doi.org/10.1007/978-90-6704-906-1_4

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