National legislation may limit the use of in-house transactions

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In the Rieco SpA v. Comune di Lanciano e.a. case (joined cases C-89/19 to C-91/19), the Court of Justice was asked in a first question whether article 12(3) of Public Procurement Directive 2014/24/EU (hereafter “Directive 2014/24”) must be interpreted as precluding national legislation which makes the conclusion of an in-house transaction subject to the impossibility of awarding a public contract and, in any event, subject to the demonstration by the contracting authority of the benefits specifically linked, for the community, to recourse to the in-house transaction.

In its Order of 6 February 2020, the Court of Justice first recalled that it already held in the Irgita case that Article 12(1) of Directive 2014/24 must be interpreted as not precluding a rule of national law whereby a Member State imposes a requirement that the conclusion of an in-house transaction should be subject, inter alia, to the condition that public procurement fails to ensure that the quality of the services performed, their availability or their continuity can be guaranteed, provided that the choice made in favour of one means of providing services in particular, made at a stage prior to that of public procurement, has due regard to the principles of equal treatment, non-discrimination, mutual recognition, proportionality and transparency.

Secondly, the Court observed that it is apparent from the wording of Article 12(1) of Directive 2014/24 and Article 12(3) of that directive that the only difference between those provisions lies in the fact that, under the first provision, the contracting authority alone controls the in-house entity whereas, under the second provision, that entity is jointly controlled by several contracting authorities.

Therefore, the Court ruled in the same sense and held that the freedom of Member States to choose the method of providing services through which contracting authorities will meet their own needs authorises them to make the conclusion of an in-house transaction subject to the impossibility of awarding a public contract and, in any event, subject to the demonstration by the contracting authority of the benefits specifically linked, for the community, to recourse to the in-house transaction.

The second question that the Court had to answer was, in essence, whether Article 12(3) of Directive 2014/24 must be interpreted as precluding national legislation which prevents a contracting authority from acquiring shareholdings

in the capital of an entity the shareholders of which are other contracting authorities, where those shareholdings are not capable of guaranteeing control or a power to block, and where that contracting authority intends subsequently to acquire a position of joint control and, consequently, the possibility of awarding contracts directly to that entity the capital of which is held by several contracting authorities.

After having observed that Article 12(3) of Directive 2014/24 does not lay down any requirement relating to the conditions under which an administration acquires shareholdings in a company the shareholders of which are other administrations, the Court provided a negative answer to the second question.

Please contact Peter Teerlinck for further information about this case and/or for general advice on public procurement.

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