The ‘State’ of Procurement: Imperialistic by Nature?

Originally, the public procurement regime was intended to include public demand in the internal market by demanding transparency in procedures and awards to avoid discrimination on the grounds of nationality; subsequently, equal treatment was presented as the obvious principle at the heart of the procurement directives.

Public procurement law has been perceived as a highly technical, complex and strictly separate discipline, living its own life as developed and delimitated by the Court of Justice of the European Union (CJEU). However, public procurement rules and principles have effects outside what might be considered as ‘core’ procurement law.

Just prior to the time as Telaustria (C-324/98, EU:C:2000:669) revolutionized the perceived state of law on the award of concessions, public procurement-like procedures (open, transparent, non-discriminatory and unconditional procedures) was recommended as an operational tool to avoid the granting of State aid in the sale of land (OJ [1997] C209/3).

This trend expanded to other areas of State aid law, such as sale of other assets, compensation for Public Service Obligations (with Altmark, C-280/00, EU:C:2003:415) and public procurement-like procedures are more recently used as a contingency for awarding certain types of State aid without prior notification to ensure optimize the use of and minimizing the amount of aid granted.

In 2016, the Commission’s notice on the notion of State aid takes the specific – and not previously obvious – position that any of the procedure recognized by the public procurement directives will as a main rule ensure that no State aid is granted. However, incoherencies in the relation between State aid and procurement law and many grey zones remain. In another area, the CJEU used an effects based test to apply the principles of equal treatment and transparency to the granting of special and exclusive rights (licenses etc.; e.g. Sporting Exchange, C-203/08, EU:C:2010:307) by declaring that the effect of such rights is much like the effect of granting a concession.

Initially, this case law concerned the gambling sector which is seemingly too sensitive to liberalise at EU level; liberalisation was instead introduced through the back door. However, the approach to granting of rights has spread to many other sectors, and the application of the principles of equal treatment and transparency cannot be seen as a sectoral development. The latest development is perhaps even more surprising, as the public procurement principles have been used by the CJEU to intervene on an area where Member State for decades have steered clear of EU law.

In cases concerning the granting of exclusive rights to manage pension systems and other social security systems by requiring mandatory affiliation to sectoral schemes, the principle of solidarity has shielded such systems from competition. However, in UNIS (C-25-26/14, EU:C:2015:821), the CJEU held that the choice of provider – the holder of the exclusive right – should be made under adherence to the principles of equal treatment and transparency, thereby opening for an alternative route for litigation.

Thus, public procurement law, in particular the principles – which have specific attributes developed in particular in concessions case law – are conquering territory step-by-step in the sphere of EU law; it could be asked which field is next and whether the procurement principles could be developing into more generally applicable principles of administrative law in the EU.

Author: Dr. Grith Skovgaard Ølykke

Date: December 2016

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