Opinion of Advocate General Campos Sánchez-Bordona delivered on 14 September 2023.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2023:681
• Date: 14 September 2023
• Celex Number: 62022CC0421
• Court: Court of Justice (European Union)

Provisional text

OPINION OF ADVOCATE GENERAL

CAMPOS SÁNCHEZ-BORDONA

delivered on 14 September 2023 (1)

Case C‑421/22

SIA Dobeles autobusu parks,

AS CATA,

SIA VTU Valmiera,

SIA Jelgavas autobusu parks,

SIA Jēkabpils autobusu parks

interveners:

Iepirkumu uzraudzības birojs,

VSIA Autotransporta direkcija

(Request for a preliminary ruling from the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia))

(Reference for a preliminary ruling – Regulation (EC) No 1370/2007 – Public passenger transport service by bus – 10-year contract – Public service obligation – Compensation parameters – Competitive tendering procedure)

1. In the dispute giving rise to this request for a preliminary ruling, a number of economic operators are challenging the specifications of an open invitation to tender for the award of a contract for the provision of public passenger transport services by bus. They claim that the tender specifications do not afford them proper protection against any potential increase in certain costs (fuel, wages and social security contributions) over the course of the contract’s 10-year term.

2. The referring court wishes to ascertain whether Regulation (EC) No 1370/2007 (2) permits a ‘compensation scheme’ under which the competent authority does not periodically index-link the price payable for the service under the contract to increases in costs inherent in providing the service which are beyond the control of the contractor.

3. The Court of Justice has ruled on compensation for public service obligations in the transport sector, (3) but it has not expressly addressed the question put to it now.

I. Legal framework

A. European Union law. Regulation No 1370/2007

4. Recitals 27 and 34 are relevant.

5. In accordance with Article 1(1) (‘Purpose and scope’):

‘The purpose of this Regulation is to define how, in accordance with the rules of Community law, competent authorities may act in the field of public passenger transport to guarantee the provision of services of general interest which are among other things more numerous, safer, of a higher quality or provided at lower cost than those that market forces alone would have allowed.

To this end, this Regulation lays down the conditions under which competent authorities, when imposing or contracting for public service obligations, compensate public service operators for costs incurred and/or grant exclusive rights in return for the discharge of public service obligations.’

6. Article 2a(2) (‘Specification of public service obligations’) states:

‘The specifications of the public service obligations and the related compensation of the net financial effect of public service obligations shall:

(a) achieve the objectives of the public transport policy in a cost-effective manner; and

(b) financially sustain the provision of public passenger transport, in accordance with the requirements laid down in the public transport policy in the long term.’

7. According to Article 3(1) (‘Public service contracts and general rules’):

‘Where a competent authority decides to grant the operator of its choice an exclusive right and/or compensation, of whatever nature, in return for the discharge of public service obligations, it shall do so within the framework of a public service contract.’

8. Article 4(1) (‘Mandatory content of public service contracts and general rules’) reads:

‘Public service contracts and general rules shall:

(a) clearly set out the public service obligations, defined in this Regulation and specified in accordance with Article 2a thereof, with which the public service operator is to comply, and the geographical areas concerned;

(b) establish in advance, in an objective and transparent manner:

(i) the parameters on the basis of which the compensation payment, if any, is to be calculated; and

(ii) the nature and extent of any exclusive rights granted, in a way that prevents overcompensation.

…’

9. According to Article 6(1) (‘Public service compensation’):

‘All compensation connected with a general rule or a public service contract shall comply with Article 4 …’.

B. National law

10. The applicable provisions are Article 10(1) and (3) and Article 11(1) of the Sabiedriskā transporta pakalpojumu likums; (4) and Article 2(1) and Article 56 of the Ministru kabineta 2015.gada 28.jūlija noteikumi Nr. 435 ‘Kārtība, kādā nosaka un kompensē ar sabiedriskā transporta pakalpojumu sniegšanu saistītos zaudējumus un izdevumus un nosaka sabiedriskā transporta pakalpojuma tarifu’. (5)

II. Facts, dispute and questions referred for a preliminary ruling

11. Valsts SIA Autotransporta direkcija (‘the contracting authority’) launched an open invitation to tender ‘for the award of the right to provide public transport services by bus on the network of routes of regional significance’. This gave notice of the conclusion of a 10-year public contract with public transport service providers. (6)

12. SIA Dobeles autobusu parks (‘Dobeles’) and other economic operators (7) challenged the tender specifications on the ground that they established a mechanism for compensating the provision of public transport services which is unlawful. (8) They argued in particular that:

– in their tenders, tenderers have to predict the price payable for the services offered for the following 10 years, even though the (future) contract does not contain an appropriate procedure for reviewing that price;

– the only price review provided for is, inadequately in their view, index-linked to only three elements (fuel, wage bill and compulsory national social security contributions, if amended by legislation) and is triggered when those costs change by more than 5% (in the case of fuel) or 8% (in the case of wage costs) – any increases in such costs which do not exceed those thresholds have to be borne by the service provider;

– the index-linking mechanism does not cover the first four years of provision of the service and no provision is made for the possibility of obtaining compensation for cost increases during the last three years.

13. On 11 November 2019, the Iepirkumu uzraudzības biroja Iesniegumu izskatīšanas komisija (Complaints Review Commission of the Office of Public Procurement Oversight, Latvia) dismissed the applicants’ challenge.

14. Each of the applicants brought administrative legal proceedings before the Administratīvā rajona tiesa (District Administrative Court, Latvia), which dismissed those actions by judgment of 29 May 2019. That court held that, in accordance with Regulation No 1370/2007 and the Commission’s guidelines on its interpretation, (9) the State is not under an obligation to cover in full all of the costs incurred by public transport service providers.

15. Some of the applicants appealed the judgment at first instance before the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia), relying, in essence, on the same arguments they had deployed in the previous administrative and judicial proceedings.

16. That court, in the light of the submissions of the parties to the dispute, has made a reference to the Court of Justice for a preliminary ruling on the following question:

‘Do the second subparagraph of Article 1(1), Article 2a(2) and Article 3(2) of Regulation No 1370/2007 … permit a compensation scheme which does not impose on the competent authority an obligation to compensate a public transport service provider in full, by periodically index-linking the [price payable for the service] under the contract (the compensation sum), for any increase in the costs connected with providing the service which fall outside the service provider’s control, and which, therefore, does not entirely eliminate the risk that the service provider will incur non-compensable losses?’

III. Procedure before the Court

17. The request for a preliminary ruling was registered at the Court on 22 June 2022.

18. Written observations have been submitted by the applicants, the Cypriot and Latvian Governments and the European Commission.

19. A hearing, attended by Dobeles, the contracting authority, the Cypriot and Latvian Governments and the Commission, was held on 8 June 2023.

IV. Assessment

A. Preliminary remarks

1. Applicable legislation

20. The referring court considers Regulation No 1370/2007 to be applicable to the dispute in the main proceedings, and seeks an interpretation of three of its provisions:

– the second subparagraph of Article 1(1), which states that the regulation itself ‘lays down the conditions under which competent authorities, when imposing or contracting for public service obligations, compensate public service operators for costs incurred and/or grant exclusive rights in return for the discharge of public service obligations’;

– Article 2a(2), which sets out the objectives pursued by the ‘specifications of the public service obligations and the related compensation of the net financial effect of public service obligations’;

– Article 3(2), which refers to the tariff obligations laid down by way of general rules, ‘notwithstanding the right of competent authorities to integrate public service obligations establishing maximum tariffs in public service contracts’. (10)

21. The application of Regulation No 1370/2007 will, however, depend on the characteristics of the contract the tender specifications relating to which are in dispute. That regulation:

– in referring to public passenger transport services by rail and road, provides for methods of intervention in general schemes for public contracts, such as those governed by Directive 2014/24/EU (11) or Directive 2014/25/EU; (12)

– contains special provisions intended to take the place of or to be added to the general rules of Directive 2014/24 or Directive 2014/25, depending on whether or not the applicable directive lays down rules in the fields governed by that regulation. (13)

22. Article 5(1) of Regulation No 1370/2007 states that public service contracts are to be awarded, in...