Opinion of Advocate General Hogan delivered on 7 May 2019.

• Jurisdiction: European Union
• Celex Number: 62018CC0285
• ECLI: ECLI:EU:C:2019:369
• Date: 07 May 2019
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Docket Number: C-285/18

Provisional text

OPINION OF ADVOCATE GENERAL

HOGAN

delivered on 7 May 2019 (1)

Case C‑285/18

Kauno miesto savivaldybė

Kauno miesto savivaldybės administracija

joined parties:

UAB Irgita

UAB Kauno švara

(Request for a preliminary ruling from the Lietuvos Aukščiausiasis Teismas (Supreme Court of Lithuania))

(Reference for a preliminary ruling — Public procurement — Directive 2004/18/EC — Scope ratione temporis — Directive 2014/24/EU — ‘In-house transactions’ — Additional conditions for an ‘in-house transaction’ under national law)

I. Introduction

1. This request for a preliminary ruling deals, in essence, with the question whether a Member State can impose additional requirements on a contracting authority for the conclusion of an ‘in-house contract’ (2) although this contract satisfies the criteria for an ‘in-house transaction’ under the case-law of the Court and, if applicable, Article 12 of Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC. (3)

2. The referring court has also asked for clarification on the applicability ratione temporis of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (4) and of Directive 2014/24.

II. Legal framework

A. EU law

3. Recitals 1, 2, 4, 5 and 31 of Directive No 2014/24 state:

‘(1) The award of public contracts by or on behalf of Member States’ authorities has to comply with the principles of the Treaty on the Functioning of the European Union (TFEU), and in particular the free movement of goods, freedom of establishment and the freedom to provide services, as well as the principles deriving therefrom, such as equal treatment, non-discrimination, mutual recognition, proportionality and transparency. However, for public contracts above a certain value, provisions should be drawn up coordinating national procurement procedures so as to ensure that those principles are given practical effect and public procurement is opened up to competition.

(2) Public procurement plays a key role in the Europe 2020 strategy, set out in the Commission Communication of 3 March 2010 entitled “Europe 2020, a strategy for smart, sustainable and inclusive growth” …, as one of the market-based instruments to be used to achieve smart, sustainable and inclusive growth while ensuring the most efficient use of public funds. … There is also a need to clarify basic notions and concepts to ensure legal certainty and to incorporate certain aspects of related well-established case-law of the Court of Justice of the European Union.

…

(4) The increasingly diverse forms of public action have made it necessary to define more clearly the notion of procurement itself; that clarification should not however broaden the scope of this Directive compared to that of Directive 2004/18/EC. The Union rules on public procurement are not intended to cover all forms of disbursement of public funds, but only those aimed at the acquisition of works, supplies or services for consideration by means of a public contract. …

(5) It should be recalled that nothing in this Directive obliges Member States to contract out or externalise the provision of services that they wish to provide themselves or to organise by means other than public contracts within the meaning of this Directive. …

…

(31) There is considerable legal uncertainty as to how far contracts concluded between entities in the public sector should be covered by public procurement rules. The relevant case-law of the Court of Justice of the European Union is interpreted differently between Member States and even between contracting authorities. It is therefore necessary to clarify in which cases contracts concluded within the public sector are not subject to the application of public procurement rules.

Such clarification should be guided by the principles set out in the relevant case-law of the Court of Justice of the European Union. The sole fact that both parties to an agreement are themselves public authorities does not as such rule out the application of procurement rules. However, the application of public procurement rules should not interfere with the freedom of public authorities to perform the public service tasks conferred on them by using their own resources, which includes the possibility of cooperation with other public authorities.

It should be ensured that any exempted public-public cooperation does not result in a distortion of competition in relation to private economic operators in so far as it places a private provider of services in a position of advantage vis-à-vis its competitors.’

4.Article 1 of Directive No 2014/24, headed ‘Subject matter and scope’, provides, in paragraph 4:

‘This Directive does not affect the freedom of Member States to define, in conformity with Union law, what they consider to be services of general economic interest, how those services should be organised and financed, in compliance with the State aid rules, and what specific obligations they should be subject to. Equally, this Directive does not affect the decision of public authorities whether, how and to what extent they wish to perform public functions themselves pursuant to Article 14 TFEU and Protocol No 26.’

5.Article 12 of Directive No 2014/24, headed ‘Public contracts between entities within the public sector’, provides, in paragraph 1:

‘A public contract awarded by a contracting authority to a legal person governed by private or public law shall fall outside the scope of this Directive where all of the following conditions are fulfilled:

(a) the contracting authority exercises over the legal person concerned a control which is similar to that which it exercises over its own departments;

(b) more than 80% of the activities of the controlled legal person are carried out in the performance of tasks entrusted to it by the controlling contracting authority or by other legal persons controlled by that contracting authority; and

(c) there is no direct private capital participation in the controlled legal person with the exception of non-controlling and non-blocking forms of private capital participation required by national legislative provisions, in conformity with the Treaties, which do not exert a decisive influence on the controlled legal person.

A contracting authority shall be deemed to exercise over a legal person a control similar to that which it exercises over its own departments within the meaning of point (a) of the first subparagraph where it exercises a decisive influence over both strategic objectives and significant decisions of the controlled legal person. Such control may also be exercised by another legal person, which is itself controlled in the same way by the contracting authority.’

6. The first paragraph of Article 91 of Directive 2014/24 provides:

‘Directive 2004/18/EC is repealed with effect from 18 April 2016.’

B. Lithuanian law

1. Viešųjų pirkimų įstatymas (Law on Public Procurement) of 13 August 1996, No I 1491

7. Article 3 of the Law on Public Procurement of the Republic of Lithuania of 13 August 1996, No I‑1491 (‘the Law on Public Procurement’), provides as follows:

‘1. The contracting authority shall ensure, in the course of performance of procurement procedures and the award of contracts, that there is compliance with the principles of equal rights, non-discrimination, mutual recognition, proportionality and transparency.

...’

8. Article 10(5) of the Law on Public Procurement (as applicable on 1 January 2016), provides as follows:

‘The requirements of this Law shall not apply to procurement procedures where a contracting authority concludes a contract with an entity having separate legal personality, over which it exercises a control identical to that which it exercises over its own department or structural division and in which it is the sole member (or exercises the rights and obligations of the State or the municipality as the sole member) and where the controlled entity receives at least 80% of sales income in the last financial year (or in the period from the day of the establishment of the entity if the entity has carried out its activities for less than one financial year) from activities intended to meet the needs of the contracting authority or to perform the functions of the contracting authority. A procurement procedure in the manner specified in this paragraph may be commenced only upon receipt of the consent of the Viešųjų pirkimų tarnyba (Public Procurement Office). ...’

9. Article 10 of the Law on Public Procurement (as applicable on 1 July 2017) provides, inter alia, as follows:

‘1. The requirements of this Law shall not apply to in-house transactions concluded by a contracting authority with another contracting authority in the case where all of the following conditions are present without exception:

(1) the contracting authority exercises control over the other contracting authority identical to that which it exercises over its own department or structural division, exercising decisive influence over its strategic goals and significant decisions ...;

(2) income received from contracts concluded with the controlling contracting authority or with legal entities controlled by that contracting authority and intended to meet its/their needs or to perform its/their functions accounts for more than 80% of the average income received by the controlled contracting authority from sales contracts during the previous three financial years. ...;

(3) there is no direct private capital participation in the controlled contracting authority.

2. An in-house transaction may be concluded only in an exceptional case, when the conditions set out in paragraph 1 of this article are satisfied and the continuity, good quality and availability of services cannot be...