Judgment — ECLI:EU:C:2009:664
Date: 2009-10-29
Language of the case: German
Court formation: Fourth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Right of establishment;Approximation of laws;Freedom to provide services
Concepts: Concept of public contract
Procedure: Action for failure to fulfil obligations - successful
Origin: Germany

summary, therefore, a plea of inadmissibility on the ground that an infringement came to an end prior to the expiry of the period laid down in the reasoned opinion must be rejected where on the expiry of that period the contract was, at least partly, still being performed and, in that regard, the provision of (pecuniary) consideration by the contracting authority must be characterised also as a form of contractual performance relevant for the purposes of resolving that plea. 58. In the light of those observations, the fact that following expiry of the prescribed period the City of Cologne provided (pecuniary) consideration on a monthly basis or was obliged to make such provision suffices in the present case to establish that on the expiry of the period laid down in the reasoned opinion the contract of 6 August 2004 was, at least partly, still being performed and, therefore, produced legally relevant effects. 59. In the light of the foregoing, the plea of inadmissibility raised by the Federal Republic of Germany on the ground that the alleged infringement came to an end prior to the expiry of the period laid down in the reasoned opinion cannot be accepted. In my view, therefore, nothing precludes the admissibility of the action. B – The merits of the action 1. Introductory observations 60. The arguments advanced by the Federal Republic of Germany in support of its contention that the present action for failure to fulfil obligations is unfounded are essentially based on the view that GKM was not awarded a ‘public works contract’ within the meaning of Article 1(a) of Directive 93/37 and – in the alternative – that in any event the works were not awarded by way of the contract of 6 August 2004 concluded by the City of Cologne. The Federal Republic of Germany supports those main lines of argument through its categorisation of the main contract of 6 August 2004 as a lease or funding agreement. 61. Having regard to the long-term grant of use established therein, it is clear that the contract of 6 August 2004 includes a substantial services element. Accordingly, it must be examined below whether and, if so, to what extent that contract, in addition, exhibits also the characteristics of a public works contract and whether the characteristics of a public works contract established suffice to bring the entire (mixed) agreement within the scope of Directive 93/37. However, those questions are preceded by the argument of the Federal Republic of Germany that in the present case, from a procurement law perspective, it is not the City of Cologne but Kölnmesse which must be regarded as the true awarding body. 2. Whether the City of Cologne is the awarding body in relation to GKM a) The City of Cologne must be characterised as the awarding body in relation to GKM 62. It is uncontested that the main contract of 6 August 2004 was concluded between the City of Cologne and GKM and that the City of Cologne then concluded an ‘underlease’ with Kölnmesse. However, having regard to the functional reading of the concept of a ‘contracting authority’ in the case-law of the Court and the willingness of the Court evidenced therein to undertake a comprehensive global analysis of complex procurement law arrangements with a view to determining the true nature of the contracts awarded and subsequently their lawfulness, the Federal Republic of Germany argues that in functional terms and on a global analysis for the purposes of procurement law, in the present case, Kölnmesse must be categorised as the true awarding body in relation to GKM. 63. Although it is correct to assert that the Court held at an early stage that the concept of a contracting authority must be interpreted not in formal but in functional terms, (17) it must be stressed that such case-law does not rest on an overarching principle of procurement law, requiring the concept of a ‘contracting authority’ to be assessed in a purely functional manner and without regard to the contractual structure chosen for the award. Instead, that case-law testifies to the efforts of the Court to break up closed national procurement markets and – in accordance with the objectives stated in the recitals in the preambles to the procurement directives – to open them to the common market. (18) Against that background, the Court has adopted a functional interpretation for the concept of a ‘contracting authority’, according to which, for the purposes of categorising a national body as a contracting authority within the meaning of Community procurement law, it is irrelevant whether or not national law links that characteristic to specific institutional features. (19) 64. Moreover, in the cases in which in its review of legality the Court took account of the context surrounding complex procurement law arrangements, that approach was pursued always with the aim of ensuring – with a view to attaining freedom of establishment at the same time as freedom to provide services in the field of public works contracts – the effectiveness of the procurement directives. (20) 65. In the present case, there are no factors suggesting that the contractual arrangements chosen by GKM, the City of Cologne and Kölnmesse in which the City of Cologne features as the principal awarding body should be ignored on a teleological interpretation of Directive 93/37. 66. First, it must be pointed out that the City of Cologne did not assign to Kölnmesse its rights and obligations arising from the ‘lease’ of 6 August 2004 and, as a result, a direct contractual link between Kölnmesse and GKM is absent. (21) Although the ‘underlease’ concluded between the City of Cologne and Kölnmesse reflects, in essence, obligations arising from the contract of 6 August 2004, and the implementing agreement includes rules to coordinate and simplify the implementation of headlease and underlease relations, in relation to GKM, ultimately only the City of Cologne has rights and obligations derived directly from the contract of 6 August 2004. (22) In addition, prior to the conclusion of those agreements it had been agreed that Kölnmesse’s de facto assumption of the payment obligation incumbent on the City of Cologne would be terminated from 2012, if it became apparent that Kölnmesse was unable to generate sufficient income through its trade fair operations to cover monthly payments. (23) 67. Second, it would run counter to the attainment of the freedom of establishment and the freedom to provide services in the field of public works contracts to give contracting authorities the opportunity, as a result of too generous an interpretation of a functional concept of an awarding body, to obscure the true identity of the awarding body through the use of complex contractual arrangements and, on that basis, to obtain a procedural advantage. In proceedings for failure to fulfil obligations in the area of procurement law, information is often distributed asymmetrically with the Commission not always immediately having access to the necessary details to disentangle the contractual arrangements chosen by the parties. If a functional interpretation of the procurement law concept of an awarding body results in an entity not directly party to the procurement contract having the potential in its capacity as the ‘true awarding body (in functional terms)’ to replace the ‘official contract awarding body’, many actions for failure to fulfil obligations in the area of procurement law run the risk of foundering as a result of the procedural prohibition – applied especially strictly in infringement proceedings (24) – on amendment or extension to the subject-matter of the proceedings, where, for example, in the pre-litigation procedure the ‘incorrect’ awarding body or the ‘incorrect’ procurement contract was specified. (25) 68. In the present case, the argument advanced by the Federal Republic of Germany in relation to Kölnmesse’s capacity as the awarding body is tantamount to a procedural allegation that in its pleadings the Commission did not raise a potential infringement of the procurement directive by Kölnmesse. Given that, in infringement proceedings, the Court is limited to an assessment of those pleas clearly set out by the Commission in its application – according to the Federal Republic of Germany – the issue of whether in its capacity as the true awarding body of the contested contract Kölnmesse should have invited tenders does not constitute the subject-matter of the present infringement proceedings. 69. For the reasons I have already stated, the argument of the Federal Republic of Germany in relation to the capacity of Kölnmesse as awarding body is mistaken. Neither by reference to a functional rendering of the concept of a ‘contracting authority’ nor on a teleological interpretation of Directive 93/37 can the role of the City of Cologne as a contracting party and awarding body in relation to GKM be called into question. 70. That all leads me to conclude that in the present case it is not Kölnmesse but the City of Cologne which must be characterised as the entity which awarded the contract to GKM. b) Alternatively, in the case that Kölnmesse must be characterised as the ‘true’ awarding body in relation to GKM 71. In order to accommodate the situation where the Court reaches a different finding on the capacity of Kölnmesse as the awarding body, I will briefly set out below – in the alternative – the consequences which result. 72. It follows from Article 38(1)(c) of the Rules of Procedure of the Court of Justice – as established by settled case-law – that an application must state the subject-matter of the proceedings and a summary of the pleas in law on which the application is based, and that that statement must be sufficiently clear and precise to enable the defendant to prepare his defence and the Court to rule on the application. It is therefore necessary for the essential points of law and of fact on which a case is based to be indicated coherently and intelligibly in the application itself and for the heads of claim to be set out unambiguously so that the Court does not rule ultra petita or indeed fail to rule on an objection. (26) 73. Both in the pre-litigation procedure and in its application, the Commission contended that the Federal Republic of Germany had failed to fulfil its obligations under Article 7 in conjunction with Article 11 of Directive 93/37, by reason of the fact that the City of Cologne concluded with GKM the main contract of 6 August 2004 without carrying out a procedure for the award of contracts involving a Europe‑wide invitation to tender in compliance with the said provisions. Consequently, the Commission unambiguously framed its claim in such a manner that only that contract of 6 August 2004 concluded by the City of Cologne constitutes the subject-matter of the present infringement proceedings. 74. Thus, if the Court holds that Kölnmesse must be regarded as the true awarding body, in the present case the Commission’s action for failure to fulfil obligations must be dismissed. 75. On that hypothesis, a multiplicity of additional issues of law and fact must be resolved, to which in the present case the parties have given little or no consideration, for example, whether or not, in its capacity as a trade fair organisation, Kölnmesse fulfils the characteristics of a ‘contracting authority’ within the meaning of Article 1(b) of Directive 93/37 and, as a result, European procurement law rules apply – in particular, directly – in relation to that organisation. 76. In principle, the issue of whether or not a trade fair organisation may be classified within the concept of a contracting authority for the purposes of the procurement directives may be resolved only on a case-by-case basis and having regard to all the individual circumstances. However, in relation to Kölnmesse, it should be noted that there are several features in the case-file which appear to permit its inclusion, in principle, under the concept of a contracting authority within the meaning of Article 1(b) of Directive 93/37. 77. According to Article 1(b) of Directive 93/37, a body governed by public law – and hence also a contracting authority – means any body having legal personality, established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character, and financed, for the most part, by the State, or regional or local authorities, or other bodies governed by public law, or under the control of such bodies. 78. In determining whether a trade fair organisation such as Kölnmesse satisfies the three main characteristics of a contracting authority, the requirements of legal personality and public authority control are likely to cause few problems. In addition, in Agorà and Excelsior the Court held that activities relating to the organisation of fairs, exhibitions and other similar initiatives must be regarded as meeting needs in the general interest. (27) 79. Although the concept of a body governed by public law must be understood in a functional sense (28) and in general given a broad meaning, (29) the matter is likely to be less obvious whether a trade fair organisation such as Kölnmesse also satisfies the requirement that the needs in question lack an industrial or commercial character, especially as in Agorà and Excelsior the Court ruled that the Ente Autonomo Fiera Internazionale di Milano (Governing Board for the Milan International Fair) could not be included as a body governed by public law for the purposes of Article 1(b) of Directive 92/50 because it satisfied needs of an industrial and commercial character. (30) 80. However, in that respect, the analysis in support of the judgment in Agorà and Excelsior does not appear to apply without more ado to German trade fair organisations such as Kölnmesse, especially as in its most recent case-law on the requirement for bodies governed by public law not to meet needs of a commercial or industrial character the Court – in particular in Ing. Aigner (31) and Korhonen and Others (32) – placed increased emphasis on whether or not the body in question carries on its activities in a situation of competition. According to the Court, in that connection, factors pointing strongly in favour of the needs to be met having a commercial or industrial character are, in particular, that the body in question operates in normal market conditions, aims to make a profit, and bears the losses associated with the exercise of its activity. (33) 81. In the light of those observations, in respect of German trade fair organisations it should be noted in general at the outset that those organisations are generally employed by the Länder and municipalities as a tool for promoting regional economic development in order to strengthen the economic attractiveness of the area concerned. In that respect, such trade fair bodies exhibit particular similarity to Wirtschaftsförderungsgesellschaften (organisations promoting economic development) which under heading III.2 of Annex I to Directive 93/37 are expressly mentioned as bodies governed by public law referred to in Article 1(b). (34) 82. To the extent that publicly owned trade fair organisations are used as a tool for economic promotion, their activities do not focus, furthermore, simply on the commercial maximisation of profit. (35) In that connection, in providing subsidies and guarantees on behalf of trade fair organisations, cities and municipalities influence the German market for fairs and, as a result, those organisations ultimately occupy a special position in terms of competition. (36) 83. On a teleological interpretation of the public procurement directives, above all, that special position in terms of competition occupied by publicly-owned German trade fair organisations constitutes – in the light of Ing. Aigner and Korhonen and Others – an extremely strong indication that the needs met by those organisations are not of an industrial or commercial character. (37) 84. According to settled case-law, the purpose of the directives concerning the coordination of procedures for the award of public contracts is to avert both the risk of preference being given to national tenderers or applicants whenever a contract is awarded by the contracting authorities and the possibility that a body financed or controlled by the State, regional or local authorities or other bodies governed by public law may choose to be guided by other than economic considerations. (38) 85. Thus, if in a specific case it is apparent that a trade fair organisation does not operate under normal market conditions and does not, itself, bear in full the losses associated with exercise of its activity, there is a genuine risk that an award procedure may have regard to considerations other than economic considerations and, thus, may be carried out on conditions which are not economically justified. (39) In my view, in such a case, the needs met by the organisation must be regarded as not of an industrial or commercial character and, as a result, such a trade fair organisation must be categorised – provided the remaining conditions are satisfied – as a contracting authority for the purposes of the procurement directives. 3. The mixed works and services character of the main contract of 6 August 2004 86. As I have discussed already, in the present case, for the purposes of procurement law, the City of Cologne must be regarded as the awarding body and contracting entity in relation to GKM. (40) Thus, the next issue to be clarified is whether the main agreement of 6 August 2004 concluded between the City of Cologne and GKM exhibits the essential characteristics of a public works contract within the meaning of Article 1(a) of Directive 93/37. 87. According to settled-case law, the definition of a public works contract within the meaning of Article 1(a) of Directive 93/37 is a matter for Community law. (41) Thus, in determining whether or not GKM was awarded a public works contract, neither German law nor the description of the contract chosen by the parties is relevant. 88. In that connection, the fact cannot be overlooked that the present case is linked, in addition, to the issue of contractus simulatus (sham contracts), where the legal classification of such contracts is based principally – as is the case in national legal orders, too – on the actual content of the agreement. (42) 89. In its definition of a public works contract, Article 1(a) of Directive 93/37 presupposes that, between a contractor and a contracting authority, a contract for pecuniary interest was concluded in writing which has as its object either the execution, or both the execution and design, of works defined in detail in that directive, by whatever means, in accordance with the requirements specified by the contracting authority. 90. That concept of a public works contract must be interpreted in the light of the objectives of Directive 93/37 which – as follows from the recitals in the preamble thereto – aims to facilitate the simultaneous attainment of freedom of establishment and freedom to provide services in respect of public works contracts (43) and the development of effective competition in that field. (44) Those objectives may equally be undermined where the contracting authority awards a contract for a work in which, following completion, the authority is granted more or less comprehensive rights either in rem or under the law of obligations. The risk of a distortion of competition brought about by the preferential treatment of some operators in relation to others is always present where a contracting authority decides to entrust a work to an undertaking, irrespective of the reasons and context for construction of the work or the purpose to which it is to be put. (45) 91. Therefore, in determining whether by way of the main contract of 6 August 2004 the City of Cologne awarded to GKM a contract for the construction of the exhibition halls having procurement law relevance, the fact that GKM – in its capacity as developer – implemented the construction on land which it owned, whereas, in principle, the City of Cologne was granted simply long-term contractual rights of use in relation to the works at issue, is not decisive. (46) Nor is it decisive whether the City of Cologne or Kölnmesse, ultimately, has a legally enforceable repurchase option over the property including exhibition halls. (47) 92. In a similar vein, the Court held in Auroux that an agreement by which the French municipality of Roanne had entrusted a semi-public urban development undertaking with the construction of a leisure centre constituted a public works contract within the meaning of Article 1(a) of the directive notwithstanding the fact that substantial elements of that centre were intended to be sold to third parties and the elements intended for the municipality were to be transferred to it only after construction. The argument that neither the element of the centre intended to be sold to third parties nor the element to be transferred to the municipality only after completion could constitute the object of a public works contract within the meaning of Article 1(a) was rejected by the Court, since – on its view – the matter was irrelevant whether or not the parties anticipated that the municipality of Roanne was or would become the owner of all or part of that work. (48) 93. Thus, in order to verify whether a contract exhibits the essential characteristics of a works contract having procurement law relevance, the decisive factor consists in an objective determination that the main purpose of the contract is the execution of a work for pecuniary interest. 94. Consequently, in the present case, in classifying the main contract of 6 August 2004 for procurement law purposes the decisive factor is whether that agreement – in addition to elements governed by the law of landlord and tenant – also includes a scheme for the execution (and planning) of the exhibition halls in accordance with the stated requirements of the City of Cologne. 95. Although the main contract of 6 August 2004 was characterised by the parties as a ‘lease of property comprising four exhibition halls, a north entrance building, a boulevard and turning to the multi-storey car park, five connecting buildings between the exhibition halls, car parks and external facilities in the Deutz neighbourhood of Cologne, inter alia, in Deutz-Müllheimer-Straße’ and an explicitly worded obligation on GKM to execute the works concerned is absent, satisfaction of the obligations governed by the law of landlord and tenant presumes necessarily prior execution of the entire works. At the time the contract was concluded, the ‘leased’ premises fully remained to be constructed, and as a result an obligation to construct the halls concerned together with ancillary buildings and attendant infrastructure implicitly – but incontestably – was inherent within the scope of the main contract. 96. That analysis is confirmed by various more or less explicit references mentioning the obligation on GKM to execute the substantive works which are evident on a detailed examination of the wording of the main contract of 6 August 2004. 97. The heading of Article 2 of the contract worded ‘Execution, fitting-out and use of the demised premises’ constitutes in itself strong evidence. In that connection, the phrase ‘execution of the demised premises’ refers unambiguously to an obligation on GKM to execute the construction of the exhibition halls in accordance with the requirements listed in that section of the contract. That follows in particular from Article 2(1) of the contract which, although stating in the opening sentence that the premises concerned are simply to be ‘made available’, following stipulations concerning the fittings, dimensions, type and characteristics of the exhibition halls records that GKM is obliged to ensure ‘execution of no less than average type and quality’, a phrase which in turn refers naturally to the execution of the works. Thus, the particularly detailed (49) ‘statement of characteristics’ recorded in that section of the contract must be interpreted, in fact, as client specifications for the construction of the exhibition halls to be executed by GKM. 98. Although Article 2(1) of the contract states also that the detailed specification of works and planning documents were jointly compiled by the contracting parties, it follows clearly from the submissions of the Federal Republic of Germany that the construction of the exhibition halls including ancillary buildings and attendant infrastructure executed by GKM was in accordance with stated requirements, that is, ‘to order’. (50) 99. In addition, the characterisation of the main contractor engaged by GKM to perform the works as operating in the capacity of a ‘vicarious agent’ of GKM in relation to the City of Cologne (51) is clearly a further expression – as the Commission, in my view, correctly asserts – of a contractual obligation owed by GKM to the City of Cologne to execute the works. 100. Thus, in my view, the main contract of 6 August 2004 also includes detailed rules on the execution of works on the exhibition halls including ancillary buildings and attendant infrastructure corresponding to the requirements specified by the City of Cologne, implying the conclusion therein of a detailed substantive obligation on GKM – in anticipation of the obligations governed by the law of landlord and tenant – to construct the exhibition halls and other buildings in accordance with the contract. 101. Thus, the main contract of 6 August 2004 exhibits the essential characteristics of a public works contract within the meaning of Article 1(a) of Directive 93/37. 102. None the less, the fact must not be overlooked that this main contract, in addition to the obligation on GKM to execute the works, also expressly records that party’s obligation to let the premises following construction to the City of Cologne for a fixed term, and even regulates that aspect in considerable detail. Such long-term grant of use must be characterised as letting and thus as a service and, as a result, the main contract contains both works and services elements. 103. Thus, by way of interim conclusion, it must be held that the main contract of 6 August 2004 has as its object both the provision of works and services and, thus, must be characterised for the purposes of procurement law as a mixed or composite contract. 4. Determination of the main purpose of the mixed main contract of 6 August 2004 104. Where a contract contains both elements relating to a public works contract and elements relating to services, according to consistent case-law it is the main purpose of the contract that determines which Community directive on public procurement is to be applied in principle. (52) That need for an assessment of the predominant nature of the tasks involved for the purposes of distinguishing the material scope of Directive 93/37 (public works) from that of Directive 92/50 (public services) was expressly recognised in the 16th recital in the preamble to the latter directive, which states that for a contract to be a public works contract its object must be the achievement of a work. However, in so far as works are incidental rather than the object of the contract, they do not justify treating the contract as a public works contract. (53) 105. Unlike in the case of a mixed contract for both products and services where in accordance with Article 2 of Directive 92/50 the predominant element of the contract must be determined simply by reference to the value of each of the aspects, (54) in the case of a mixed contract for both services and works in addition to a comparison of the respective cost prices an objective analysis of the contract as a whole must be undertaken. (55) 106. Admittedly, in the present case, the total value of the payments to be made by the City of Cologne over a term of 30 years – ignoring future ‘rent increases’ – can be expressed relatively easily in absolute figures as EUR 598 575 000. However, in the absence of objective contractual criteria for such assessment, specific numerical apportionment of that sum according to the works and services elements contained in the contract of 6 August 2004 is, in practice, an impossible task. 107. None the less, the case-file provides sufficient additional information with which – on an objective examination of the overall project – to determine the main purpose of the contract of 6 August 2004. 108. It is evident that Kölnmesse had been working on plans for the construction of new exhibition halls since the 1990s and as a result of a series of events in 2003 those plans rapidly developed a specific form. In those circumstances, under pressure of time, Kölnmesse and the City of Cologne jointly sought to find a funding or investor model to fund immediate construction of the exhibition halls and in that regard settled, ultimately, on the main contract of 6 August 2004 concluded with GKM. (56) Thus, immediate construction of the exhibition halls in accordance with the requirements specified by the City of Cologne provided the context for that contract and, accordingly, the works to be executed by GKM were clearly paramount. 109. In that regard, it must be stressed that the specifications imposed by the City of Cologne in relation to the construction of the exhibition halls by GKM – inasmuch as this may be deduced from the case-file – far exceed the usual requirements of a tenant in relation to newly constructed premises, a factor which again shifts the predominant nature of the contract towards a public works contract. (57) 110. In addition, the case-file contains very strong indications of an arrangement between the parties according to which following the expiry of the 30-year contractual term Kölnmesse was to be granted the opportunity to purchase the property including the exhibition halls at a price of EUR 70 million – fixed prior to the conclusion of the principal agreement – representing the estimated future value of the land (without any buildings). Although the contract of 6 August 2004 does not expressly confirm those arrangements, public statements by the city treasurer of Cologne, (58) the official responsible for the contract negotiations, and a report of the Bezirksregierung Köln of 27 January 2006 on the construction of the new exhibition halls (59) indicate unambiguously that the City of Cologne was convinced that it had secured for Kölnmesse a right of first refusal over the property at the same price – fixed in advance – of EUR 70 million. 111. It is apparent from the report of the Bezirksregierung Köln of 27 January 2006 on the construction of the new exhibition halls, which includes a chronological summary of the contractual negotiations with GKM, that a ‘draft lease’ for a term of 30 years and an annual ‘rent’ of EUR 20.7 million – that is, EUR 1 725 000 monthly – had been negotiated at the end of 2003, and in that regard ‘the cash value of the transaction [had been calculated on the basis] of a purchase price of EUR 70 million in the year 2036’. Although that purchase option never became a binding contractual term, it is evident that the ‘rent’ of EUR 1 725 000 mentioned in that draft was incorporated, ultimately, in the principal agreement of 6 August 2004. Thus, the remuneration regime applicable to the City of Cologne established by the main contract is based unambiguously on the calculations underlying the draft contract, according to which on the expiry of the contractual term GKM would transfer the trade fair site to Kölnmesse in consideration for the purchase price of some EUR 70 million. (60) Nor does the existence of the 13-month rent-free period, evidently agreed at a subsequent date, preclude that analysis, especially as argument to that effect was advanced by the Federal Republic of Germany neither in its discussion and interpretation of that rent-free period nor in its comprehensive analysis of the repurchase or right of first refusal options. According to the argument of the Federal Republic of Germany – advanced both in its rejoinder and at the hearing – concession of such a rent-free period is a wholly standard market practice by which the yield on a rental property may be increased in formal terms, to the benefit of the landlord. 112. Ultimately, the question of whether, after all, Kölnmesse was granted a legally enforceable right of first refusal over the property at a predetermined price of EUR 70 million may be left unanswered. The decisive fact is that the City of Cologne and GKM concluded the main agreement evidently on the assumption that the trade fair site – which GKM had acquired from the City of Cologne and Kölnmesse shortly beforehand in an unbuilt state for some EUR 67 million – including exhibition halls, following expiry of the contractual term, could be purchased by Kölnmesse for EUR 70 million and, as a result, the contractual arrangements at issue in these proceedings, ultimately, are based on that assumption. 113. In my view, it follows from those findings that the monthly payments to be made by the City of Cologne must be regarded primarily as instalment payments for the works executed by GKM. Thus, taking the perspective of the remuneration regime chosen by the parties, the main contract of 6 August 2004 appears – by reference to its predominant features – to be a works contract subject to an extended payment regime and, in that regard, the nature of the contemporaneous grant of use is dependent on the term of the extended payment regime and, therefore, results necessarily from the real purpose of the main contract, that is, the execution of works. 114. That analysis is confirmed by the contractual scheme governing the allocation of any increases or reductions in the costs of the works which may be necessary by reason of client amendments to the approval and execution plans as a result of requirements imposed by the authorities, the inspecting structural engineer or utility supply and waste-disposal undertakings. According to the main contract, (61) the City of Cologne and GKM must reach an agreement by which those increased or reduced costs of GKM are offset, a scheme implying, ultimately, an economic allocation of the risks, an allocation which corresponds to that applicable between client and contractor in the framework of a works contract. 115. On an objective assessment of the entire project and, in particular, the contractual arrangements made in the present case, having regard to the foregoing, the conclusion is inevitable that the main purpose of the contract concluded between GKM and the City of Cologne was not so much a fixed-term grant of use over the works following their construction but the construction of those works. Accordingly, the objective of the main contract of 6 August 2004 was primarily for the City of Cologne to procure works, and in that regard the long-term grant of use over the works following their construction functioned as a device for funding those works. In that connection, the monthly ‘rent’ payment of EUR 1 725 000 must be regarded primarily as consideration for the works executed by GKM, with the 30-year term of that payment and the attendant grant of use existing principally for financial reasons. 116. In the light of the foregoing, I conclude, in addition, that the elements of a public works contract included in the main contract of 6 August 2004 constitute the main purpose of that contract and, as a result, it lies within the material scope of Directive 93/37. 5. Conclusion 117. In the light of the foregoing analysis, it should be concluded that the main contract of 6 August 2004 at issue in this case must be characterised as a public works contract within the meaning of Article 1(a) of Directive 93/37 which, consequently, the City of Cologne in its capacity as contracting authority should have awarded – in accordance with Article 7(4) of that directive – in the framework of an open or restricted procedure and in compliance with the publication requirements established in Article 11. VIII – Costs 118. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Federal Republic of Germany has been unsuccessful, I consider that it should be ordered to pay the costs. IX – Conclusion 119. In view of all the foregoing considerations, I propose that the Court should: (1) declare by reason of the fact that the City of Cologne directly concluded with the Grundstücksgesellschaft Köln Messe 15-18 GbR the contract of 6 August 2004, without carrying out a Community-wide award procedure in accordance with the provisions specified and in compliance with the provisions on publication applicable thereto, that the Federal Republic of Germany failed to fulfil its obligations under Article 7 in conjunction with Article 11 of Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts; (2) order the Federal Republic of Germany to pay the costs. 1 – Original language: German. 2 – OJ 1993 L 199, p. 54. 3 – OJ 1992 L 209, p. 1. 4 – The full title of that agreement is worded: ‘underlease of property comprising four exhibition halls, a north entrance building, a boulevard and turning to the multi-storey car park, five connecting buildings between the exhibition halls, car parks and external facilities in the Deutz neighbourhood of Cologne, inter alia, in Deutz-Müllheimer-Straße’. 5 – Judgment of 17 July 2008 in Case C-311/07 Commission v Austria, paragraph 26; Case C‑319/06 Commission v Luxembourg [2008] ECR I-4323, paragraph 72; Case C‑412/04 Commission v Italy [2008] ECR I-619, paragraph 42; Case C-525/03 Commission v Italy [2005] ECR I-9405, paragraph 13 et seq.; Case C-29/01 Commission v Spain [2002] ECR I-2503, paragraph 11; Case C-3/96 Commission v Netherlands [1998] ECR I-3031, paragraph 36; and Case C-60/96 Commission v France [1997] ECR I-3827, paragraph 15. 6 – Case C-525/03 Commission v Italy, cited in footnote 5, paragraph 16. 7 – To that effect, see the earlier view of Advocate General Lenz in his Opinion in Case C-362/90 Commission v Italy [1992] ECR I-2353, point 11 et seq. 8 – To that effect, see also the Opinion of Advocate General Mengozzi in Case C‑237/05 Commission v Greece [2007] ECR I-8203, point 62. 9 – Case C-237/05 Commission v Greece [2007] ECR I-8203, paragraph 29, in relation to Directive 92/50. See also Case C-394/02 Commission v Greece [2005] ECR I‑4713, in relation to Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (OJ 1993 L 199, p. 84). To that effect, see also Lenaerts, K., Arts, D. and Maselis, I., Procedural Law of the European Union, 2nd edition, London, 2006, p. 159 et seq., paragraph 5-052. 10 – The Court decisively rejected the strictly formal perspective, according to which Community procurement law must be regarded as a wholly procedural set of rules, with the result that the effects of any infringement of those provisions are automatically exhausted on the commission of such an act; see Joined Cases C-20/01 and C-28/01 Commission v Germany [2003] ECR I‑3609, paragraphs 31 to 37. 11 – Case C-159/94 Commission v France [1997] ECR I-5815, paragraph 102, and Case 96/81 Commission v Netherlands [1982] ECR 1791, paragraph 6. 12 – Opinion of Advocate General Léger in Case C-399/98 [2001] ECR I-5409, point 94. 13 – Commission v Germany, cited in footnote 10, paragraph 35 et seq. 14 – Case C-328/96 Commission v Austria [1999] ECR I-7479, paragraphs 42 to 45, and Case C‑362/90 Commission v Italy [1992] ECR I-2353, paragraph 11. 15 – Case C-394/02 Commission v Greece, cited in footnote 9, must be interpreted in that vein. First, the Court affirmed the principle that an action for failure to fulfil obligations is inadmissible if, when the period prescribed in the reasoned opinion expired, the contract in question had already been completely performed. Since, in the case in question, only 85% of the contractual works had been completed on the expiry of that period, the plea of inadmissibility was rejected. 16 – Case C-237/05, cited in footnote 9, paragraph 29 et seq. 17 – Case 31/87 Beentjes [1988] ECR 4635, paragraph 11; Case C-360/96 BFI Holding [1998] ECR I-6821, paragraph 62; Case C-237/99 Commission v France [2001] ECR I-939, paragraph 43; and Case C-470/99 Universale-Bau and Others [2002] ECR I-11617, paragraph 53. 18 – See Marx, F. and Prieß, H., in Jestaedt, T., Kemper, K., Marx, F. and Prieß, H., Das Recht der Auftragsvergabe, Neuwied, 1999, p. 16. 19 – See, for example, Beentjes, cited in footnote 17, paragraph 11, in which the Court emphasised that the term ‘the State’ contained in Article 1 of Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (OJ, English Special Edition 1971 (II), p. 682) must be interpreted in functional terms because the aim of the directive, which is to ensure the effective attainment of freedom of establishment and freedom to provide services in respect of public works contracts, would be jeopardised if the provisions of the directive were to be held to be inapplicable solely because a public works contract is awarded by a body which, although it was set up to carry out tasks entrusted to it by legislation, is not formally a part of the State administration. 20 – See, for example, Case C-29/04 Commission v Austria [2005] ECR I-9705. 21 – A different conclusion might be necessary if, from the outset, the City of Cologne had acted on behalf of Kölnmesse and subsequently had assigned to Kölnmesse all its rights and obligations arising from the contract of 6 August 2004. In that regard, in Case C-44/96 Mannesmann Anlagenbau Austria [1998] ECR I-73, paragraph 42 et seq., the Court held that a public works contract awarded by a contracting authority ceases to be subject to the provisions of Directive 93/37 if, before completion of the work, the contracting authority transfers its rights and obligations arising from the call for tenders to an undertaking which is not itself a contracting authority, provided that from the general context it is apparent that the contract was awarded on behalf of that undertaking and, in addition, relates to a project which, from the outset, falls entirely within the objects of the undertaking. On that point, see also Bovis, C., ‘Case C-44/96 Mannesmann Anlagenbau Austria AG’, Common Market Law Review, Vol. 36, 1999, p. 205, at p. 212. 22 – In the implementing agreement, the City of Cologne mandated Kölnmesse with the full implementation and exercise of all rights and obligations which the city had undertaken in relation to GKM, subject to the proviso that rights modifying the legal relationship (Gestaltungsrechte) could be exercised only with the city’s prior consent. Therefore, that contractual arrangement does not imply that the City of Cologne assigned its rights and obligations to Kölnmesse, but simply that in relation to GKM Kölnmesse could exercise those rights and obligations on behalf of the City of Cologne. In addition, the City of Cologne reserved the right at any time to terminate the implementation agreement in full or in part and to prohibit Kölnmesse from exercising contractual rights and obligations on behalf of the city vis-à-vis GKM. 23 – That agreement is evidenced, in particular, by a letter of intent from the City of Cologne to Kölnmesse of 8 December 2003 which expressly stated that the amount of rent due from Kölnmesse to the City of Cologne would have to be adjusted in the light of the new economic position of the undertaking, if after 2012 Kölnmesse was unable to generate additional events to cover the additional costs arising. That commitment was expressly confirmed by a letter of intent from the City of Cologne to Kölnmesse of 14 July 2004, according to which, in a binding manner, the City of Cologne indicated its willingness under certain economic conditions to adjust the rent payment due from Kölnmesse under the (under)lease of the new exhibition halls following their construction. 24 – See, for example, Rengeling, H.-W., Middeke, A. and Gellermann, M., Handbuch des Rechtsschutzes in der Europäischen Union, Munich, 2003, § 23, point 37, p. 426. 25 – In accordance with settled case-law, the subject-matter of the proceedings brought under Article 226 EC is circumscribed by the pre-litigation procedure provided for by that provision and, consequently, both the Commission’s reasoned opinion and the application must be based on the same complaints. Although that requirement does not mean that in every case the statement of complaints in the letter of formal notice, the operative part of the reasoned opinion and the form of order sought in the application must be exactly the same, none the less, in all cases, the subject-matter of the proceedings may not be extended or altered. On the other hand, limitation of the subject-matter of the dispute is permitted (see Case C-365/97 Commission v Italy [1999] ECR I-7773, paragraphs 23 and 25; Case C-229/00 Commission v Finland [2003] ECR I-5727, paragraphs 44 and 46; and Case C‑433/03 Commission v Germany [2005] ECR I‑6985, paragraph 28). In addition, in its application the Commission may clarify its initial grounds of objection provided in all cases, however, that it does not alter the subject-matter of the dispute (see Case C‑195/04 Commission v Finland [2007] ECR I-3351, paragraph 18 with further references). 26 – Case C‑412/04 Commission v Italy, cited in footnote 5, paragraph 103, and Case C‑195/04 Commission v Finland, cited in footnote 25, paragraph 22. To that effect, see also Case C‑296/01 Commission v France [2003] ECR I-13909, paragraph 121, and Joined Cases 46/59 and 47/59 Meroni v High Authority [1962] ECR 411, 419. 27 – Joined Cases C-223/99 and C-260/99 [2001] ECR I-3605, paragraph 33 et seq. The Court justified that finding, in particular, by the fact that an organiser of such events, in bringing together manufacturers and traders in one geographical location, does not act solely in the individual interest of those manufacturers and traders, who are thereby afforded an opportunity to promote their goods and merchandise, but also provides consumers who attend the events with information that enables them to make choices in optimum conditions. In its view, the stimulus to trade which results may be considered to fall within the general interest. 28 – Case C-337/06 Bayerischer Rundfunk and Others [2007] ECR I-11173, paragraph 36 et seq. 29 – Case C-373/00 Adolf Truley [2003] ECR I-1931, paragraph 43. To that effect, see also the Opinion of Advocate General Mazák of 16 December 2008 in Case C‑300/07 Hans & Christophorus Oymanns, point 27. 30 – Agorà and Excelsior, cited in footnote 27, paragraph 35 et seq. On that issue, the Court stated that the organisation of fairs, exhibitions and other similar initiatives is an economic activity which involves offering services on the market place. Those services, so the Court held, are provided in consideration for payment and, in so doing, commercial needs are met. Even if the body in question in that case was non-profit-making, according to the Court, it operated, as was evident from Article 1 of its articles of association, according to criteria of performance, efficiency and cost-effectiveness and there was no mechanism for offsetting any financial losses, and as a consequence it had to bear the economic risk of its activities itself. Moreover, a relevant criterion was the fact that the fair operated in a competitive environment. On those criteria, see Brown, A., ‘Joined Cases C-223/99 and C‑260/99: the definition of contracting authorities and of needs in the general interest that lack a commercial character’, PPLR, 2001, p. 107, at p. 109. 31 – Case C-393/06 [2008] ECR I-2339, paragraph 41. 32 – Case C-18/01 [2003] ECR I-5321, paragraph 49. See also Case C-283/00 Commission v Spain [2003] ECR I-11697, paragraph 81 et seq. 33 – Korhonen and Others, cited in footnote 32, paragraph 51. 34 – To that effect, see Marx, F., in Motzke, G., Pietzcker, J. and Prieß, H., Beck’scher VOB‑Kommentar Verdingungsordnung für Bauleistungen Teil A, 1st edition, § 98 Auftraggeber, point 32; Werner, M., in Byok, J. and Jaeger, W., Kommentar zum Vergaberecht, Heidelberg, 2000, § 98, point 313; Byok, J. and Goodarzi, R., ‘Messegesellschaften und Auftragsvergabe’, NVwZ, 2006, p. 281, at p. 285. See also Dreher, M., in Dreher, M. and Stockmann, K., Kartellvergaberecht, 4th edition, Munich, 2008, § 98, point 136, who argues that, consequently, trade fair organisations, on balance, must be regarded as contracting authorities. 35 – To that effect, see Marx, F. and Prieß, H., cited above in footnote 18, p. 38 et seq., who argue that the holding of markets and fairs constitutes a public service and that, in general, such activity can be financed only through the investment of substantial public funds. According to those authors, the decisive argument for treating such trade fair bodies as contracting authorities is precisely the fact that those organisations do not constitute industrial or commercial undertakings whose sole aim is the maximisation of profit. 36 – Byok, J. and Goodarzi, R., cited above in footnote 34, p. 285, with many examples illustrating that special position in terms of competition. 37 – On that issue, see Dreher, M., cited above in footnote 34, § 98, point 77, who points out that the absence of a commercial or industrial character, ultimately, is the same as holding a special position in the market as a result of public intervention. See also the Opinion of Advocate General Léger in Case C-44/96 Mannesmann Anlagenbau Austria [1998] ECR I-73, point 69, in which he emphasised that the Community legislature intended that the procurement directive should apply to entities meeting needs in the general interest whose activities escape market forces, in whole or in part. 38 – See, in particular, Korhonen and Others, cited in footnote 32, paragraph 52, and Universale-Bau and Others, cited in footnote 17, paragraph 52. 39 – On that issue, see also the Opinion of Advocate General Geelhoed in Case C‑126/03 Commission v Germany [2004] ECR I-11197, point 32, in which he stressed that a body which aims to make a profit and bears the losses associated with the exercise of its activity will not normally become involved in an award procedure on conditions which are not economically justified. 40 – See point 62 et seq. of this Opinion. 41 – Case C-220/05 Auroux [2007] ECR I-385, paragraph 40. In relation to Directive 92/50, see Case C-264/03 Commission v France [2005] ECR I-8831, paragraph 36. 42 – The assessment, whereby in the case of a contractus simulatus legal classification of the contract concerned is based on the actual content of the agreement, is to be found already in the Roman Law maxim plus valere quod agitur, quam quod simulate concipitur (Justinian Code, title to book 4.22). In that connection, Paragraph 117(2) of the German BGB (Civil Code) also provides that if a sham transaction hides another legal transaction, the provisions applicable to the hidden transaction will apply. Thus, in the case of transactions which are not subject to requirements as to form, in accordance with the rule falsa demonstratio non nocet, the hidden transaction – intended by the parties – applies (on that point, see Larenz, K. and Wolf, M., Allgemeiner Teil des deutschen bürgerlichen Rechts, 9th edition, Munich, 2004, § 35, point 34). A similar provision to that German rule is contained in Article 50(2) of the Slovenian Obligacijski zakonik (Code on the law of obligations) (on that point, see Dolenc, M., in Juhart, M. and Plavšak, N. (eds), Obligacijski zakonik s komentarjem, First Book, GV založba, Ljubljana, 2003, commentary on Article 50, p. 207). In the same vein, the second sentence of Paragraph 916(1) of the Austrian ABGB (Civil Code) provides that a hidden transaction must be assessed in accordance with its true characteristics. That basic approach may be discerned both in French and Belgian law, too, in that in the classification of contracts courts may override the description which the parties have applied to the contract in order to determine the true nature of the contract and, thus, the provisions applicable (for France, see Le Tourneau, Ph., Droit de la responsabilité et des contrats, 6th edition, Paris, 2006, point 3615; for Belgium, see Cornelis, L., Algemene theorie van de verbintenis, Antwerp, 2000, point 229). Under Article 1281(2) of the Spanish Codigo Civil (Civil Code), too, in the case of conflict, the parties’ evident intent takes precedence over the wording of the contract. On the basis of that provision, by judgment of 28 May 1990 (summarised in Moreno Gil, O., Código civil y jurisprudencia concordada, 4th edition, Madrid, 2006, point 4.230), the Tribunal Supremo (Supreme Court) held that in the classification of an agreement it is not the description chosen by the parties but the contractual obligations contained therein which are decisive. 43 – Second recital in the preamble to Directive 93/37. 44 – Tenth recital in the preamble to Directive 93/37. 45 – To that effect, see the Opinion of Advocate General Kokott in Case C-220/05 Auroux [2007] ECR I-385, point 43. 46 – To that effect, see Franke, H., in Grabitz, E. and Hilf, M., Das Recht der Europäischen Union, Volume 4, Munich, 30th update June 2006, B. 8. Bauaufträge, point 11. Egger, A., Europäisches Vergaberecht, 1st edition, Vienna, 2008, point 719, observes in that connection that the procurement law definition of public works includes precisely construction ‘by whatever means’ and thus must apply also to property leasing arrangements where a lessor effects a work in accordance with the requirements of the client/lessee. 47 – On the other hand, in determining – in qualitative terms – the main purpose of a mixed works and services contract, the assessment that the parties concluded their agreement on the assumption that such a repurchase option exists may be highly significant. See point 110 et seq. of this Opinion. 48 – Auroux, cited in footnote 41, paragraph 47. 49 – In that regard, reference is made in particular to the appended specifications and schedules of works and to the detailed building plans, schemes and further planning documents annexed to the contract in appendices covering several thousand pages. 50 – In paragraph 67 of its defence, the Federal Republic of Germany expressly affirmed that ‘the exhibition halls were indeed constructed according to the requirements specified – within the meaning of Article 1(a) of Directive 93/37/EEC – by Kölnmesse’. 51 – Article 17(2) of the main contract. 52 – Case C‑412/04 Commission v Italy, cited in footnote 5, paragraph 47, and Auroux, cited in footnote 41, paragraph 37. See also Case C-331/92 Gestión Hotelera Internacional [1994] ECR I-1329, paragraph 29. 53 – Recital 10 in the preamble to 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 (OJ 2004 L 134, p. 114) incorporates that recital in material terms and reiterates it as follows: ‘… Public service contracts, in particular in the sphere of property management services, may, in certain circumstances, include works. However, in so far as such works are incidental to the principal subject-matter of the contract, and are a possible consequence thereof or a complement thereto, the fact that such works are included in the contract does not justify the qualification of the contract as a public works contract.’ 54 – See, for example, Case C-340/04 Carbotermo [2006] ECR I-4137, paragraph 31, and Case C‑107/98 Teckal [1999] ECR I-8121, paragraph 38. 55 – Case C‑412/04 Commission v Italy, cited in footnote 5, paragraph 48. 56 – See point 10 et seq. of this Opinion. 57 – On that point, see Trepte, P., Public Procurement in the EU. A Practitioner’s Guide, 2nd edition, Oxford, 2007, p. 246 et seq., who argues that in order to classify a contract granting use of a property under the concept of a public works contract the decisive factor is that premises were constructed according to the specifications of the contracting authority and the developer would not have built the property concerned without the prior commitment of the contracting authority. In the same vein, see also Eschenbruch, K., ‘Immobilienleasing und neues Vergaberecht’, BB-Beilage, No 5, 2000, p. 8, at p. 11, who argues that in a case of ‘real property leasing’ a works contract must be presumed when the contracting authority exercises decisive influence over the architecture (design) of the premises or otherwise decisively intervenes in the planning of the building and does not restrict itself to the establishment of certain user-specific requirements. 58 – Annexed to the Commission’s pleadings as Appendix I was an interview given to the Kölner Stadt-Anzeiger newspaper by the city treasurer of Cologne published in the edition of 5/6 September 2005, the content of which was discussed and examined in detail by the Commission and the Federal Republic of Germany. In that interview, the city treasurer confirmed that the Stadtsparkasse (municipal savings bank) which had brokered the deal with GKM stood by its commitment guaranteeing Kölnmesse the right to repurchase the exhibition site for EUR 70 million and that Kölnmesse could rely on that commitment. In that connection, he stressed that ‘in 30 years time neither from an economic nor a legal point of view can the plug be pulled on the trade fair organisers’. 59 – Report of the Bezirksregierung Köln, Messe Köln: Neubau der Messehallen. Ergebnis der vergabe- und kommunalrechtlichen Bewertungen, of 27 January 2006, which includes a history of the contract negotiations. 60 – At the hearing, in response to questioning, the Federal Republic of Germany conceded that it was unable to provide an objective explanation why omission of the repurchase option – on which it relied in argument – had not influenced the calculation of the rent. 61 – Article 2(3)(d) of the main contract of 6 August 2004.