EUROPEAN COMMISSION 
Brussels, 20.12.2011 
SEC(2011) 1589 final 
  
COMMISSION STAFF WORKING PAPER 
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 
Accompanying the document 
PROPOSAL FOR A DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF 
THE COUNCIL 
on the award of concession contracts 
{COM(2011) 897 final} 
{SEC(2011) 1588 final}  
 
EN 2   EN COMMISSION STAFF WORKING PAPER 
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 
Accompanying the document 
PROPOSAL FOR A DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF 
THE COUNCIL 
on the award of concession contracts 
EXECUTIVE  SUMMARY 
OF THE IMPACT ASSESSMENT OF PROPOSAL FOR A DIRECTIVE ON THE AWARD OF 
CONCESSION CONTRACTS  
1. PROBLEM DEFINITION  
Concession contracts are commonly used by public authorities to  provide for the delivery of 
services or construction of infrastructure. Concessions involve a contractual arrangement 
between the public authority and an economic operator (the conce ssion holder) whereby the 
latter provides services or carries out work s and is substantially remunerated by being 
permitted to exploit the work or service. Conc essions are a particularly attractive way of 
carrying out projects of public interest when stat e or local authorities need to mobilise private 
capital and know-how to supplem ent scarce public resources. Th ey underpin a significant 
share of economic activity in the EU and are es pecially common in network industries and for 
the delivery of services of ge neral economic interest. Conce ssion holders may, for example, 
build and manage motorways, provide airport se rvices or operate wate r distribution networks. 
Concessions involving private part ners are a particular form of public private partnership 
(PPP)1. According to the information available, over 60  % of all PPP contracts can be classed 
as concessions. As a model where, in remunera tion, the private partner is given the right to 
exploit either the work or the service, with th e inherent financial risks, concessions constitute 
a convenient legal framework for carrying ou t public tasks through PPPs and hence make it 
possible to deliver much needed public works a nd services, while keeping those assets out of 
the government balance sheet. 
Since it involves the efficient allocation of public funds, procuremen t of concessions (and 
therefore indirectly of PPPs) is of special concern in the current context of severe budgetary 
constraints and economic difficulties in many EU Member States. The initiative on concessions is to be seen as one of the measures that can help to ensure more efficient allocation of public money by creating conditions for the competitive award of a contract. 
Currently, the award of service concessions  is subject only to the Treaty principles (equal 
treatment, non-discrimination, tran sparency and proportionality) while works concessions  
(with the exception of the ‘utilit ies’ sector) are also partially covered by some secondary 
                                                
 
1 For the purpose of statistical treatment , concessions are defined as projects where the majority of revenue is 
generated by third-party users, whereas in PPPs the majority of  revenue comes from public authorities.  
 
EN 3   EN legislation. By contrast, public procurement c ontracts are subject to  detailed secondary 
legislation (covering ‘classic’  and ‘utilities’ sectors)2. 
The lack of clarity of the EU rules governing concessions is the main driver of problems 
identified with regard to the present situation: lega l uncertainty (1.1), en try barriers (1.2.) and 
lack of appropriate judicial gua rantees for the bidders (1.3.). 
1.1. Lack of legal certainty genera ting economic inefficiencies 
Legal uncertainty affects both the definition of  concession and the legal regime applicable. 
The current definition makes it difficult to distinguish between c oncessions and public 
contracts (and also between works concessions  and service concessions). Although the Court 
has explained that the essential feature of a concession is the risk inherent in the exploitation of a work or a service which the concession holder has to b ear, fundamental components of 
the definition, such as the leve l and type of risk, are still unde fined. Furthermore, the precise 
content of the obligations of transparency and non-discrimina tion arising from the Treaty 
remains unclear. National legal frameworks do not  provide a solution to the problem either as, 
for the same reasons, their compliance with  the EU rules cannot be easily ensured. 
The present situation of uncer tainty at several levels gi ves rise to major economic 
inefficiencies and is detrimental to contrac ting authorities and entit ies, economic operators 
and users of the services. Indeed, for contracti ng authorities and entities, the lack of legal 
certainty increases the risk of cancellation or early termination of illegally awarded contracts 
and ultimately discourages them from using con cessions in cases where this type of contract 
may be a good solution. Economic operators may al so be less inclined to engage in projects 
which may turn out to have been tendered in violation of EU law. Limited interest in 
concessions may equally have a negative eff ect on the uptake of PPPs and, consequently, 
jeopardise improvements in efficien cy and innovation in the delivery of services vital to EU 
citizens. 
1.2. Entry barriers 
In addition to legal uncertainty, the current situ ation is marked by the presence of barriers to 
market entry. 
Member States' legal systems differ significantly as to the scope of application of the rules on 
the award of concessions, the level of publication and transpar ency standards, the choice of 
procedures, or of selection a nd award criteria, and technical specifications. This situation 
contributes to the fragmentation of national frameworks, further aggravated by the often 
unlawful practices of c ontracting authorities and entities , such as the direct award of 
concession contracts or the use of criteria which are not objective. 
As a result, economic operators are faced with an  unlevel playing field, often leading to lost 
market opportunities. Many respo ndents to the public consultations confirmed that the this 
situation gives rise to costs related to legal ad vice and to the need for in-depth knowledge of 
specific local conditions and creates obstacles to  the entry of non-domestic  EU operators into 
these markets. In addition to the harm to competitors located in other Member States, 
contracting entities and consumer s also stand to lose, as they  do not get the value for money 
they might have expected.  
                                                
 
2 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, publ ic supply contracts and pub lic service contracts, and 
Directive 2004/17/EC of the EP and of the Council of 31  March 2004 coordinating the procurement procedures of 
entities operating in the water, energy, transpor t and postal services sectors (OJ L 134, 30.4.2004).  
 
EN 4   EN 1.3. Insufficient legal protection of tenderers 
Services concessions, and to a certain extent works concessions, are no t covered by the rules 
providing for legal remedies in the area of public procurement. Therefore, aggrieved tenderers 
do not benefit from important judicial protectio n afforded by the Remedies Directive. Despite 
the fact that certain Member Stat es have extended the application of this Directive to service 
concessions, others have not done so. As a result, possible violatio ns of the EU Treaty 
principles cannot be adequately addressed. 
2. SUBSIDIARITY  
Although the aforementioned proble ms produce their material eff ects at national level, they 
also affect the efficient functioning of the EU internal market. 
Even if Member States were to take legislativ e action to establish a le gal framework based on 
the Treaty principles, at least two problems would still remain unresolved: the risk of the legal 
uncertainty related to interpretations of thos e principles by nationa l legislators and large 
disparities between the legislati on in different Member States. 
A common understanding across Member States of the obligations fl owing from the EU 
principles can only be achieved  by action at EU level. Similarly, approximation of the rules 
by the EU legislator can best eliminate discrepancies between national regimes. 
3. OBJECTIVES  
The overall objective of the present initiative is to create a supportiv e framework for wider 
use of concessions, hence contributing to econom ic growth and innovation. The initiative will 
concentrate on solutions allowing the qualit y and accessibility of many socially and 
economically important services to be impr oved by facilitating inve stment and increasing 
competition for the award of concessions, thus  creating more business opportunities for EU 
companies and fostering innovation. 
4. SCOPE OF LEGISLATION  
Legislation on concessions should cover the award of this type of contract w ith regard not 
only to the ‘classic’ sector (Directive 2004/18/E C) but to the ‘utilities’ sector (Directive 
2004/17/EC), which accounts for a signi ficant number of concessions. 
Non-priority services (e.g. hea lth, education and social services) are presently only partially 
covered by the Public Procurem ent Directives since they were deemed not to present a 
significant potential for cross-border trade. Ho wever, in the light of recent findings by the 
Commission following the evaluation on the im pact and effectiveness of EU public 
procurement legislation, many categories of se rvices formerly classified as non-priority 
services showed a relatively high ratio  of cross-border provision. Any new proposal in the 
field of public purchases must take account of  these findings. Therefore, such conclusions 
justify the extension of the envisaged rules to those services. Neverthele ss, services such as 
social, health and education continue to ha ve a limited cross-border dimension, due to the 
strong impact of different national cultural  traditions, and are less often awarded as 
concessions. 
Concessions contracts for certain  specific types of services ar e already subject to specific 
regulation with regard to the contracts they awar d, such as public passe nger transport services 
 
EN 5   EN by rail and road (covered by Regulation 1370/2007)  and air transport services (covered by 
Regulation 1008/2008) and therefor e should be excluded from the scope of the future 
legislation on concessions. 
5. POLICY OPTIONS  
The Commission has analysed different policy opti ons aimed at meeting the objectives set out 
in the previous section. These include the follow ing legislative and non legislative actions: no 
policy change; a focused infringement policy; soft law; legislation: basic rules, detailed rules, 
mixed rules. 
Only the legislative options above will be analysed in detail since, as will be explained below, 
neither the focused infringement policy nor th e soft law option seem fully adequate to 
accomplish the objectives set out. 
5.1. Base line scenario (Option 1) 
This option implies no action to address th e status quo. In this case the economic 
inefficiencies caused by legal uncertainty and the existing entry barriers to the EU 
concessions market would persist: contract ing authorities and en tities would miss the 
opportunity to ensure best value for money in the award of concession s, economic operators 
would miss out on substantial business opportuniti es and consumer benefits would remain 
limited. 
5.2. Focused infringement policy (Option 2) 
This option would consist in increased and more systematic use of the infringement procedure 
under Article 258 of the TFEU to address cases of violation of the Treaty principles during 
the award of concessions. While this option offe rs certain positive effects it would not address 
the problems identified and result s could only be expected in th e long term. Therefore, this 
option would not meet the objec tives of the initiative and  can also be discarded. 
5.3. Soft law (Option 3) 
The soft law option would consist either in an interpretative communication of the 
Commission or a recommendation. The Communication on concessi ons of 2000 has not so far 
ensured legal certainty and compliance with the Treaty principles3. A new communication 
would probably raise stakeholders’ awareness of the case law of the C ourt but could not go 
beyond interpretation of the existing case law. Furthermore, a communication is not binding 
and therefore would not be likely to ensure publicity of conce ssion contracts in the EU or 
fairness of the procedures used to award them. 
The above comments also apply to a r ecommendation by the Commission. It therefore 
appears that neither a communi cation nor a recommendation would achieve the objectives of 
the initiative. This option can therefore be discarded.  
5.4. Legislation — content of the options 
The two ‘extreme’ legislative options are the introduction of basic rules corresponding to the 
existing provisions on works concessions of Di rective 2004/18/EC or de tailed rules based on 
the current legal framework fo r public contracts. The third option, mixed rules, would be 
some compromise between the two. 
                                                 
3 Commission interpretative communi cation on concessions under Community law (OJ C 121, 29.4.2000).  
 
EN 6   EN 6. ASSESSMENT OF IMPACTS OF THE LEGISLATIVE OPTIONS  
6.1. Scope of legislation 
A proposal for directive on concessions, irresp ective of its actual content, would cover 
concessions in both ‘classic ’ and utilities sectors. 
By contrast, new rules would not apply to se rvices concessions currently governed by the 
Transport Regulation4 and the Air Transport Services Regulation5, for the sake of the stability 
of their separate legal regimes, and only partia lly to social services . The threshold for both 
works and service concessions should ensure th at these rules cover only concessions with a 
manifest cross-border interest. 
6.2. Option 4: Legislation — basic rules 
Basic rules would include provisions currently  applicable to works concessions in the 
‘classic’ sectors, as well as clarif ication of the notion of concession. 
Clearer criteria distinguishing between public contracts and con cessions could be expected to 
reduce the number of public contra cts wrongly labelled as concessions. 
The most important of these rules is the obligation to publish  a concession notice in the 
Official Journal of the EU. This requirement is  expected to reduce a number of direct awards, 
contribute to better information on concessions, eliminate legal uncertainty as to whether the 
standards of ‘adequate advert isement’ have been met and reduce the cost of bidding for 
concessions for SMEs. 
More competition and contestability is likely to result in more competitive bids and hence, in 
better results for contracti ng authorities and entities and consumers. 
Provisions on the minimum deadlines  for the submission of bids could help avoid 
discrimination, combat corruption and encourag e participation of cr oss-border bidders. 
Legislation is the only option capable of br inging procedures for the award of service 
concessions within the realm of the Remedies Directives.  This should substantially improve 
legal protection for bidders, which is likely to enhance their confidence in the impartiality of contracting authorities and en tities’ decisions and encourag e them to bid more often. 
Basic rules might also ensure equal treatm ent throughout the procedure. However, their 
effectiveness is more uncertain in this regar d. One possible drawback might be that greater 
transparency in the award of concessions could lead to increased dominance by large 
companies. However, such an outcome is by no means certain. Stake holders perceive the 
administrative and compliance costs likely to be  generated by basic legislation as rather 
unsubstantial and considered they would be c ounterbalanced by the e fficiencies achieved 
thanks to greater competition. 
As to the possible social drawbacks, the current EU legislation on safeguarding employees’ 
rights in the event of transfers of undertakings  reduces the possibility  of redundancies in the 
event that an incumbent operator loses a contract. 
Basic rules would have no impact on the abilit y of contracting author ities and entities or 
regulatory bodies to establish which e nvironmental standards need to be met.  
                                                
 
4 Regulation 1370/2007, OJEU, L 315 of 3.12.2007. 
5 Regulation 1008/2008  OJEU, L 293, 31.10.2008. 
 
EN 7   EN Basic rules could create a stable legal framework, stimulate the use of concessions and 
therefore facilitate investment and promot e innovation. Greater transparency, resulting in 
more innovative approaches to pub lic services and gr eater choice and efficiency, would bring 
about positive outcomes for contracting authoriti es and entities and for users, improve access 
to the market and create new business opportunities. 
6.3. Option 5: Legislation — detailed rules 
Detailed rules would include a ll the legal solu tions provided for in the basic rules option. 
Thus, the impact of deta iled rules on legal certai nty would be partly iden tical to the impact of 
the basic rules. In addition, how ever, this option would involve the application of the same 
rules, in particular those on selection a nd award criteria and on award procedures, as for 
public contracts.  Thus in certain respects, these rules are likely to raise the level of legal 
certainty, as they would comprehensively enshri ne the Treaty principles applicable to many 
aspects of the award procedure. However, despit e all the expected benef its, the introduction of 
detailed rules might prove counter-productive an d substantially decrease the attractiveness of 
concessions. Indeed, the complex ity of rules and specific provisions (such as compulsory use 
of standard tendering procedures or the mo st economically advantageous tender (MEAT) 
criteria) might have a deterrent effect and also  reduce overall legal ce rtainty, due to a higher 
risk of litigation, ultimately di scouraging the use of concessions . Many stakeholders perceive 
the complexity of detailed rules as a major threat. 
The economic impact of the introdu ction of detailed rules is ther efore likely to be negative, as 
undertakings might shy away from bidding fo r concessions, contracting authorities and 
entities would fail to reap the benefits they might expect, while consumers would fail to gain access to cheaper and better quality services.  
The impact on employment and the quality of j obs is likely to be limited, while the overall 
social and environmental impact might be ne gative, with less innovation and poorer quality 
services. 
6.4. Option 6: Legislation — Mixed rules 
Nevertheless, the basic rules could usefully be  complemented by some provisions on selection 
and award criteria, and on the course of proc edures. These provisions would not strictly 
reproduce the content of public procurement direc tives (such as rules on MEAT), but would, 
for example consist of obligations to publis h subject-matter-related  selection and award 
criteria in advance or to observe minimum deadlines for the submission of tenders. They 
might also include rules on tec hnical specifications , obligations to di sseminate the same 
information to all bidders during negotiations, public-public cooperation and modifications of 
concessions during their perfor mance. Finally, they might im pose compulsory publication of 
the award notice. 
Such provisions could be expected to have a beneficial impact on tr ansparency, fairness and 
legal certainty, thereby contributing to better achievement of a number of objectives of the 
present initiative, in particular better access to the market, improved investment opportunities 
and hence more and better quality  services. By encouraging th e uptake of concessions more 
than either of the alternative options, they w ould also positively impact engagement in PPPs. 
A substantial number of stakeholders s upported the introduction of mixed rules. 
Under mixed rules all impacts (economic, social and environmental) should be slightly 
improved in comparison with the effects of basic rules. 
 
EN 8   EN 7. COMPARING THE OPTIONS  
Both the basic rules and the mixed rules options are capable of achieving significant 
improvement of legal certainty and hence fa cilitate access to the market, resulting in 
improved outcomes for the contracting authoritie s and entities, users a nd businesses. Detailed 
rules permit to achieve better results in terms of fairness of the procedures, but are likely to generate important drawbacks in the form of  reduced up-take of co ncessions. Mixed rules 
appear to deliver the best results in terms of  fairness and better va lue for money but also, 
given their flexibility, in terms of encouraging the use of concessions. 
In the light of the above it is recommende d to opt for Option 6 — mixed rules, which 
represents an ambitious and comprehensive solution. 
8. M
ONITORING AND EVALUATION  
Evaluation of the legislation will be based on such indicators as the change in the number and 
value of concessions and published and awarded, the number of bidders and successful non-domestic bidders, and the percentage of SMEs among bidders.