WRITTEN QUESTION E-3837/02

by Camilo Nogueira Román (Verts/ALE) to the Commission

(9 January 2003)

Subject: Breach of the principle of free competition by the Spanish state-owned company Tragsa

The Spanish state-owned company Transformaciones Agrarias Sociedad Anónima (Tragsa) is, in direct and systematic fashion, awarded most of the contracts handed down by the Spanish central government and regional governments for the execution of development schemes, drawing-up of projects, provision of services and other activities in the area of forestry, the environment and agriculture. This amounts to a clear breach of the Community's principles of publicisation, equal treatment, competition and transparency in public contracts. This privileged position which Tragsa enjoys, with the support of the public authorities, is anti-competitive vis-à-vis the company's private-sector counterparts, which are thus discriminated against, in breach of the Community principle, laid down in the Treaties, of free competition.

According to Spanish media reports, the Commission has sent a letter of formal notice to the Spanish government concerning contracts entered into with third parties by Tragsa, on the grounds of non-compliance with the rules on publicisation and transparency laid down by the Community legislation on public contracts. This arises from a complaint lodged by the National Association of Forestry Enterprises (Asemfo), which, although it represents more than 85 % of the forestry development and services sector in Spain, is not awarded a proportion of public contracts comparable to that awarded to Tragsa.

Can the Commission provide information on the matter, in particular on the letter sent to the Spanish government concerning the legal situation of Tragsa and its activities in the field of public contracts?

Answer given by Mr Bolkestein on behalf of the Commission

(25 February 2003)

Tragsa is a state-owned Spanish company which provides services in the areas of rural development and environmental protection, including works, projects and technical assistance. It is obliged to carry out the work entrusted to it by central government and by the autonomous communities and dependent public bodies.

In following up a complaint received from the National Association of Forestry Enterprises (Asociación Nacional de Empresas Forestales Asemfo), the Commission did indeed find that the system for the award of contracts placed by Tragsa as contracting authority was incompatible with the Community Directives in several respects.

Under Spanish legislation, Tragsa is not deemed to be a body governed by public law. As a result, it does not regard itself as being bound by the Community Directives as regards contracts which it enters into with third parties in cases where the application thresholds are exceeded, or as having to meet the obligations deriving from the principle of transparency and publicisation under the EC Treaty in other cases.

In accordance with the established case-law of the European Court of Justice(1), the concept of a body governed by public law has to be interpreted in functional terms and to qualify for such a designation a body must meet the three conditions set out in the Directives, which Tragsa does.

A letter of formal notice was sent to the Spanish authorities in April 2002. They replied in June 2002, refuting the arguments put forward by the Commission.

However, contacts between the Spanish authorities and the Commission have clarified certain aspects of the dossier, with the Spanish authorities notifying the introduction of certain legislative provisions in Law 53/2002 of 30 December 2002 relating to fiscal, administrative and social measures (law accompanying the Law on the State Budget for 2003), which amends the legal arrangements regarding Tragsa so as to meet the Commission's requirements.

Thus, Article 87 of said Law adds a paragraph 7 to Article 88 of Law 66/1997 of 30 December 1997, providing that Tragsa and its subsidiaries shall be subject, when concluding works, supplies, assistance and services contracts with third parties, to the Law on the award of contracts by public bodies, which regulates the implementation in Spanish law of the obligations deriving from Community legislation on public contracts.

Under these conditions, the Commission will be able to decide at one of its forthcoming meetings on the closure of this matter.

(1) According to the judgments in cases C-44/96 (Mannesmann) of 15 January 1998, C-360/96 (BFI Holding) of 10 November 1998, C-237/99 (H.L.M.) of 1 February 2001, C-380/98 (University of Cambridge) of 3 October 2000, C-223/99 and 260/99 (Ente Fiera di Milano) of 10 May 2001, the three conditions are that a body must: have a legal personality of its own; by controlled financially and administratively by the State; and have been established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character.