WRITTEN QUESTION P-0488/03

by Freddy Blak (GUE/NGL) to the Commission

(17 February 2003)

Subject: Circumvention of rules on invitation to tender by Dansk Tipstjeneste

Dansk Tipstjeneste A/S has a monopoly on the football pools and lotteries in Denmark. Since 1 July 2000, Dansk Tipstjeneste has also had a monopoly on betting on horse and dog racing via its subsidiary DanToto A/S.

In January 2002, DanToto A/S transferred newly acquired TV production equipment to an external TV production company following the DanToto Board's decision that TV production was not within the company's sphere of competence.

The production equipment was sold to the production company for DKK 9 million. At the same time, the parties concluded an agreement on broadcasts from horse and dog races. Under the agreement, DanToto has undertaken to pay an eight-figure sum per year for the broadcasts. The agreement may be terminated by giving 12 months' notice, though not until the end of 2004 at the earliest.

Despite the value of the contract, no tenders were invited. In a new report, the National Audit Office of Denmark criticises DanToto for not having invited tenders from other TV producers and for not having consulted the market. At the same time, the National Audit Office writes that, in its opinion, DanToto is not a public body and that therefore DanToto A/S is not required to invite tenders throughout the EU even though the company is making purchases, including services, above the thresholds.

Does the Commission take the view that the Danish Government can circumvent EU rules on the award of public contracts by conferring a state monopoly on a limited company? If the Commission considers that the Danish Government has circumvented EU rules on invitations to tender, will it say what options it has available to intercede?

Answer given by Mr Bolkestein on behalf of the Commission

(12 March 2003)

Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts(1) (hereafter the Directive) applies to public service contracts for pecuniary interest concluded in writing between a service provider and a contracting authority.

An obligation for DanToto to put the broadcasting contract referred to in the question to tender in accordance with the Directive only exists if DanToto is to be considered a contracting authority. Because DanToto is not a State, regional or local authority, it must be examined whether DanToto is indeed a body governed by public law, in order for it to be categorised as a contracting authority in accordance with the Directive.

While it is clear from the national law regulating DanToto (Lov om væddeløb i forbindelse med heste- og hundevæddeløb) that it has legal personality and has a board appointed by the Minister of Taxation who also has to approve the company's statutes, it is less obvious whether DanToto is established for the

specific purpose of meeting needs in the general interest, without having any industrial or commercial character. In fact, only a body meeting all of the said requirements can be considered as a contracting authority subject to the public procurement rules established by the above-mentioned Directive 92/50/EEC.

In this respect, it is to be noted that, on the one hand, the Danish authorities state that the aims of the Danish gambling model, which is largely made up of state-controlled gaming companies such as DanToto and its owner Dansk Tipstjeneste, are to protect the gambler and combat crime as well as supporting charitable and non-profit organisations. It would therefore seem that DanToto was indeed established for the specific purpose of meeting certain needs in the general interest.

However, on the other hand, the law regulating DanToto states that the profits are split between the parent company Tipstjenesten (whose profits support charitable organisations) and a fund to promote and finance horse racing. According to jurisprudence of the European Court of Justice, if a body is managed according to criteria of performance, efficiency and cost-effectiveness and operates in a competitive environment, it cannot be considered as a body established for the specific purpose of meeting needs in the general interest, since it does have an industrial or commercial character.

Therefore, on the basis of available information, the Commission is at present not in a position to assess whether Dan Toto has an industrial or commercial character. The Commission intends to further enquire on this issue.

Should the Commission come to the conclusion that the Danish authorities are not in compliance with the relevant Community rules, the Commission may start infringement procedures against the Danish government in the accordance with Article 226 of the Treaty establishing the Community.

(1) OJ L 209, 24.7.1992.