WRITTEN QUESTION E-3776/02

by Christoph Konrad (PPE-DE) to the Commission

(23 December 2002)

Subject: Anti-competitive practice in waste management in Germany

1. The towns of Herne, Wuppertal, Remscheid, Bochum, the districts of Ennepe-Ruhr, Recklinghausen and the municipal association for the Ruhr (KVR) recently founded a waste management association named EKO-City (as the commissioning agency) and EKO-City GmbH

(as the sole contractor). EKO-City GmbH is to be responsible for all thermal treatment, for mechanical processing, for pre-treatment and disposal of household and industrial waste produced in the area covered by the association,

Is the Commission aware of the foundation of this waste management association and the limited company (GmbH)?

2. What view does the Commission take of the fact that EKO-City is to award 100 % of contracts for waste disposal to EKO-City GmbH, indefinitely and without inviting tenders, which precludes any form of competition as the private sector is barred from providing waste disposal services from the outset?

3. What is the Commission's position on the fact that the formation of this dedicated association and limited company circumvents the mandatory requirement to invite tenders to provide waste disposal services?

4. Can the Commission discount the possibility that, in pursuing this practice, the above municipalities are in breach of European competition law?

Answer given by Mr Monti on behalf of the Commission

(28 February 2003)

The waste management association referred to by the Honourable Member has not hitherto been drawn to the Commission's attention.

A contract for the provision of waste disposal services of a value exceeding EUR 200 000 normally has to be tendered in accordance with the provisions stipulated in Council Directive 92/50/EEC of 18 June 1992 relating to the co-ordination of procedures for the award of public service contracts(1). However, no tender is required in case of a contract awarded to an entity over which the contracting authority exercises a control which is similar to that which it exercises over its own departments and, at the same time, that entity carries out the essential part of its activities with the contracting authority(2).

Whether the transfer of the duty obligation for the provision of waste disposal services to the waste management association EKO-City fulfils the described conditions for such an exemption from the obligation to tender would require a thorough analysis of the relationship between the original holders of the duty obligation and the waste management association. Likewise, the subsequent award of a waste disposal service contract to the EKO-City GmbH would require an analysis of the relationship between the waste management association and the EKO-City GmbH. The Commission will commence an examination of the case and contact the German authorities on this matter.

As to the application of Community competition rules, the Commission takes a neutral position as regards the public or private status of waste management companies, and Member States may grant exclusive rights to such companies. However, public companies or companies with exclusive rights have to comply with the competition rules in the same way as private companies.

In considering whether a Member State infringes Article 86(1) in conjunction with Articles 81 and/or 82 of the EC Treaty in any particular case, it is necessary to determine whether the privileged status of a company leads to anti-competitive agreements or an abuse of a dominant position. In order to be able to determine whether a dominant position exists, it is necessary for the relevant market to be defined and to establish that at least a substantial part of the common market is affected. Only if it is found that a dominant position exists is it then necessary to consider the question of possible abuse. In its ruling in the Copenhagen case, the European Court of Justice confirmed that the grant of an exclusive right over part of the national territory for environmental purposes does not in itself constitute an abuse of a dominant position(3).

It should also be pointed out that Community competition rules only apply where the conduct in question is liable to affect trade between Member States. Concerning the antitrust rules, Articles 81 and 82 of the EC Treaty, the Commission has noted that activities affecting the market only

insignificantly, and this may be the case of a number of services of local character, will normally not affect trade between Member States and therefore will not be subject to the Community rules(4). Furthermore, Member States are entitled to apply the principles of proximity and self-sufficiency in the context of waste destined for disposal, so as to be able to deal with the waste locally. However, certain waste management services provided within the Community can have some transboundary implications(5).

Under Article 86(2) of the EC Treaty certain restrictive measures of Member States may be justified, provided that they are necessary to fulfil a task of general economic interest and proportionate. The European Court of Justice has confirmed in the Copenhagen case(6) that the management of particular waste may be considered to be capable of forming the subject of a service of general economic interest, particularly where the service is designed to deal with an environmental problem(7). The crucial question of proportionality could only be judged after a careful examination of the case.

(1) OJ L 209, 24.7.1992.

(2) Case C-107/98 Teckal, paragraph 50.

(3) Case C-209/98 FFAD v Kobenhavens Kommune [2000] ECR I-3743, paragraph 68.

(4) Commission Communication of 2001 entitled Services of general interest in Europe, OJ C 17, 19.1.2001, p. 32.

(5) See, in particular, Regulation (EEC) No 259/93 of 1 February 1993, on the supervision and control of shipments of waste within, into and out of the European Community, OJ L 30, 6.2.1993.

(6) Case C-209/98 FFAD v Kobenhavens Kommune [2000] ECR I-3743.

(7) At paragraph 75 of the European Court of Justice judgement.