Draft Commission interpretative communication on concessions under Community law on public contracts
Date: 1999-04-07
Institutions: European Commission
Subjects: administrative procedure, contract, entrepreneur, invitation to tender, public contract, works contract

C 94/4

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Draft Commission interpretative communication on concessions under Community law on public
contracts

(1999/C 94/04)

out

sets

interpretative

communication

the
draft
This
Commission’s first
thoughts on the subject after discussing
the problems named within the two advisory committees on
public contracts and taking note of contributions from the
sectors concerned. It intends to consult as widely as possible.
The Commission will take account, when drafting the final
version of
the communication, of any contribution which
may be addressed to it. Any such contribution should be
forwarded to it within two months of the publication of this
draft in the Official Journal of the European Communities. It can
also be sent by e-mail to the following address:
concessions@dg15.cec.be

INTRODUCTION

1. Participation by the private sector in the financing of public
investment has varied widely over time and from one
country to another. Some Member States have not
hesitated to entrust their major infrastructure projects to
private investors (e.g. the railways in the 19th century, the
urban transport networks at
the 20th
century and,
large parts of the road
network, redevelopment of city centres etc.).

in some countries,

the beginning of

Involvement of the private sector has declined since the first
quarter of the 20th century as governments began to prefer
to be directly involved in the provision and management of
infrastructure and public services. Nowadays, however, it is
experiencing a considerable upswing for
technical and
financial reasons.

large-scale infrastructure projects
railways, motorways

2. This can be explained partly by the need for private
such as
financing for
airports. The
underground
in some cases, have particular
private sector can also,
know-how or experience that
is not available in the
public sector (water, waste or urban transport management,
for instance).
In its Communication on public-private part-
nerships in trans-European Transport Network projects (1), the
Commission said that it wanted to promote this type of
partnership, particularly for certain priority projects.

and

State to another. Some countries have legislation on
relationships of this kind, sometimes dating back centuries.
The most common arrangement is the concession contract.

4. Public-private partnerships (cid:151) particularly the concession
system, which is in full spate (cid:151) are of great interest for
the Single Market as the economic significance of projects is
often far greater than that of the biggest traditional public
contracts.

5. The usefulness of additional legislation setting out the terms
for opening up concessions to Community competition
became apparent at the end of the 1980s with the intro-
duction of specific arrangements for works concessions. The
Justice has also clarified various aspects of
Court of
Community law with implications
for concessions and
other similar forms of public-private partnership.

6. In its Communication on public procurement (2),

the
Commission said that it also intended to examine other
forms of public-private partnership to determine
the
to which the rules on public contracts might
extent
framework for
provide an appropriate
ensuring
legal
compliance with the rules of
the Treaty while allowing
these forms of cooperation to develop.

In view of
the Court’s case law in this field and the
experience gained in examining cases in the sector of
which it has taken cognisance, the Commission proposes
in this interpretative communication to give its opinion
on the legal arrangements applicable to concessions and
other similar forms of public-private partnership given the
current state of Community law. However, this text does not
seek to interpret the more specific systems of the Directives
adopted in different sectors.

The Commission regards recourse to private investment for
the public infrastructure projects as a positive factor, which
must be promoted while ensuring that it complies with
Community law.

3. The forms taken by these partnerships between the public
and private sectors vary widely from one period or Member

(1) COM(97) 453 final of 10 September 1997.

In particular the Commission will ascertain the extent to
which Council Directives 93/37/EEC of 14 June 1993 coor-
dinating procedures for the award of public works contracts,
92/50/EEC of 18 June 1992 coordinating procedures for the
award of public services contracts and 93/38/EEC of 14
June 1993 coordinating the procurement procedures of
entities operating in the water, energy, transport and tele-
communications sector, apply to concessions and other
analogous forms of public/private partnership.

(2) Public procurement

in the European Union, Communication
adopted on 11 March 1998, COM(98) 143. Cf. in particular point
2.1.2.4.

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It

is set out

authorities,

is obviously a basic framework which will be
This
to enable the various parties
developed.
contractors,
(public
economic operators, etc.)
the
existing rules of the game and to contribute, by applying
the
them correctly,
European Single Market.

towards improving the operation of

to get a better picture of

authorities,

awarding

(cid:145)a contract of the same type as a public works contract
except for the fact that the consideration for the works
to be carried out consists either solely in the right to
exploit the construction or in this right together with
payment(cid:146)

I. DEFINITION AND GENERAL PROBLEM OF CONCESSIONS AND
SIMILAR FORMS OF PUBLIC/PRIVATE PARTNERSHIP

Public authorities in Member States are increasingly calling on
the private sector to provide public services on their behalf
using various procedures and on a variety of scales. In some
cases cooperation of this kind is governed by the directives on
public contracts, but it can also take forms, which are not
covered. For example, only works concessions are covered by
Directive 93/37/EEC, while other similar forms of public/
private partnership do not explicitly fall within the scope of
the directives on public contracts. All these forms of coop-
eration nevertheless have
common features, and should
therefore be dealt with in this communication.

The fact that service concessions and other similar forms of
public/private partnership are not expressly covered by the
directives on public contracts does not mean that they are
exempt from the rules and principles of the Treaty, since in
so far as concessions and other forms of public/private part-
nership are acts of State (3) involving economic activities, they
are subject to Articles 52 to 66 of the Treaty and the principles
set out in the Treaty or deriving from the Court’s case law,
particularly the principles of non-discrimination, equality of
treatment,
recognition and propor-
tionality.

transparency, mutual

a

According to this definition,
the main distinctive
the
concession is
feature of
the
consideration for the works consists in the right to
exploit and the exploitation risks are borne for a
significant part by the concessionaire.

that

fact

(cid:145)Exploitation(cid:146) means that the contractor carrying out
instead of being paid directly by the
the work,
awarding authority initiating the procedure, earns
revenue from the fees charged to users of
the
construction when it is completed. In addition to the
a
therefore, he
construction risk
in the
risks
significant part
management and use of the facilities. If recovery of
expenditure were
awarding
guaranteed
authority without the risk involved in the management
of the construction, there would be no element of risk
should be regarded as a works
and the contract
contract rather than a concession contract (4).

also assumes
involved

the

the

by

of

The directive also states that there may be payment in
addition to the right to exploit the construction. We
shall deal with this aspect in greater detail in point (b)
for distin-
below, since it
guishing a concession from a public works contract
in practice.

is an important element

Concessions and other similar forms of public/private part-
nership are not defined in the Treaty. We therefore need to
outline their distinctive features in order to delimit the field of
application of this interpretative communication.

(b) Delimitation of

the

concepts of

(cid:145)public works

contract(cid:146) and (cid:145)works concession(cid:146)

1.1. Definition of (cid:145)works concessions(cid:146)

(a) Directive 93/37 definition

Article 1(d) of Directive 93/37/EEC defines a (cid:145)public
works concession(cid:146) as

(3) In the largest sense,

i.e.

the acts adopted by all public bodies
belonging to the organisation of
the State (local authorities,
regions, departments, autonomous communities, municipalities) as
well as any other entity which, even if it has its own legal existence,
is linked to the State in such a tight manner that it is to be
considered as being part of the State’s organisation. The notion
of acts of State comprehends also the acts that are attributable to
the State,
for which the public authorities are
responsible, even though not adopted by them, given that they
can intervene to prevent
to receive their
amendment.

their adoption or

is acts

that

that

contracts

at present
are

the concept of public
As the legislation developed,
works
extended to situations not
contracts was
covered by the previous directives (5). The text as it
(cid:145)public works
stipulates
stands
contracts(cid:146)
interest
for
concluded in writing between a contractor and a
contracting authority (. . . ) which have as their object
either the execution, or both the execution and design,
of works related to one of the activities referred to in
Annex II or a work (. . . ), or the execution by whatever
means of a work corresponding to the requirements
specified by the contracting authority (Article 1(a)).

pecuniary

(4) The best-known example of a public works concession is a contract
whereby a State grants a company the right to build and exploit a
motorway and authorises it to earn revenue by charging tolls.

(5) See,

in particular,

the eighth recital of Directive 89/440/EEC
((cid:145)Whereas it is to define more precisely what is meant by public
works contracts in order to take account,
in particular, of new
forms of such contracts(cid:146)).

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In view of this extension of the Community concept of
public works contracts, there is a risk of confusion
between public works concessions and public works
contracts
complex legal
arrangements (6).

forming the

subject of

Even if awarding authorities use complex contractual
formulas, these are still public works contracts within
the meaning of Community law in so far as the cost is
borne entirely by the awarding authority and there are
no exploitation risks for the contractor (7).

The fact that the directive allows for a payment in
addition to the right of exploitation does not change
this analysis.

The definition of a concession always includes the
possibility that a payment may be made provided
that it doesn’t eliminate a significant part of the risk
borne by the concessionaire, since Directive 93/37/EEC
states that the right to exploit the construction may be
accompanied by a payment.

in certain cases, the
It can be seen in practice that,
grantor shares some of the economic risk borne by
the concessionaire. The State therefore bears part of
the costs of exploiting the concession in order to
keep prices down for the user. A variety of procedures
are possible (guaranteed flat rate, fixed sum but paid
on the basis of the number of users etc.). This sharing
of risks and costs does not necessarily change the
nature of the contract.

If the payment covers only part of the cost of the
construction, the concessionaire will still have to bear
a significant part of the exploitation risks. Similarly, if
the concessionaire must, for reasons of public interest,
apply (cid:145)social prices(cid:146) (8) and receives compensation from
the State in a lump sum or instalments, this sharing by

to meet
for

(6) For example, the Commission has already taken cognisance of cases
in which a consortium composed of contractors and banks
the needs of
undertook to carry out a project
the
awarding authority,
reimbursement by the
in exchange
awarding authority of the loan taken out by the contractors with
the banks, together with a profit for the private partners. The
Commission interpreted this as a public works contract since the
consortium did not undertake any exploitation, and therefore bore
no attendant risk.
The Commission came to the same conclusion in another case
where, although the private partner carrying out the work was
ostensibly exploiting the construction, the public authority had in
fact guaranteed that he would receive compensation. The terms of
this guarantee were such that the public authority in effect bore the
exploitation risks.

(7) In its Judgment of 10 November 1998 of the Arnhem case, (Case
C-360/96), the Court implicitly concluded that it could not be a
the remuneration paid
public concession on the grounds that
comprises only a price and not the right to operate the service,
without interpreting the term public service concession (Grounds,
paragraph 25).

relieve the
the State of operating costs does not
concessionaire of a significant part of the exploitation
risks. The
the awarding
authority assumes responsibility for the exploitation
risks. In that case it is a public works contract.

situation is different

if

1.2. Service concessions and coverage of this communi-

cation

does

define

92/50/EEC

it relates to. Thus,

not
the distinctive

(cid:145)service
Directive
concessions(cid:146) (9). However,
features of
works concessions as defined by the Community legislator
in Directive 93/37/EEC are shared by service concessions,
since a concession has the same features regardless of
what
for example, as with works
concessions, the exploitation criterion is vital for deter-
mining
service
concession (10). By virtue of this criterion, the contractor
bears
the risk involved in operating the service in
question, obtaining a significant part of his revenue from
the user, particularly by charging fees in one form of
another.

otherwise

existence

the

or

of

a

The Commission’s discussions in the Advisory Committees
on public contracts and with the main economic operators
concerned have also revealed that there are other forms of
public/private partnership in the Member States that are
very similar to concessions, in the field of both works and
services.

the State is
it has been observed that
For example,
sometimes involved in the financing and exploitation of
a construction or services at the same time as the private

(cid:145)contracts

(9) The absence of a reference to the concept of service concession in
Directive 92/50/EEC calls for some comment. Although, when
preparing this directive, the Commission had proposed including
a special arrangement for this type of concession equivalent to the
existing arrangement for works concessions, the Council did not
accept this proposal. The question remains, however, as to whether
or not the granting of service concessions comes entirely under the
arrangements introduced by Directive 92/50/EEC, since this applies
to all
for pecuniary interest concluded in writing
between a service provider and a contracting authority(cid:146), to the
exception of certain types of contract specified in the directive
which do not include concession contracts.
followed by certain
this definition,
A literal
authors, could lead to inclusion of concession contracts, since
these are for pecuniary interest and concluded in writing. This
approach would mean that the granting of a service concession
would have to comply with the entire detailed provisions of
to a more
Directive 92/50/EEC, and would hence be subject
complex procedure than works concessions. However,
in the
absence of Court case law on this point, the Commission does
not follow this interpretation.

interpretation of

(8) For example, if the toll for a motorway is fixed by the State at a

(10) See also the Judgment of the Court in Case C-360/96, Arnhem,

level which does not cover exploitation costs.

(Grounds, paragraph 25).

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sector, setting up by means of a regulatory act (cid:151) not
necessarily a contract (cid:151) a public-private equity joint
venture. The fact that these forms of concession cannot
be defined as works concessions or public contracts within
the meaning of Directive 93/37/EEC or that they are not
covered by Directive 92/50/EEC does not prevent the rules
of Articles 52 and 59 of the Treaty from applying, since
any act of State laying down the terms governing
economic activities, be it contractual or unilateral, must
be viewed in the light of the Treaty and in particular
Article 52 to 66. Concessions and similar forms of public/
private partnership are governed by acts of this kind and
as such are covered by the abovementioned rules and
principles of the Treaty.

This interpretative communication therefore concerns acts
of State whereby a public authority entrusts to a third
party (cid:151) by means of a contractual act or a unilateral
act with the prior consent of the third party (cid:151) the total
or partial management of services for which that authority
would normally be responsible and for which the third
party takes on the main exploitation risk. Such services
are covered by this communication only if they constitute
economic activities within the meaning of Articles 52 to
66 of the Treaty. These acts of States will henceforth be
referred to as (cid:145)concessions and similar forms of public/
private partnership(cid:146).

interpretative communication does not

therefore
This
concern acts whereby a public authority entrusts to a
third party the management of services connected with
the exercise of official authority (11) or authorises the
exercise of an economic activity even if these acts would
be regarded as concessions in certain Member States (12).
Nor does it concern relationships which are internal in the
public administration (13).
Instead, relationships between
public authorities and public enterprises entrusted with
the operation of services of general economic interest
are covered by the present communication (14).

II. REGIME APPLICABLE TO CONCESSIONS AND SIMILAR FORMS
OF PUBLIC/PRIVATE PARTNERSHIP

As mentioned above, only works concessions for an amount
equal to or greater than the threshold specified in Directive
93/37/EEC (ECU 5 000 000) are subject to a specific regime.
Other forms of public/private partnership for works or services
or
telecommunications
sectors are not subject to the directives on public contracts.

in the water, energy,

transport or

This does not, however, mean that these phenomena are not
covered by any Community rules.

Like any act of State laying down the terms governing
economic activities, concessions and similar forms of public/
private partnership are subject to Articles 52 to 66 of the
Treaty and the principles
enshrined in the Treaty or
emerging from the Courts’ case law (cid:151) notably the principles
of non-discrimination, equality of
transparency,
mutual recognition and proportionality (15).

treatment,

In the transport sector the relevant rules on freedom to provide
services are set, by the means of Article 61, by Articles 74 to
84 of the Treaty (16). This is without prejudice to the fact that
as the Court has consistently held, the general principles of
Community law are applicable to the sector (17).

The Treaty does not restrict the freedom of a Member State to
have recourse to concessions and analogous forms of public/
private partnership, provided the methods of granting these are
if a
compatible with Community law. Thus,
Member State seeks to impose conditions of an environmental
kind when choosing the concessionaire it can include, among
the selection criteria, requirements of environmental qualifi-
cation on a non-discriminatory basis, provided that they are
compatible with the rules and the principles of the Treaty.

instance,

for

(11) For example, (cid:145)sovereign(cid:146) services (notably, in certain Member States,

the profession of notary).

(12) For example, taxi concessions or authorisations to use the public
relating to

highway (newspapers kiosks, cafØ terraces), acts
pharmacies, gas stations.

(13) In his opinion regarding the case Arnhem (abovementioned),
Advocate General La Pergola outlined that these are forms of inter-
organic delegation that are not outside the administrative sphere of
contracting authorities.

(14) In the broadcasting sector the protocol on the system of public
broadcasting in the Member States annexed to the Treaty of
Amsterdam, amending the Treaty of European Union (still to be
ratified) has to be taken into consideration.

(15) Obviously, acts and behaviour of the concessionaire to the extent
that these are attributable to the State within the meaning of the
case law of the Court of Justice are governed by the above rules
and principles.

(16) Transport services by rail, road and inland waterway are covered
by Regulation (EEC) No 1191/69 as amended by Regulation (EEC)
No 1893/91, which set out the mechanisms and procedures that
public authorities can employ in ensuring that their objectives for
public transport are met.

(17) Judgments of 4 April 1974, Affair C-167/73, Commission v. France,
of 30 April 1986,
Joint Affairs 209/84 and 213/84, MinistŁre
Public v. ASJES et al, of 17 May 1994, Affairs C-18/93, Corsica
Ferries, of 1 October 1998, Affair C-38/97, Autotrasporti Librandi
snc v. Cuttica.

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As the Court has stated in connection with the directives on
public contracts, even if the Member States remain free to lay
down the substantive and procedural rules, they must respect
all the relevant provisions of Community law and particularly
the prohibitions deriving from the principles enshrined in the
Treaty concerning right of establishment and freedom to
provide services (18). The Court stated in particular that the
public procurement directives were intended to (cid:145)facilitate the
attainment within the Community of freedom of establishment
and freedom to provide services(cid:146) and (cid:145)to ensure the effec-
tiveness of the rights conferred by the Treaty in the field of
public works and supply contracts(cid:146) (19).

States

thought

sometimes

that
have
Certain Member
concessions were not governed by the rules of the Treaty in
that they involved delegation of a service to the public, which
would be possible only on the basis of mutual trust (intuitu
personae). According to the consistent case law of the Court, the
only reasons which would enable State acts which violate
Articles 52 and 59 of the Treaty (and therefore concessions
and similar forms of public/private partnership which violate
Articles 52 and 59 of the Treaty) to circumvent prohibition
under these Articles are those referred to in Articles 55 and 66.
The very restrictive conditions specified by the Court for the
application of these Articles are described below (20).

In what follows, the Commission will refer to the rules of the
Treaty and the principles deriving from Court case law that are
applicable to concessions and similar forms of public/private
partnership covered by this communication;
it will explain
what, at
thinking, are the applicable
criteria.

the current state of

2.1. The rules and principles of Community law applicable
to concessions and similar forms of public/private
partnership

The Treaty makes no specific mention of public contracts,
concessions or other similar forms of public-private part-
nership. A number of its provisions are, however, relevant,
i.e.
the rules instituting and guaranteeing the proper
operation of the Single Market, namely:

(18) Judgment of 9 July 1987 Joint Affairs 27/86, 28/86 and 29/86,

Bellini.

(19) Judgments of 10 March 1987, Affair 199/85, Commission v. Italy
and of 17 November 1993, Affair 71/92, Commission v. Spain.
(20) Judgment of 26 April 1994, Affair C-272/91, Lottomatica. In this
Judgment, the Court of Justice ruled that in view of the facts, the
tasks of the concessionaire were limited to activities of a technical
nature and as such were subject to the provisions of the Treaty.

(cid:151) the rules prohibiting any discrimination on grounds of

nationality (Article 6(1)),

(cid:151) the rules on freedom of establishment (Articles 52 and
following) and on freedom to provide services (Article
59 and following) and the exceptions to these rules
provided for in Articles 55 and 56 (21),

(cid:151) Article 90 of the Treaty might help to determine if the

grant of these rights is legitimate.

The rules and principles arrived at by the Court are
clarified below.

1. Equality of treatment

the general
The Court has consistently held that
principle of equality of
treatment, which includes
specifically a prohibition of discrimination based on
nationality, is a fundamental principle of Community
law. This principle requires that similar situations are
not to be treated differently unless this is justified by
objective reasons (22).

In a judgment on the application of
the rules and
principles of the Treaty to public contracts the Court
asserted that the principle of equality of treatment, of
which Articles 52 and 59 are a particular expression
prohibits not only the obvious discrimination based on
nationality but also all covert forms of discrimination
which, by applying other criteria of differentiation, lead
in fact to the same result (23).

all

that

treatment

implies
rules

tenderers know the

in
The principle of equality of
in
particular
they apply to everybody in the
advance and that
same way. The case law of the Court,
in particular
the Judgment (cid:145)Raulin(cid:146) (24) and the Judgment (cid:145)Parliament/
Council(cid:146) (25) lays down that the principle of equality of
treatment requires not only that conditions of access to
an economic activity be non-discriminatory, but also
that public authorities take all the measures required
to ensure the exercise of this activity.

(21) The Commission points out that restrictive but non-discriminatory
they are not
measures are contrary to Articles 52 and 59 if
motivated by overriding reasons of public
interest worth
protecting. This is the case when the measures are neither appro-
priate nor necessary for achieving the objective in question.

(22) Judgment of 8 October 1980, Affair 810/79, (cid:220)bersch(cid:228)r.
(23) Judgment of 5 December 1989, Case C-3/88, Data Processing,

recital 8.

(24) Judgment of the Court of 26 February 1992, Case C-357/89.
(25) Judgment of the Court of 7 July 1992, Case C-295/90.

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In the Judgments Storeb(cid:230)lt and Bus Wallons the Court
had the occasion to set out the scope of the principle
of equality of treatment in the area of public contracts,
by asserting on the one hand that
this principle
requires that all offers conform to the tender specifi-
cations to guarantee an objective comparison between
offers (26) and, on the other hand,
this principle is
violated, and transparency of the procedure impaired,
when an awarding entity takes account of changes to
the initial offers of one tenderer who thereby obtains
an advantage over his competitors. Moreover, the Court
notes (cid:145)that
the procedure to compare offers (must)
observe at all stages both the principle of equality of
treatment of tenderers and that of transparency, so that
all tenderers have the same chances in formulating the
terms of their offers(cid:146) (27).

a principle of

therefore developed in these two
The Court has
judgments
treatment
equality of
between tenderers quite apart from possible discrimi-
nation on the basis of nationality or other criteria to
distinguish between them.

their being opened or
cations or amended after
allowing variants when this possibility was not
provided for in the specifications or contract notice.
In addition the nature of the initial project must not
be changed during negotiation in regard to the criteria
and requirements laid down at the beginning of the
procedure.

solutions

Furthermore, in certain cases, awarding authorities are
unable to specify their
requirements in sufficiently
precise technical terms, so they seek alternative offers
to a problem
likely to provide various
expressed in general terms. In such cases, however, in
order to ensure fair and effective competition, the spec-
ifications must always state in a non-discriminatory and
objective manner what is asked of the candidates and
above all the way in which they must draw up their
bids. In this way, each tenderer knows in advance that
he has the possibility of proposing various technical
solutions. More generally, the specifications must not
infringe the abovementioned
contain elements that
rules and principles of the Treaty.

similar

awarding

authority

negotiates with

The application of this principle to concessions and
other
forms of public/private partnerships
(which from all the evidence is only possible when
several
the
candidates) implies that the grantor is free to choose
the award procedures and lay down the requirements
which candidates must meet throughout the various
the
phases of
procedure must be conducted objectively and trans-
parently and comply with the procedural rules and
basic requirements originally set (28). Where these
rules have not yet been fixed, the application of the
principle of equality of treatment requires in any event
that the candidates be chosen objectively.

tendering procedure. However,

a

of

The following must therefore be considered contrary to
the Treaty and to the
the abovementioned rules of
provisions
principle
treatment;
of
in
reserving public
which the State or the public sector has a majority
or complete participation (29); practices allowing for
the acceptance of bids not complying with the specifi-

contracts only to companies

equality

(26) Judgment of 22 June 1993, Case C-243/89, Storeb(cid:230)lt, recital 37.
(27) Judgment of 25 April 1996, Commission v. Belgium, Case 87/94,

Bus Wallons.

(28) Thus, for example, even if the specifications provide for the possi-
improvements to the
bility for candidates to make technical
solutions proposed by the awarding authority (and this will often
be
such
improvements may not relate to the basic requirements of a
project and must be delimited.

infrastructure

projects),

complex

case

the

for

(29) Case C-3/88, Data Processing, abovementioned, recital 30.

requirements of

The
also be
determined in collaboration with companies in the
sector provided that this does restrict competition.

the grantor may

2. Transparency

The Commission notes that in virtually all the Member
States the administrative rules or practices adopted
with regard to concessions and similar forms of public/
private partnership provide that bodies wishing to
entrust the management of an economic activity to a
in order to ensure a minimum of
third party must,
transparency, make their intention public according to
appropriate rules.

It is up to the awarding authorities to choose these
methods. This is done, for example, by publishing a
tender notice or a pre-information notice in the daily
press or specialist journals, or by posting appropriate
notices. These notices generally contain the information
necessary to enable potential
to decide
tenderers
whether
interested in participating (e.g.
selection and award criteria, etc.). This includes the
subject of
the concession or partnership and the
nature and scope of the services expected from the
concessionaire or partner.

they are

The Commission considers that, under these circum-
stances, the requirement of transparency is met.

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The Commission would call moreover that the Court
has in its case law concerning subsequent stages of the
procedure affirmed that the principle of transparency is
the equality of
the corollary of
the principle of
treatment whose useful effect
it seeks to ensure in
undistorted competitive conditions (30).

3. Proportionality

The principle of proportionality is recognised by the
established case law of the Court (cid:145)as being part of the
general principles of Community law(cid:146) (31); it also binds
national authorities in the application of Community
law (32),
even when these have a large area of
discretion (33).

The principle of proportionality requires
that any
measures chosen should be both necessary and appro-
In
priate in the light of
choosing the measures to be taken, a Member State
those which cause the least possible
must adopt
disruption to the pursuit of an economic activity (35).

the objectives sought (34).

this

partnerships

Applied to concessions and other similar forms of
public/private
principle, which
allows contracting authorities to define, especially in
terms of performance and technical specifications, the
objective to be reached, requires, however, that any
measure chosen is both necessary and appropriate in
relation to the objective laid down.

Thus, for example, a Member State may not impose,
when selecting candidates,
technical, professional or
financial conditions which are excessive and dispropor-
tionate to the subject of the concession or similar form
of public/private partnership.

4. Mutual recognition

The principle of mutual recognition has been laid down
by the Court and gradually defined in greater detail in a
large number of judgments on the free circulation of
goods, persons
to this
principle, a Member State must accept the products
and services supplied by economic operators in other

and services. According

(30) As the Court has stated, a non-distorted system of competition can
be guaranteed only if the various economic players have equal
chances.

(31) Judgment of 11 July 1989, Case 265/87, Schr(cid:228)der, ECR p. 2237,

recital 21.

(32) Judgment of 27 October 1993, Case 127/92, recital 27.
(33) Judgment of 19 June 1980, Joint cases 41/79, 121/79 and 796/79,

Testa et al., recital 21.

(34) Judgment of the Court of First Instance of 19 June 1997, Case

T-260/94, Air Inter SA, recital 14.

(35) See, for example, Judgment of 17 May 1984, Case 15/83, Denkavit

Nederland.

Community countries if the products and services meet
in like manner the legitimate objectives of the recipient
Member State (36).

The application of this principle to concessions and
similar forms of public-private partnership implies, in
particular, that the Member State in which the service
is provided must accept the technical specifications,
checks,
qualifications
certificates
required in another Member State if they are recognised
as equivalent to those required by the Member State in
which the service is provided.

diplomas,

and

for example,

Thus,
the Member State in which the
service is provided must accept the equivalent qualifi-
cations already acquired by the service provider in
another Member State which attest to his professional,
technical and financial capacities (37).

5. Exceptions provided for by the Treaty

Restrictions on the freedom of establishment and the
freedom to provide services are allowed only if they are
justified by one of the reasons stated in Articles 55 and
56 of the Treaty.

With particular reference to Article 55 (which allows
restrictions on the freedom of establishment and the
freedom to provide services in the case of activities
connected, even occasionally, with the exercise of
on
the Court
official
numerous occasions (38) that (cid:145)since it derogates from
the fundamental
freedom of establishment,
the Treaty must be interpreted in a
Article 55 of
is strictly
manner which limits its scope to what

authority),

stressed

rule of

has

basis

discrimination on the

(36) This principle derives from case law relating to freedom of estab-
lishment and freedom to provide services (in particular in the
Vlassopoulou Judgment
(7 May 1991, Case C-340/89) and
Dennemeyer Judgment (25 July 1991, Case C-76/90). In the first
Judgment, the Court of Justice found that (cid:145)even if applied without
any
of nationality, national
requirements concerning qualifications may have the effect of
hindering nationals of
the other Member States in exercising
their right of establishment guaranteed to them by Article 52 of
the EEC Treaty. That could be the case if the national rules in
question took no account of
the knowledge and qualifications
already acquired by the person concerned in another Member
State.(cid:146) In the Dennemeyer Judgment the Court stated in particular
that (cid:145)a Member State may not make the provision of services in its
territory subject to compliance with all the conditions required for
establishment and thereby deprive of all practical effectiveness the
provisions of the Treaty whose object is, precisely, to guarantee the
freedom to provide services.(cid:146) Lastly,
in the Webb case (of 17
December 1981, Case 279/80), the Court added that the freedom
to provide services requires that (cid:145)(. . .) the Member State in which
the service is provided (. . .) takes into account the evidence and
guarantees already produced by the provider of the services for the
pursuit of his activities in the Member State in which he is estab-
lished(cid:146).
(37) Apart

from applying the technical harmonisation directives,
recognition of voluntary certification
agreements on mutual
systems can constitute proof that the qualifications of enterprises
are equivalent; these agreements can be based on accreditation,
which shows the competence or the conformity assessment body.
(38) See, in particular, the Judgment of 15 March 1988, Case 147/86,

Commission v. Hellenic Republic.

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necessary in order to safeguard the interests which it
allows the Member States to protect(cid:146). Such exceptions
must be restricted to those activities referred to in
Articles 52 and 59, which in themselves involve a
direct and specific connection with the exercise of
official authority (39).

Consequently,
the exception included in Article 55
must apply only to cases in which the concessionaire
or partner directly and specifically exercises official
authority.

Thus, this exception does not automatically apply to
activities carried out by virtue of an obligation or
exclusivity established by law or qualified by the
national authorities as being in the public interest (40).
It is true that any activity delegated by the public auth-
orities normally has a connotation of public interest,
but this still does not mean that such activity neces-
sarily involves exercising official authority.

an example,

As
Justice dismissed
the Court of
application of the exception under Article 55 on the
basis of findings such as:

(cid:151) the activities transferred remained subject to super-
vision by the official authorities, which had at their
the
disposal
protection of the interests entrusted to them (41),

appropriate means

ensuring

for

(cid:151) the activities transferred were of a technical nature
and therefore not connected with the exercise of
official authority (42).

restricting the exercise of

that any
The principle of proportionality requires
measures
the freedoms
provided for in Articles 52 and 59 should be both
necessary and appropriate in the light of the objectives
in the
pursued (43). This implies,
the measures for achieving the objective
choice of
the Member State must give preference to
pursued,
those which least
these
the
freedoms (44).

in particular,

exercise of

restrict

that

(39) Judgment of 21 June 1974, Case 2/74, Reyners.
(40) Conclusions of Mr Advocate-General Mischo in Case C-3/88, Data

Processing, referred to above.

(41) Judgment of 15 March 1988, Case 147/86, referred to above.
(42) Cases C-3/88 and 272/91, Data Processing and Lottomatica,

referred to above.

(43) Case T-260/94, Air Inter SA, referred to above. For example, the
Court rejected the application of the exception relating to public
policy when it was supported by insufficient reasons and the
objective could be achieved by other means which did not
restrict freedom of establishment or freedom to provide services
(cf. Recital 15 of the Judgment C-3/88, Data Processing, referred to
above).

(44) Judgment of 28 March 1996, Case C-272/94, Guiot/Climatec.

Furthermore, with regard to the freedom to provide
services, the host Member State must check that the
interest to be safeguarded is not safeguarded by the
rules to which the applicant is subject in the Member
State where he normally pursues his activities.

6. Protection of the rights of individuals

In consistent case law on the fundamental freedoms
guaranteed by the Treaty, the Court has stated that
decisions to refuse or reject must state the reasons
and must be open to judicial appeal by the affected
parties (45).

These requirements are generally applicable since, as
the Court has stated, they derive from the constitu-
tional traditions common to the Member States and
enshrined in the European Convention on Human
Rights (46).

They are therefore also applicable to individuals who
consider that they have been harmed by the award of a
concession or by the choice of a partner within the
meaning of this communication.

2.2. The provisions of Directive 93/37/EEC on works

concessions

The Commission considers it worthwhile to point out that
the rules and principles, which it has explained regarding
forms of public/
concessions for services and similar
to
private partnership, are applicable mutatis mutandis
concessions for works.

The fact that Directive 93/37/EEC lays down only adver-
tising rules for works concessions does not mean that
these rules are the only ones applicable to them, and for
the following reason: since works concessions are State
acts the purpose of which is the provision of economic
activities, they also fall within the field of application of
Articles 52 to 66 of the Treaty and the abovementioned
principles.

It goes without saying that, for concessions whose value is
below the threshold laid down by Directive 93/37/EEC,
the same rules and principles of the Treaty are applicable.

(a) The upstream phase: choice of concessionaire

1. Rules on advertising and transparency

in the Official

Awarding authorities must publish a concession
the European
notice
of
Communities according to the model
laid down in
the contract up for
Directive 93/37/EEC to put
competition at the European level (47).

Journal

(45) Judgment of 7 May 1991, Case C-340/89, Vlassopoulou, recital 22.
(46) Judgment of 15 October 1987, Case 22/86, Heylens, recital 14.
(47) (cid:145)In order to meet the directive’s aim of ensuring development of
effective competition. In the award of public works contracts, the
criteria and conditions which govern each contract must be given
sufficient publicity
contracts(cid:146)
(Judgment of 20 September 1988, Case 31/87, Beentjes, recital 21).

authorities

awarding

the

by

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the Commission
A problem encountered by
involves the award of concessions between public
entities. Some Member States seem to consider that
the provisions of Directive 93/37/EEC applicable to
works concessions do not apply to contracts
concluded between a public authority and a legal
person governed by public law.

hensive list of such firms must be enclosed with the
application for the concession and must be updated
following any subsequent changes in the relationship
between firms. Since this list is comprehensive, the
concessionaire may not cite the non-applicability of
for awarding a
the advertising rules as grounds
works contract to a firm which does not figure on
the abovementioned list.

a
93/37/EEC requires
Nevertheless, Directive
for
for all contracts
preliminary advertisement
public works concessions,
irrespective of whether
the potential concessionaire is private or public.
Furthermore, Article 3(3) of Directive 93/37/EEC
expressly states that the concessionaire can be one
of
the
authorities
Directive, which implies that this type of relation
is subject to publication in accordance with Article
3(1) of the same Directive.

covered by

awarding

the

2. The choice of the type of the procedure

The grantor of works concessions is free to adopt
one of
the three procedures mentioned in the
Directive, whilst complying with the abovemen-
tioned rules and principles laid down in the Treaty.

(b) The downstream phase: contracts awarded by the

contract holder (48)

Directive 93/37/EEC lays down certain rules on
contracts awarded by public works concessionaires
for works for a value of ECU 5 000 000 or more.
They vary, however, depending on the type of conces-
sionaire.

If the concessionaire is an awarding authority within
the meaning of the Directive, the contracts for such
works must be awarded in full compliance with all the
Directive’s provisions on public works contracts.

If the concessionaire is not an awarding authority, the
Directive stipulates that he must comply only with
certain advertising rules. These rules are not applicable
when the concessionaire awards works contracts to
affiliated undertakings within the meaning of
the
Directive. The Directive also stipulates that a compre-

(48) It should be recalled that under Article 3(2) of the Directive the
contracting authority may require the concessionaire to award to
third parties contracts representing a minimum percentage of the
total value of the work. The contracting authority may also request
the candidates for concession contracts to specify in their tenders
this minimal percentage.

Consequently the concessionaire is always obliged to
make known his intention to award a works contract
to a third party whether or not he is an awarding
authority.

The Commission considers that a Member State is in
breach either of the provisions of Directive 93/37/EEC
on works carried out by third parties if, to award
works contracts to third-party firms, without any invi-
tation to tender, it uses as an intermediary a firm with
which it is linked.

(c) The rules applicable to review

In the case of public works concessions, the provisions
of Directive 89/665/EEC concerning
review are
applicable (49).

draws

The Commission also
the
requirements of Article 2(7) of Directive 89/665/EEC,
which stipulates (cid:145)the Member States shall ensure that
decisions
review
taken by bodies
procedures can be effectively enforced.(cid:146)

responsible for

attention to

This implies that the Member States must not take any
material or procedural measures, which might render
ineffective
this
Directive.

the mechanisms

introduced

by

(49) In this context, it should be noted that Mr Advocate-General Elmer,
in Case C-433/93, Commission v. Germany, found that according
to the case law of the Court (Judgments of 20 September 1988, in
Case 31/87, Beentjes, and 22 June 1989,
in Case 103/88,
Constanzo) the Directives on public contracts confer on individuals
rights which they may exercise,
in certain conditions, directly
before the national courts, vis-(cid:224)-vis the State and awarding auth-
orities. The Advocate-General also maintained that Directive
89/665/EEC, adopted after this Judgment, did not seek to restrict
the rights which case law individuals vis-(cid:224)-vis public authorities.
On the contrary, the Directive sought to reinforce (cid:145)the existing
arrangements
. . .
particularly at a stage when infringements can be corrected(cid:146)
(second recital of Directive 89/665/EEC).

and Community levels

at both national

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In addition to the obligations already mentioned
above, these public contracts are subject to the obli-
gation to state reasons provided for by Article 8 of
Directive 93/37/EEC, which makes it compulsory for
the awarding authority to state the reasons for its
decision within fifteen days, and to the review
procedures provided for by Directive 89/665/EEC.

2.4. Concessions in the special sectors

Directive 93/38/EEC on contracts awarded by entities
operating in the water, energy,
transport and telecom-
munications sectors does not have any specific rules
either on works concessions or on service concessions.

Lastly, in the case of service concessionaires who are
awarding authorities within the meaning of
the
Directives, the provisions of the Directives apply to
the procedures to award concession contracts.

2.3. The delimitation between works concessions and

service concessions

Since Directive 93/37/EEC provides for a special system of
procedures for granting public work concessions,
is
worth determining exactly what this type of concession
is, especially if it is a mixed contract, which also includes a
the case in
service element. This
concessionaire often
practice
a public works
since
provides a service to the user on the basis of
the
structure he has built.

is virtually always

it

For the Commission, the decisive criterion is whether the
contract involves building a structure on behalf of the
grantor.

the awarding authority,

If the contract involves building a structure or carrying
out works and the control of the resulting assets is to
the
remain in the hands of
Commission considers that the system provided for by
Directive 93/37/EEC must apply as long as the threshold
for applying this Directive is reached (ECU 5 000 000),
even if service aspects are involved. The fact that the
works are performed or the structures are built by third
parties does not change the nature of the contract. The
same applies
the concessionaire cannot build the
structure or perform the works himself: the subject of
the contract remains the same.

if

In contrast, a concession contract, which does not involve
construction work or only involves operating an existing
structure, is regarded as a service concession since, in both
cases, no actual construction work takes place.

Furthermore, alongside a public works concession, service
contracts or other service concessions may be concluded
for complementary activities, which are, however,
inde-
pendent of
the concession, and
particularly of a structure. Thus, services to repair a
service
motorway may be the subject of a different
concession from that
construction or
management.

the exploitation of

involving its

the four

The Commission would, however, recall that the award by
authority not operating
the State or other public
specifically in one of
sectors governed by
concession involving an
Directive 93/38/EEC of
economic activity in one of
falls
within the rules and principles of the Treaty described
above,
if it is a service concession, and such rules and
principles of the Treaty as well as the Directive 93/37/EEC,
if it is a works concession (50).

these four

sectors,

a

The system of the Treaty which applies to the grant of a
concession by an entity operating in one of the sectors
covered by Directive 93/38/EEC does not differ in any
material respect from the system applicable to the grant
of a concession where the grantor is a public entity and
falls within the rules and principles described above.

the Member States have a discretionary power

(50) On the basis of Articles 74 to 84 of the Treaty the Community has
legislated to ensure the free provision of services in certain
transport sectors, but not all especially not in a significant part
of the land transport sectors. For these the responsible authorities
of
to select
to whom they accord special rights to supply land
operators,
transport services and/or whom they reimburse for providing
public transport services in this sector.
However, Regulation (EEC) No 1191/69 (as amended by Regulation
(EEC) No 1893/91) and Regulation (EEC) No 1107/70 lay down
rules on compensation (which are in fact State aids) for providing
public land transport services. Certain tasks are only remunerated
if
they are covered by a public service contract between an
operator and a public authority. This applies both to the
provision of services in a works concession contract and to
combined supplies and services contracts.
Although authorities do not have to apply the detailed rules of
Directives
bestow service
concessions the general principles set out under point 2.1 of
equality of treatment, transparency, proportionality, mutual recog-
nition and protection of individual rights apply when a public
authority chooses a potential operator.
Since the adoption of Regulation (EEC) No 1191/69 there is now a
considerably greater understanding of the conditions required for
an adequate transport service and the best ways of ensuring it. For
these reasons the Commission considers that the Regulation must
be brought up to date among other things to set out more
precisely proportionality of exclusive rights and to extend the
use of public service contracts.

92/50/EEC and

93/38/EEC to