Just as the Court’s case law on in-house procurement seemed to settle to familiar territory, a new challenge was facing its application. As the usage of in-house structures became more or less an established practice in Member States, it began to look like the in-house entities were not used only as servants of the contracting authorities but as instruments of cooperation between such public authorities. As one of the key requirements and elements of the in-house case law regarded the control by the contracting authority to its in-in-house entity, the reasoning of in-house procurement did not provide a clear answer to a structure where there was no relationship based on control.
The first ruling to address the issue of horizontal cooperation (i.e cooperation without a controlled entity) concerned an arrangement between the city of Hamburg and four local authorities called Landkreise.658 In the Hamburg case,the city of Hamburg reserved in the arrangement an annual capacity of its soon-to-be-built waste management facility for the waste management of the Landkreise. The case was brought before the Court of Justice by the Commission who argued that this arrangement should have been tendered out. The Court held first that the requirements from its case law
658 Case C-480/06. See also Haussmann – Queisner. 2013. 231-237
on in-house procurement were not met, because of the absence of the relationship base on control between the contracting parties in question. The Court then, in an interesting line of reasoning, focused on the ultimate objective of thearrangement, which was held to be enabling Hamburg to build and operate a waste treatment facility “under the most favourable economic conditions owing to the waste contributions from the neighbouring Landkreise” and which was contingent upon the cooperation of the Landkreise.659 Here we see a reference to the effectivity of public management, a consideration also referred to in the Court’s case law on public-private cooperation (depicted below). The Court also stated that the contract at issue also provided for “commitments on the part of the contracting local districts that are directly related to the public service objective”, namely to make available landfill capacity for the quantities of slag unable to utilize in the incineration of the waste. It is unclear of the wording whether the public service objective was held to be the management or incineration of waste or theefficient management of waste. The Court also referred to the commitment of theLandkreise to restrict their right of access to the incineration facility in certain circumstances. This was held to constitute assistance between the contracting parties. Lastly, the Court pointed out that the contract between the public authorities did not include any financial transfers outside the reimbursement of charges paid by the city of Hamburg to the waste management operator.
After referring to its ruling inCoditel Brabant, the Court held that EU law does not require public authorities to use any particular form when they carry out jointly their public service tasks.660 The Court also held that such cooperation did not undermine the “principle objective of the Community rules on public procurement”, namely the free movement of services and the opening-up of undistorted competition, where here implementation of that cooperation is governed “solely by considerations and requirements relating to the pursuit of objectives in the public interest and the principle of equal treatment of the persons concerned, so that no private undertaking is placed in a position of advantage vis-à-vis competitors. The last statement was coupled with a reference to the Court’s judgment in Stadt Halle. Thus, even though the requirements concerning control and market activities of the controlledentity were to be discarded, a fraction of the requirements from in-house case law was possible to maintain in the Hamburg ruling. The arguments from the background of a cooperation in the carrying out of public service obligation and the objectives in the public interest could, however, be seen to reflect the same logic that the Court first introduced in its Teckal ruling, namely that of drawing the outlines of public authorities in their contractual relationships. In theHamburgruling, these arguments could be seen to demarcate the public authorities from the competitive market, in
659 Case C-480/06. Para 38.
660 Case C-324/07.
terms of the relationship between contractual parties as an element of the concept of a public contract. As the legal status of the cooperating parties could not be used in bringing about sufficient justificatory power661, the next closest context would be the similarity of the tasks of the parties and the objectives of their tasks. The Court did, however see a need to make, in addition, a reference to the objectives of the EU legislation on public procurement and the fact that these objectives were not harmed by such cooperation.
It could be argued, that sufficient justificatory power could have been drawn simply from the unity of the tasks of the cooperating public authorities and that there was no need to invoke teleological or consequentialist arguments from the objectives of EU public procurement legislation, in particular when another objective was referred to in passing, namely the objective of effective public management. Perhaps it was the Court’s aim to show that these objectives were not in contrast with each other. One cannot help to question, however, whether they indeed were: it definitely was not the view of the Commission, when it brought the case before the ECJ, that such an arrangement made without a tendering procedure would not “undermine” the principle of free movement of services or opening-up of undistorted competition. As the ECJ referred to so many of the different elements and objectives of the arrangement, it is quite difficult to assess which references were used in the support of which requirements and if there was an act of weighing and balancing objectives related to (effective) public management and the key principles of EU public procurement law. In terms of the coherence within the reasoning, the judgment in theHamburgcase does not seem to hold a very cohesive or tightly knitsupportive structure of reasons.662 InLecce, the element of cooperation was assessed in more detail.663 The Court was faced with a question whether the requirements of horizontal cooperation from the Hamburgruling could be applied to an arrangement between a regional authority and a university concerning the study and evaluation of seismic vulnerability of hospital structure. The Court held that the contract contained in significant part activities “usually carried out by engineers and architects and which, even though they have an academic foundation, do not however constitute academic research”. Here we can see once again the attempt to demarcate, in the conceptual analysis of a public contract, the public authority from the market by emphasizing the differences of the tasks between the contracting parties. As the Court put it, the public task which is the subject-matter of the cooperation between the public entities established by the contract did “not appear to ensure the implementation of a
661 In Stadt Halle, it was stated that EU public procurement rules are also applicable where the contracting party of the contracting authority is itself also a contracting authority. C-26/03. Para 47.
662 Moral Soriano. 2003. 311-319.
663 Case C-159/11. EU:C:2012:817.
public task which the ASL and the University both have to perform”.664 Perhaps one could see a shift here from assessing the overall (public or non-public) characteristics of the cooperating parties in theHamburgcase to the question if the public tasks on which the cooperation is based weremutual or similar.665
InLecce, the Advocate General presented a very interesting argument from the conceptual analysis of cooperation in comparison to a contract for consideration. According to his opinion,
“It must also be required that the cooperation serves to perform a common public task. It is not therefore sufficient that the statutory duty to perform the public task in question concerns only one of the public authorities involved, whilst the other’s role is limited to that of a vicarious agent, which takes on the performance of this external task under a contract. This seems understandable if we consider the etymological meaning of the word ‘cooperation’; the essence of such cooperation consists precisely in a common strategy between partners which is based on the exchange and the coordination of their respective interests. The unilateral pursuit of one participant’s own interests cannot really be described as ‘cooperation’ in the above sense.”666 The Advocate General went on to state that the relationship between the parties to a contract is distinguished by the recognition of reciprocal rights and duties. Whereas in the Hamburg case, the parties to the contract were committed to mutual assistance and mutual consideration. According to the opinion of the Advocate General, the ruling in the Hamburg case was thus based on ”a relationship of exchange which goes beyond the provision of services for consideration”.667
InLecce we can see the use of conceptual tools in assessing what was meant by the concept ofcooperation by comparing (although not expressively) this concept to that of a public contract with consideration. Where the concept of a public contract includes consideration,which reflects theeconomic interests of the contracting parties (such as presented in theHelmut Müller ruling) as the motivating force behind the arrangement, the concept of cooperation entails the element ofcoordination ofexistingtasks as the motivating force behind cooperation. Such a systemic approach to reasoning is suggested to improve coherence and consistency of the case law on the cooperation between public authorities.
664 Case C-159/11. Para 37.
665 This was actually emphasised by the Advocate General inLecce, who stated that ”it is not therefore sufficient that the statutory duty to perform the public task in question concerns only one of the public authorities involved, whilst the other’s role is limited to that of a vicarious agent, which takes on the performance of this external task under a contract.” Opinion in Case C-159/11. Para 75.
666 Opinion in Case C-159/11. Para 75.
667 Opinion in Case C-159/11. Para 76.
Graells has conceptualized the Court’s case law on public cooperation between public authorities as allowing it only where the cooperation was conducted outside the market and was not led by economic reasons.
Consequently, parallels could be drawn between public-public cooperation and the decision by the contracting authorities betweenmake-or-buy.Graells has reformulated this decision in the context of public-public cooperation as
“cooperate-or-buy”.668 In terms of the concept of public contract this would mean that the elements of consideration as the motivating force and the distinctive characteristics of the contracting partners (public and private parties with different tasks) highlight the connection of the arrangement to the market and the economic reasons in public contracts. As regards the concept ofpublic cooperation, thelack of consideration as the motivating forceand the similarity of the tasks of the participants place the cooperation outside the market and the economic reasons for transactions therein.669 Thus, even though the reasoning behind such cooperation might beeconomicin the sense that collaboration brings about economic benefits, it is not based on market efficiency (at least if one does not consider transactions between public authorities as a market or a quasi-market).
InPiepenbrock, the Court was asked to analyze whether a contract where one public entity assigns to another public entity the task of cleaning certain buildings in return for financial compensation corresponding the costs incurred in the performance of cleaning, constituted a public contract within the meaning of public procurement directive from 2004. 670 Here the Court only presented a short reference (substantive citation) to the previous case law in the matter. The Court stated then that it followedfrom the findings of the referring court that the aim of the draft contract at issue in the main proceedings did not appear to be to establish cooperation between the two contracting public entities with a view to carrying out a public task that both of them have to perform. Here we can see a reference to the findings of the national court being used as a part of the internal syllogistic justification chain of the ruling and, perhaps, an illustrative example of judicial dialogue, whether looked at from the viewpoint of dialogical pluralism or legal realism, between national referring courts and the Court of Justice being used in the reasoning of the latter. In terms of classifying such a reference as an argument, one could
668 Graells. 2015. 253.
669 Arrowsmith has elaborated on the reasoning behind cooperation between public authorities:
“There may be good reasons for keeping the delivery of services within the government rather than contracting them out, and there are often advantages in collaborating with other parts of the administration…political or strategic reasons for keeping the service provision within the administration cannot always be sufficiently taken into account in a tendering process and, indeed, for such reasons contracting out may not be an appropriate option at all. To require tendering as a condition of collaborative provision may result in a decision to supply solely from within the procuring entity when administrative collaboration would be more efficient. Arrowsmith. 2014. 499-500.
670 Case C-386/11.
make the case that it could be considered a systemic argument of taking into account the context of the case and thereasoning already provided by the national court. The Court then added that because the contract in question authorised the use of the servicesof a third party for the accomplishment of that task, the requirement based onconsequential arguments in theHamburg case was not met.
In the case law of the Court on the issue of cooperation between contracting authorities we can see, on one hand, the utilization of systemic arguments, as the court has analysed the concept of cooperation. It is suggested that this has improved the coherency and consistency of the rules concerning the scope of tendering requirement. On the other hand, we find that teleological or consequential arguments have also been quite prevalent, as the issue of (not) affecting the relationships between undertakings has been introduced in the requirements of exclusion ground concerning public-public cooperation. It could be asked why such a restriction was introduced in a public procurement case, especially as the cooperating public authorities must, in any case, tender out any contracts which they wish to award to undertakings.