Council of European Municipalities and Regions (CEMR)
European section of United Cities and Local Governments

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Local and regional governments as service providers

Public procurement - 28.07.2005

CEMR "baffled" by Court of Justice ruling on public procurement case
The Council of European Municipalities and Regions (CEMR) expresses serious concern at the recent European Court of Justice's ruling in the Coname v. Comune di Cingia de' Botti case (C-231/03).
CEMR believes this decision damages the right of municipalities to decide what is the best way for them to deliver public services to their citizens. In particular, it undermines long-standing 'intercommunal" arrangements, under which groupings of local authorities join together to deliver local services across their joint area.
The Court held that even though the public procurement directives did not apply to this case (the award of a concession), the municipality did not have the right to award the task to its intercommunal company (Padania) without opening up the process to the private sector. Even where the public procurement directives apply, local governments may give tasks directly without tender to companies they fully control, and which operate almost wholly in the locality.
Yet in the Coname case, one of the Court's main arguments is that a municipality cannot simply award a local task to a company which it and other local authorities own if this company is partially "open to private capital". The Court's argument is baffling, says CEMR secretary general Jeremy Smith; its decision is not based on the fact that a percentage of a public company's shares are actually owned by a private undertaking, but on the fact that some of these shares might one day be owned by a private company!
This case highlights once again the unacceptable level of uncertainty that European local governments have to face whenever their own in-house services are concerned. The Court of Justice keeps moving the goalposts. The EU institutions are supposed to be neutral between the public and private sectors in service delivery, but that is not how things are working out in the Court's case law. In the last week or two the European Commission has shown welcome signs of better understanding the need not to trample on local self-government and local decision-making, in its decisions on public service compensation, and the new draft Regulation on public transport. What we need is less bureaucracy, a less top-down Europe. It is high time the Court of Justice stopped creating new law that goes in the opposite direction.
The Coname v. Commune di Cingia de' Botti case
The municipality of Cingia de' Botti (province of Cremona, Italy) awarded directly the service covering the maintenance, operation and monitoring of the methane gas network to Padania, a company (Padania) with predominantly public share capital held by the province of Cremona and by almost all the municipalities of that province including Cingia de' Botti . The consortium Coname contested that award, claiming that it should have been made following an invitation to tender.
On 20 July, the Court stated that an undertaking located in another Member State must be able to have access to appropriate information regarding the concession before it is awarded, in order to be in a position to express its interest in obtaining that concession.
In addition, the Court observed that the public company Padania is open to private capital, which precludes it from being regarded as a structure for the -in-house' management of a public service on behalf of the municipalities which form part of it.
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