An Interpretative Communication on IPPPs and Community public procurement law should, above all, clarify the application of public procurement rules (1) to the establishment of mixed capital entities the objective of which is to perform services of general (economic) interest and (2) to the participation of private firms in existing public companies which perform such tasks. In this context, any future Communication should in particular outline ways of establishing IPPPs ensuring that the accompanying award of tasks is EC law compatible.13
In the context of IPPPs the PPP Green Paper discussed in-house relations.14 It was stressed that as a rule Community law on public contracts and concessions applies when a contracting body decides to entrust a task to a third party, i.e. a person legally distinct from it. It is established case law15 of the European Court of Justice that the position can be otherwise only where (1) the local authority exercises over the person concerned a control which is similar to that which it exercises over its own departments and, at the same time, (2) that person carries out the essential part of its activities with the controlling local authority or authorities. In its judgment of 11 January 2005 in the Stadt Halle16 case, the European Court of Justice supplemented this definition of "in-house relations" by stating that the public award procedures laid down by the Public Procurement Directives must - if the other conditions for their application are met - always be applied where a contracting authority intends to conclude a contract for pecuniary interest with a company legally distinct from it, in whose capital it has a holding together with at least one private undertaking.
In particular, public sector stakeholders, including some Member State governments, called for a widening of the in-house concept, which in their view is understood too narrowly by the Court. However, there does not appear to be any compelling evidence at present to suggest that the quality of public services could be improved or prices be reduced, if private undertakings - via IPPPs - obtain public service missions without a preceding competitive award procedure. Furthermore, it is difficult to see how privileged treatment of IPPPs vis-à-vis their private competitors could comply with the equal treatment obligation derived from the EC Treaty.
Contributions to the PPP Green Paper and discussions with stakeholders in the context of this public consultation as well as experiences in the context of Article 226 EC Treaty procedures have shown that clarification is also needed in order to identify to what extent Community law applies to the delegation of tasks to
public bodies, and which forms of co-operation remain outside the scope of internal market provisions. Just recently, the European Court of Justice17 made it clear that relations between public authorities, their public bodies and, in a general manner, non-commercial bodies governed by public law could not a priori be excluded from public procurement law. Clearly, further clarification on this issue could form part of an Interpretative Communication on IPPPs.
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13 Such Communication would more specifically examine closely the issues highlighted in paragraphs 58
to 69 of the PPP Green Paper.
14 Paragraph 63 of the PPP Green Paper.
15 Judgment of 18 November 1999 in Case C-107/98 Teckal [1999] ECR I-08121, paragraph 50.
16 Case C-26/03 [2005], paragraph 52, not yet published in the ECR.
17 Judgment of 13 January 2005 in Case C-84/03 Commission vs Spain [2005] not yet published in the ECR.