57. The law on public contracts and concessions does not of itself apply to the transaction creating a mixed-capital entity. However, when such a transaction is accompanied by the award of tasks through an act which can be designated as a public contract, or even a concession, it is important that there be compliance with the rules and principles arising from this law (the general principles of the Treaty or, in certain cases, the provisions of the Directives).52
58. The selection of a private partner called on to undertake such tasks while functioning as part of a mixed entity can therefore not be based exclusively on the quality of its capital contribution or its experience, but should also take account of the characteristics of its offer - the most economically advantageous - in terms of the specific services to be provided. Thus, in the absence of clear and objective criteria allowing the contracting authority to select the most economically advantageous offer, the capital transaction could constitute a breach of the law on public contracts and concessions.
59. In this context, the transaction involving the creation of such an entity does not generally present a problem in terms of the applicable Community law when it constitutes a means of executing the task entrusted under a contract to a private partner. However, the conditions governing the creation of the entity must be clearly laid down when issuing the call for competition for the tasks which one wishes to entrust to the private partner.53
60. However, the Commission has noted that, in certain Member States, national legislation allows the mixed entities, in which the participation by the public sector involves the contracting body, to participate in a procedure for the award of a public contract or concession even when these entities are only in the course of being incorporated. In this hypothesis, the entity will be definitively incorporated only after the contract has actually been awarded to it. In other Member States, a practice has developed which tends to confuse the phase of incorporating the entity and the phase of allocating the tasks. Thus the purpose of the procedure launched by the contracting authority is to create a mixed entity to which certain tasks are entrusted.
61. Such formulae do not appear to offer satisfactory solutions in terms of the provisions applicable to public contracts and concessions.54 In the first case, there is a risk that the effective competition will be distorted by a privileged position of the company being incorporated, and consequently of the private partner participating in this company. In the second case, the specific procedure for selecting the private partner also poses many problems. The contracting authorities encounter certain difficulties in defining the subject-matter of the contract or concession in a sufficiently clear and precise manner in this context, as they are obliged to do. The Commission has frequently noted that the tasks entrusted to the partnership structure are not clearly defined and that, in certain cases, they even fall outside any contractual framework. This raises problems not only with regard to the principles of transparency and equality of treatment, but even risks prejudicing the general interest objectives which the public authority wishes to attain. It is also evident that the lifetime of the created entity does not generally coincide with the duration of the contract or concession awarded, and this appears to encourage the extension of the task entrusted to this entity without a true competition at the time of this renewal. Sometimes this results in a situation where the tasks are awarded de facto for an unlimited period.
62. In addition, it should be pointed out that the joint creation of such entities must respect the principle of non-discrimination in respect of nationality in general and the free circulation of capital in particular.55 Thus, for example, the public authorities cannot normally make their position as shareholder in such an entity contingent on excessive privileges which do not derive from a normal application of company law.56
63. The Commission also wishes to point out that the participation of the contracting body in the mixed entity, which becomes the joint holder of the contract at the end of the selection procedure, does not justify not applying the law on public contracts and concessions when selecting the private partner. The application of Community law on public contracts and concessions is not contingent on the public, private or mixed character of the joint contractor of the contracting body. As the Court of Justice confirmed in the Teckal case, this law is applicable when a contracting body decides to entrust a task to a third party, i.e. a person legally distinct from it. The position can be otherwise only in the case where 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, that person carries out the essential part of its activities with the controlling local authority or authorities.57 Only entities that fulfil these two conditions at the same time may be treated as equivalent to "in-house" entities in relation to the contracting body and have tasks entrusted to them without a competitive procedure.58
64. Lastly, it should be pointed out that if the mixed entity has the quality of a contracting body this quality also requires it to comply with the law applicable to public contracts and concessions when it is awarding tasks to the private partner which have not been the subject of a call for competition by the contracting authority ahead of the incorporation of the mixed entity. Thus, the private partner should not profit from its privileged position in the mixed entity to reserve for itself certain tasks without a prior call for competition.
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51. The question being dealt with here is the creation of ex novo entities in the context of a specific legal arrangement. However, the case of pre-existing mixed entities participating in the procedures for the award of public contracts or concessions will not be dealt with specifically, because this latter hypothesis does not give rise to much comment in terms of the applicable Community law. The mixed character of an entity participating in a tendering procedure does not in fact involve any derogation from the rules applicable to the award of a public contract or a concession. Only in the case where the entity in question meets the characteristics of an 'in house' entity, within the meaning of the Teckal Case Law of the Court of Justice, is the contracting authority entitled not to apply the usual rules.
52. Note that the principles governing the law on public contracts and concessions apply also when a task is awarded in the form of a unilateral act (e.g. a legislative or regulatory act).
53. Also, these conditions must not discriminate against or constitute an unjustified barrier to the freedom to provide services or to freedom of establishment, or be disproportionate to the desired objective.
54. When planning and arranging such transactions, the test involving the use of the standard forms - which include the elements indispensable for a well-informed competition, - also demonstrate how difficult it can be to find an adequate form of advertising to award tasks falling within the scope of the law on public contracts or concessions.
55. Participation in a new undertaking with a view to establishing lasting economic links is covered by the provisions of Article 56 relating to the free movement of capital. See Annex I of Directive 88/361/EEC, adopted in the context of the former Article 67, which lists the types of operations which must be considered as movements of capital.
56. See Judgments of the Court of 4 June 2002, Case C-367/98, Commission v. Portugal, ECR I-4731; Case C-483/99, Commission v. France, ECR I-4781; and Judgments of 13 May 2003, Case C-463/00, Commission v. Spain, ECR. I-4581; Case C-98/01, Commission v. United Kingdom, Rec. I-4641. On the possible justifications in this framework, see Judgment of the Court of 4 June 2002, Case C-503/99, Commission v. Belgium, ECR I-4809.
57. Case C-107/98, Teckal, Judgment of 18 November 1999, point 50.
58. The Court of Justice has been asked to make three preliminary rulings (Cases C-26/03, C-231/03 and C-458/03) designed to obtain additional clarification on the scope of the criteria which can establish the existence of an "in house" type relationship.