Public procurement: The ECJ recently ruled on the definition of a public body in the context of the Directive on public procurement.

The ECJ recently ruled on the definition of a public body in the context of the Directive on public procurement. The issue was raised by BFI, an undertaking specialising in the collection and treatment of waste, before the Dutch courts. BFI had objected to the fact that the job of refuse collecting for two municipalities had been given to the public limited company ARA which had been set up for that purpose. BFI submitted that the municipal authorities concerned should have awarded the contract only after conducting a tendering process as provided for in the Directive. However, Article 6 of Directive 92/50 excludes contracts awarded to entities which are themselves contracting authorities within the meaning of Article 1(b), such as bodies governed by public law. BFI therefore wanted to know if ARA was such a body.

BFI argued that a body governed by public law is one that is established specifically to meet the needs in the general interest, without having a commercial or industrial character. ARA’s statutes of incorporation stated that its objects included the performance of all economic operations aimed at collecting waste. BFI submitted that as some of these operations could be carried out by a private company ARA could not fall within the definition of a public body.

The ECJ ruled the following:

(1) Under Article 1(b) of Directive 92/50 the words “not having an industrial or commercial character” were intended to qualify the meaning of the term “needs in the general interest” and created within the category of needs in the general interest a sub-category of needs which were not of an industrial or commercial character.

(2) Article 1(b) referred only to the needs which an entity had to meet and did not state whether or not those needs might also be met by private undertakings. The fact that there was competition was not sufficient to exclude the possibility that a body financed or controlled by the state, territorial authorities or other bodies governed by public law might choose to be guided by other than economic considerations in awarding a contract. As most activities could be carried out by private undertakings, a requirement that there should be no private undertakings capable of meeting the needs for which the body in question was set up would mean the term “body governed by public law” was virtually meaningless.

(3) The status of a body governed by public law was not dependent on the relative importance, within its business as a whole, of the meeting of needs in the general interest not having a commercial or industrial character and it was therefore immaterial that commercial activities might be carried out by a separate legal person forming part of the same group or concern as it. Conversely, the fact that one of the undertakings of a group or concern was a body governed by public law was not sufficient for all of them to be regarded as contracting authorities.

(Gemeente Arnhem, Gemeente Rheden and BFI Holding BV, Case C0360/96, Judgement of 3 November 1998; Opinion of AG delivered on 19 February 1998)