ECJ Allows Cooperation Between Local Authorities Without Tendering Procedure

Heuking Kühn Lüer Wojtek Welcomes Decision

A sigh of relief on a municipal level: Municipalities may perform their public tasks jointly and award contracts to each other without issuing a call for tenders. The European Court of Justice decided this in its judgment of June 09, 2009 (C-480/06) and thus clarified one of the most important questions of EU procurement law. The ECJ thus rejects the strict requirements of German courts and the EU Commission.

"The decision is to be welcomed. It strengthens the rooms for maneuver of municipalities in order to jointly act more efficiently," explains Dr. Ute Jasper, procurement expert at law firm HEUKING KÜHN LÜER WOJTEK. "Fortunately, the ECJ clarifies that public authorities may internally organize freely and support each other. Organizational questions under formal law do not play a role. It is important whether private undertakings are participating or not," says Jasper.

The ECJ found for the Federal Republic of Germany in the dispute with the EU Commission. The Commission had filed a complaint about a cooperation in Northern Germany. In 1995, four adminis-trative districts had directly entered into a contract with the Ham-burg sanitation department without tendering procedure in order to be able to dispose of their waste in a waste incineration plant. They paid a fee for this service. In return, the sanitation depart-ment agreed to reserve the required incineration capacity. The EU Commission initiated an infringement procedure against the Fed-eral Republic of Germany.  The Advocate General also deemed the contract to be liable to tender.

Wrongly, as the ECJ now surprisingly decided. Communities may determine themselves how they want to perform their tasks. In the scope of services of public interest, they may cooperate with other communities without tenders if no private parties are participating.

Jasper says: "The stricter German case-law is thus obsolete. It is now clear that the form of cooperation is not important and direct awards between local authorities are also possible without a call for tenders."