I have been exchanging views with colleagues of the University of Turin on the justification, scope and implications of Art 10(1) of the Concessions Directive (2014/23). This is a rather complex provision that has hidden links with a number of equivalent provisions in the Public Sector Directive (2014/24) and the Utilities Directive (2014/25).
It has taken us some time to clarify these issues--and I am actually not a 100% sure that we have finished with that conversation. Given that the publication where all this debate and analysis will be reflected will take some to be available, I thought it useful to upload here my draft. Comments will be most welcome.
Article 10(1) of the Concessions Directive states:
This Directive shall not apply to services concessions awarded to a contracting authority or to a contracting entity as referred to in point (a) of Article 7(1) or to an association thereof on the basis of an exclusive right.
This Directive shall not apply to services concessions awarded to an economic operator on the basis of an exclusive right which has been granted in accordance with the TFEU and Union legal acts laying down common rules on access to the market applicable to activities referred to in Annex II.
My views are set out below.
10.1. Concessions
awarded on the basis of exclusive rights
The exclusion in Article 10(1) for concessions awarded on
the basis of exclusive rights is functionally equivalent to those in Article 11
of the Public Sector Directive and Article 22 of the Utilities Directive for
services contracts. As briefly indicated by the European Commission in its
factsheet “Concessions: Excluded concessions”, the purpose of this exclusion is
to cover “Concessions awarded by
(sic, to?) public authorities as well as
contracting entities other than public undertakings and private entities
enjoying of exclusive rights, both in the ‘classic’ and ‘utilities’ sectors.”
However, the drafting of the exclusion for services concessions diverges from
those applicable to services contracts in some respects, which aim to
accommodate the requirements of both other directives
Firstly, it should be taken into account that Recital
(32) of the Concessions Directive indicates that
In certain cases, a given contracting authority or contracting entity which is a State, regional or local authority or body governed by public law or a given association thereof might be the sole source for a given service, for the provision of which it enjoys an exclusive right pursuant to national laws, regulations or published administrative provisions which are compatible with the TFEU. It should be clarified that in those situations a contracting authority or contracting entity as referred to in this recital or association thereof may award concessions to such bodies without this Directive being applied.”
This results in the exclusion in the first paragraph of Article 10(1) being applied to “services concessions awarded to a contracting authority or to a contracting entity as referred to in point (a) of Article 7(1) or to an association thereof on the basis of an exclusive right”. This drafting deviates from that of Article 11 of the Public
Sector Directive and Article 22 of the Utilities Directive for services
contracts. Focussing on the drafting of Article 11 of the Public Sector
Directive, it is worth stressing that, due to the dual treatment of contracting
authorities in the Concessions Directive as ‘proper’ contracting authorities
(under Article 6) and as contracting entities by virtue of the activity in
which they engage [under Article 7(1)(a)], the first paragraph of Article 10(1) of
the Concessions Directive does not only mention contracting authorities, but
also contracting entities “as referred to
in point (a) of Article 7(1)”. However, this does not extend the personal
scope of the exclusion as compared with that in Article 11 of the Public Sector
Directive or that in Article 22 of the Utilities Directive.
Still in that
comparison, it is worth mentioning that the Concessions Directive does not
include the requirement that the exclusive rights of the contracting
authorities (proper and improper) are enjoyed “pursuant to a law, regulation or published administrative provision
which is compatible with the TFEU”. However, given that the requirement is
included in the definition of exclusive right in Article 5(10) of the
Concessions Directive (“‘exclusive right’
means a right granted by a competent authority of a Member State by means of
any law, regulation or published administrative provision which is compatible
with the Treaties…”), this does not actually create a difference in
treatment of the exclusion in the Public Sector and the Utilities Directives either.
Turning to the exclusion in the second paragraph of
Article 10(1) of the Concessions Directive, which makes it inapplicable to
services concessions awarded to economic operators that hold exclusive rights “granted in accordance with the TFEU and
Union legal acts laying down common rules on access to the market applicable to
activities referred to in Annex II”, it seems clear that this is an exclusion
that aims to coordinate the Concessions Directive with sectoral regulation
adopted in compliance with the existing EU framework.
This seems clear from
Recital (33), which foresees that:
It is also appropriate to exclude from the scope of this Directive certain services concessions awarded to economic operators, where they are awarded on the basis of an exclusive right which that operator enjoys under national laws, regulations or published administrative provisions and which has been granted in accordance with the TFEU and Union acts laying down common rules on access to the market applicable to activities referred to in Annex II, since such exclusive right makes it impossible to follow a competitive procedure for the award. By way of derogation and without prejudice to the legal consequences of the general exclusion from the scope of this Directive, concessions as referred to in the second subparagraph of Article 10(1) should be subject to the obligation to publish a concession award notice in view of ensuring basic transparency unless the conditions of such transparency are provided for in sectoral legislation. In order to reinforce transparency, where a Member State grants an exclusive right to an economic operator for the exercise of one of the activities referred to in Annex II, it should inform the Commission thereof.
As briefly indicated by the European Commission in its
factsheet “Concessions: Excluded concessions”, the purpose of this exclusion is
to cover
Concessions awarded to an economic operator on the basis of an exclusive
right
This exclusion applies only to service concessions awarded to economic
operators which are active in the ‘utilities’ sector. It is subject to two
conditions:
i) The economic operator has a prior
exclusive right to provide the services that are the subject of the concession;
ii) This right was granted under a published national law or
administrative act in accordance with the Treaty and with EU acts that lay down
common rules on access to the market applicable to any of the ‘utilities’
activities (e.g. concessions in the electricity sector covered by Directive
2003/54/EC, modified by Directive 2009/72/EC and gas concessions covered by
Directive 2009/73/EC).
Indeed, the coordination with sectoral regulation takes
place both at the stage of definition of the contracting entities covered by
the Concessions Directive [see Article 7 of the Concessions Directive, and Article 4(3) of the
Utilities Directive] and at this stage of exclusion of the concessions awarded
to certain types of entities.
Firstly, Recital (22) of the Concessions
Directive offers some clarification in that regard:
entities which are neither contracting entities pursuant to point (a) of Article 7(1) nor public undertakings are subject to [the Concessions Directive] only to the extent that they exercise one of the activities covered on the basis of such rights. However, they will not be considered to be contracting entities if such rights have been granted by means of a procedure based on objective criteria, in particular pursuant to Union legislation, and for which adequate publicity has been ensured. That legislation should include Directive 2009/73/EC of the European Parliament and of the Council, Directive 2009/72/EC of the European Parliament and of the Council, Directive 97/67/EC of the European Parliament and of the Council, Directive 94/22/EC of the European Parliament and of the Council and Regulation (EC) No 1370/2007 of the European Parliament and of the Council. It should also be clarified that that listing of legislation is not exhaustive and that rights in any form, which have been granted by means of other procedures based on objective criteria and for which adequate publicity has been ensured are not relevant for the purposes of determining the contracting entities covered by this Directive.
This implies that the granting of concessions
to these entities will not be covered by the first paragraph of Article 10(1),
as the way in which their rights had been granted excludes them from the definition
of contracting entity for these purposes.
However, secondly, this situation would result in a more limited
possibility to directly award contracts on the basis of exclusive rights under
the Concessions Directive than under the Public Sector and the Utilities
Directives. It should be borne in mind that Article 32(2)(b)(iii) of the Public
Sector Directive allows for the use of the negotiated procedure without prior
publication if it is necessary for the protection of exclusive rights, and
always provided that no reasonable alternative or substitute exists and the
absence of competition is not the result of an artificial narrowing down of the
parameters of the procurement. Article 50(c)(iii) of the Utilities Directive
contains the same provision regarding the equivalent negotiated procedure
without prior call for competition. Hence,
under those sets of rules, the direct award of a contract to an economic
operator on the basis of an exclusive right is still possible, even if not
covered by Article 11 of the Public Sector Directive or Article 22 of the
Utilities Directive. With the inclusion of the second paragraph of Article
10(1) Concessions Directive, this possibility is accommodated through an
exclusion of the application of the Directive, with the only exception of the
reinstatement of transparency obligations similar to those required by Articles
32(2)(b)(iii) of the Public Sector Directive and 50(c)(iii) of the Utilities
Directive by means of Article 10(2) of the Concessions Directive.
The ultimate justification for this exclusion is,
consequently, of a seemingly double nature. On the one hand, it seems clear
that the interest of potential tenderers in obtaining the concession had
already been protected by substantially equivalent means at the stage of
granting of the exclusive right that triggers the exclusion under the second paragraph of Article 10(1) of the Concessions Directive and, consequently, there is no
need to reopen the competition at this stage. On the other hand, it serves the
purpose of creating a functional equivalent to Articles 32(2)(b)(iii) of the Public
Sector Directive and 50(c)(iii) of the Utilities Directive in order to allow
for the direct award of concession contracts to holders of exclusive rights.