the possibility for public entities to participate in tendering procedures for public contracts, in parallel to the participation of private economic entities, is already evident from the wording of [the Directives] according to which ‘service provider’ is to mean any natural or legal person, including a public body, which offers services. Furthermore, such a possibility to participate was recognised by the Court in the judgment in Teckal, C‑107/98, EU:C:1999:562, paragraph 51, and was repeated in the subsequent judgments in ARGE, EU:C:2000:677, paragraph 40; CoNISMa, EU:C:2009:807, paragraph 38; and Ordine degli Ingegneri della Provincia di Lecce and Others, EU:C:2012:817, paragraph 26 (C-568/13 at para 33).The only check and balance to the expansive interpretation of the criteria for participation in public contracts that the CJEU is willing to tolerate is based on the fact that
Member States do, admittedly, have a discretion as to whether or not to allow certain categories of economic operators to provide certain services. They can regulate the activities of entities, such as universities and research institutes, which are non-profit-making and whose primary object is teaching and research. They can, inter alia, determine whether or not such entities are authorised to operate on the market, according to whether the activity in question is compatible with their objectives as an institution and those laid down in their statutes. However, if and to the extent that such entities are entitled to offer certain services in return for remuneration on the market, even occasionally, the Member States may not prevent those entities from participating in tendering procedures for the award of public contracts relating to the provision of those services. Such a prohibition would not be compatible with [the Directives] (see, in relation to the corresponding provisions of Directive 2004/18, the judgments in CoNISMa, EU:C:2009:807, paragraphs 47 to 49, and Ordine degli Ingegneri della Provincia di Lecce and Others, EU:C:2012:817, paragraph 27) (C-568/13 at para 36, emphasis added).Consequently, the CJEU refers the issue to the regulation of specific activities or specific legal structures available to the public sector to organise the provision of services. In the absence of that sort of regulation (which would then be potentially subjected to the rules on freedom of establishment and free movement of services, where applicable), public procurement rules cannot be used to determine the remit of the economic activity of public entities.
That being said, the CJEU then proceeded to stress that, in case the public entity is in a position to offer contractual conditions impossible to match by private competitors--particularly in view of the funding it receives--then the contracting authority should scrutinise its offer under the general rules applicable to abnormally low offers (now in art 69 of Directive 2014/24). In the words of the CJEU:
the provisions of [the Directives] and in particular the general principles of freedom of competition, non-discrimination and proportionality which underlie that directive, must be interpreted as not precluding national legislation which allows a public hospital, such as that at issue in the main proceedings, participating in a tendering procedure to submit a tender which cannot be matched by any competitors as a result of the public funding which it receives. However, in the course of the examination of the abnormally low character of a tender on the basis of [the Directive], the contracting authority may take into consideration the existence of public funding which such an entity receives in the light of the option to reject that tender (C-568/13 at para 51, emphasis added).In my view, the Judgment in Data Medical Service simply consolidates the existing case law and prompts the contracting authority to assess the potential abnormality of the tender submitted by the public entity. The question that remains unanswered is whether there (actually) is a subsequent obligation to reject the tender, which is a particularly controversial point [for discussion, see A Sánchez Graells, "Rejection of Abnormally Low and Non-Compliant Tenders in EU Public Procurement: A Comparative View on Selected Jurisdictions", in M Comba & S Treumer (eds) Award of Contracts in EU Procurements, vol. 5 European Procurement Law Series (Copenhagen, DJØF, 2013) 267-302]. Arguably, in most of the cases, there can be an obligation to reject on the basis of the principle of competition stressed by the CJEU and now consolidated in Art 18(1) Dir 2014/24.
Moreover, one cannot discard the application of the EU and domestic rules on competition (arts 101 and 102 TFEU and their equivalents) to the public entities when they engage in such economic activity [hence, immediately deactivating the FENIN-Selex exemption; see A Sánchez Graells, "Distortions of Competition Generated by the Public (Power) Buyer: A Perceived Gap in EC Competition Law and Proposals to Bridge It" (August 21, 2009). University of Oxford, Center for Competition Law and Policy, CCLP (L). 23], or even the application of domestic unfair competition law rules if the activity is caught in their substantive scope.
Hence, situations like the one that triggered the Data Medical Service simply blur the distinction between public and private in public procurement, but by no means make the participation of public entities in procurement bullet-proof in terms of the application of general competition rules. This is an area where significant developments can be expected in the immediate future, as the public sector seeks to find new sources of funding or revenue for its activities. Hence, this is an area where more definite answers from the CJEU would be welcome in the future.