Public contracts: the Commission refers Spain to the Court of Justice concerning the joint ventures set up by the publicly owned company IVVSA

13 October 2009

The European Commission has decided to take Spain to the European Court of Justice regarding the joint ventures set up by the publicly owned company IVVSA. In this instance, the Commission considers that, by setting up joint ventures, IVVSA has, in some cases, awarded public procurement contracts to those joint ventures in contravention of certain provisions of Directives 92/50/EEC, 93/37/EEC and 93/36/EEC (now consolidated and amended by Directive 2004/18/EC) and in violation of the principle of equal treatment referred to in those Directives and in Articles 43 and 49 of the EC Treaty.

Non-compliance with the public procurement contracts directives

IVSSA (Instituto Valenciano de Vivienda, S.A.) is a limited company wholly owned by the regional government of Valencia. Among other things, it conducts urban planning studies and carries out infrastructure and management activities in the field of urban planning, including the renovation and promotion of social housing.

IVVSA has set up joint ventures with private shareholders. The purpose of the joint ventures is to perform tasks similar to those set out above (conducting studies, infrastructure projects, urban planning management, etc).

The Commission considers that, by setting up certain joint ventures and giving them responsibility for carrying out various tasks in the field of urban planning, IVVSA has awarded public procurement contracts. The Commission takes the view that, when awarding those contracts, IVVSA did not comply with the public procurement directives, particularly as regards advertising and the principle of equal treatment, which also derives from Articles 43 and 49 of the EC Treaty.

Background

Public procurement in the EU – i.e. supplies, services and works purchased by the public sector – accounted for 16% of GDP in the EU. The open and transparent nature of public procurement procedures, as required by Community texts, boosts competition, strengthens anti-corruption provisions and provides taxpayers with cheaper and higher quality services.

Infringement procedures consist of three steps. The first step is that the Member State receives a letter of formal notice and has two months to reply. If further action by the Member State is needed to ensure compliance with EU legislation, the Commission sends a reasoned opinion. Again the Member State has two months to reply. If there is no satisfactory reply, the Commission can refer the matter to the European Court of Justice in Luxembourg. It can also request that the Court impose a fine on the country concerned if it does not comply with the Court's ruling.

The latest information on infringement proceedings concerning all Member States can be found at: http://ec.europa.eu/community_law/index_en.htm