Public procurement: Commission closes infringement procedure against France concerning direct award of concessions to public bodies, as provided for under the 'Sapin Law'

20 November 2009

The European Commission has decided to terminate an infringement procedure that it had initiated against France under Article 226 of the EC Treaty relating to a provision of Law No 93-122 of 29 January 1993 (known as the 'Sapin Law') which allowed public entities to award concession contracts to public bodies without prior publicity or competitive tendering. These concession contracts (referred to as 'conventions de délégation de service public' (public service delegation agreements) in French law) relate to a wide range of areas of activity including, for example, water and electricity distribution, waste collection, management of public amenities such as sports fields and swimming pools, etc. and the construction and operation of motorways.

This infringed EU public procurement law by failing to comply with the obligation to ensure the transparency required in order to uphold the principle of equal treatment for all economic operators potentially interested in bidding for a concession contract. This obligation, which must be complied with by the public entity awarding the contract, entails guaranteeing adequate publicity to ensure competitive tendering and monitoring of the impartiality of the contract award procedures.

The direct award of a concession by a public entity to a public body is only justifiable if the contract-awarding public entity exercises control over the public body to which it awards a contract which is similar to the control it exercises over its own departments, and if the public body carries out the bulk of its activities with the controlling public entity. This is known as 'in-house providing' ('contrats de quasi régie' in French). If these conditions are satisfied, public procurement law does not apply, since the concession contract is awarded to a body which, although legally distinct from the awarding public entity, is not regarded as being functionally separate from it.

As part of this procedure, the Commission had sent a letter of formal notice to the French authorities.

In their reply the French authorities acknowledged the need to clarify the legislation in question.

This was achieved with the adoption of Order No 2009-864 of 15 July 2009 which specifies that the exemption allowing a public entity to award a concession contract to a public body without publicity or competitive tendering applies only if there is a relationship between the public entity and the public body which satisfies the 'in-house' criteria.

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