Luxembourg, 14/10/2005 (Agence Europe) - A public authority cannot award a public service concession to a company without putting it out to tender if the transaction is not 'in-house'. The public service contracts directive does not apply in respect of a concession, but the public authority must comply with the general rules of the EC Treaty as well as the principles of non-discrimination, equal treatment and transparency, explains the Court of Justice in a press release about its ruling in the Parking Brixen Case C-458/03. In 2001, the municipality of Brixen in Italy converted Stadtwerke Brixen, a municipal undertaking, into a company limited by shares, Stadtwerke Brixen AG. The company's nominal capital was 100% owned by the municipality which, however, was allowed under national legislation to remain the sole shareholder for only the following two years. In 2002, the municipality of Brixen signed an agreement with Stadtwerke Brixen AG for the management, for a nine-year term, of a car park with about 200 spaces. Parking Brixen GmbH, a company managing another car park in the municipality of Brixen, took the award of the management of the car park to Stadtwerke Brixen to court in Bolzano because it claimed the municipality should have issued a public call for tender. The municipality responded that as it wholly controls Stadtwerke Brixen, there was no award of a contract or concession to a third party and there was no obligation to proceed by way of a public call for tender.
The Italian court sent the case to the European Court of Justice over the interpretation of EU law and Council Directive 92/50/EEC of 18 June 1992 on public service tenders. The Court ruled that the directive does not apply to public service concessions, but 'made it clear that a concession-granting public authority is, as a rule, bound to comply with the general rules of the EC Treaty. The application of those rules is excluded only if the concession-granting public authority exercises over the concessionaire a control similar to that which it exercises over its own departments and if that concessionaire carries out the essential part of its activities with the controlling authority. In this case, Stadtwerke Brixen AG enjoys a high degree of independence which precludes the municipality from exercising over it control similar to that which it exercises over its own departments.' The Court concluded that the complete failure to put out to tender the award of a public service concession such as that in question is not compatible with Community law.