Luxembourg, 12/05/2006 (Agence Europe) - In a statement, the European Court of Justice rules that local authorities may directly award public procurement contracts to companies it owns if the companies' activity is principally involved with the local authority in question. It issued the ruling in a case involving the Italian local authority of Busto Arsizio, which directly awarded a contract worth nearly EUR 10 million for managing the heating of municipal buildings to a company called AGESP. AGESP is owned by AGESP Holding, 99.98% of which is owned in turn by the local authority in question, Busto Arsizio. The local authority granted the contract directly on the grounds that AGSEP is subject to similar controls as those which the local authority exercises over its own services, and virtually all AGESP's business is with Busto Arsizio. The local authority argued that it therefore met the conditions set out under EU case law for public procurement without publishing calls for tender. Two competing companies took the decision to a court in Lombardy (north Italy), which sent it to the European Court of Justice, which has the power of interpreting criteria set by the Court.