C-353/96

1. In the present Treaty-infringement pro­ ceedings brought against Ireland, the Com­ mission claims that a call by the Irish For­ estry Board (Coillte Teoranta) for tenders for 3. The Commission sent a letter to the Irish the supply of fertiliser was not published in Government on 30 June 1994 highlighting the the Official Journal of the European Commu- failure to publish a notice of the call for ten­ nities. The essential issue in this regard is ders. That letter was based on Article 3(1) of whether Coillte Teoranta is a contracting 3 Directive 89/665/EEC and was also expressly authority within the meaning of Directive stated to constitute a letter of formal notice 77/62 1 and therefore under an obligation to within the meaning of Article 169 of the EC publish a notice of the call for tenders in Treaty. A letter of the same tenor was sent to question. Coillte Teoranta. In its reply, the Irish Gov­ ernment challenged the view taken by the Commission. The Commission subsequently sent a reasoned opinion to the Irish Govern­ ment on 23 February 1996. The Irish Gov­ ernment, however, took issue with the com­ 2. On 10 March 1994 Coillte Teoranta issued plaints raised, in part on the ground that the a call for tenders in respect of a contract to procedure under Article 169 of the EC Treaty supply fertiliser but did not publish a corre­ was not applicable to the present case because sponding notice in the Official Journal of the national judicial proceedings were already European Communities. The matter was pending and Coillte Teoranta was in any event brought to the Commission's attention on not a contracting authority, with the result 18 May 1994. A contract for the supply of that publication in the Official Journal would fertiliser, to the value of approximately have been unnecessary. IR £280 000, was concluded pursuant to the tendering procedure on 30 May 1994. On 21 June 1994, an undertaking which had unsuccessfully tendered brought proceedings 2 — The High Court has itself requested an interpretation by the Court of the term 'contracting authority' within the meaning of Directive 77/62 (Case C-306/97 Commuant Machine Turf v Coillte Teoranta): sec the Opinion in that case delivered by Advocate General Alber on 16 July 1998 (ECR [1998] I-8761, 1-8763). * Original language: German. 3 — Council Directive 89/665/EEC of 21 December 1989 on the 1 — Council Directive 77/62/EEC of 21 December 1976 coordi­ coordination of the laws, regulations and administrative pro­ nating procedures for the award of public supply contracts visions relating to the application of review procedures to the (OJ 1977 L 13, p. 1), as amended by Directive 88/295/EEC award of public supply and public works contracts (OJ 1989 (OJ 1988 L 127, p. 1). L 395, p. 33).

(b) "contracting authorities" shall be the State, regional or local authorities and the legal persons governed by public law or, in Member States where the latter are unknown, bodies corresponding thereto 5. Ireland contends that the Court should: as specified in Annex I;

...' — dismiss the application;

7. Annex I to Directive 77/62, as amended by — order the Commission to pay the costs. Directive 88/295, contains a list of the legal

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persons governed by public law and bodies (b) "contracting authorities" shall be the State, corresponding thereto referred to in Article regional or local authorities, bodies gov­ 1(b). Point VI refers to these as being, in the erned by public law, associations formed case of Ireland: by one or several of such authorities or bodies governed by public law;

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OPINION OF MR ALBER — CASE C-353/96

bodies, or having an administrative, mana­ which have led it to conclude that a clear and gerial or supervisory board, more than manifest infringement has been committed half of whose members are appointed by and request its correction'. the State, regional or local authorities or by other bodies governed by public law;

As grounds for not correcting an infringe­ ment, Article 3(4) provides that reliance may ...' be placed

10. So far as review of compliance with the 'among other matters on the fact that the provisions for awarding contracts is con­ alleged infringement is already the subject of cerned, the Commission is empowered under judicial or other review proceedings ...'. Article 3 of Directive 89/665 to:

National provisions

6 14. Under Article 3(1) of Directive 89/665, the procedure for which that article provides can be applied only if the Commission is sat­ 12. The relations between the Department of isfied that there has been a clear and unequiv­ Agriculture, Food and Forestry, the Depart­ ocal infringement of Directive 77/62 before ment of Finance and the shareholders of the contract has been concluded. Coillte Teoranta are defined by the Forestry Act 1988 and by the Memorandum and Arti­ cles of Association of the company itself. It will be necessary to return to the individual provisions of those rules for purposes of clarity when examining whether the action is 15. The Commission points out that it did well founded. not send its letter of formal notice to the Irish Government until 30 June 1994, whereas the contract in question had already been con­ cluded on 30 May 1994.

C — Analysis

16. In regard to the temporal aspects, the 7 Court held in Commission v Netherlands Admissibility that it is clear from the letter and spirit of Directive 89/665 that it is very much to be preferred, in the interest of all parties con­ cerned, that the Commission should give notice of its objections to the Member State and the contracting authority as soon as pos-

13. The Irish Government first submits that infringement proceedings under Article 169 of the EC Treaty arc not the correct form of 5 — Cited above in point 10. 6 — Cited above in point 10. action in this case. The Commission ought, it 7 — Case C-359/93 Commission v Netherlands [1995] ECR I-157, claims, to have used the procedure set out in paragraph 12.

19. The Commission's action brought under Article 169 of the EC Treaty is therefore 23. It is also extremely doubtful to what admissible. extent the directive which is later in time can

8 — Commission v Netherlands, cited above in footnote 7, para­ 9 — This becomes apparent from the Irish Government's reply of graph 13. 22 July 1994 to the Commission's letter of formal notice.

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be used for the purpose of interpreting the the introduction of a functional definition of earlier directive. The Irish Government, which contracting authorities. On an a contrario submits that the Court should proceed in such reading, however, this means that the defini­ a manner, relies in this connection on the tion now given need not necessarily be iden­ recitals in the preamble to Directive 93/36, tical with that which previously applied, and according to which that directive was adopted extreme caution should therefore be exercised primarily for reasons of clarity. Consequently, in using it as an aid to interpretation. The it claims, there should be no problem in con­ new directive, which has also repealed and struing the earlier provisions in the light of replaced Annex I to the old version, contains the new version. in its definition of a contracting authority additional matters which do not merely amplify the previous definition or general thinking on the topic, but also constitute modifications which go further and cannot be 24. It must first be noted in this regard that applied retroactively. Furthermore, in inter­ the wording of the definition of a contracting preting a provision of Community law it is authority in Directive 93/36 has been sub­ always necessary to consider its wording, its 12 stantially extended and now contains indi­ context and its aims. For the present case, vidual features which were nowhere men­ therefore, it follows that the facts fall to be tioned in the earlier version. To that extent, assessed on the basis of Directive 77/62. the new version might well indeed lead to a restriction in the directive's scope; the Com­ mission also made a reference in this connec­ tion during the oral procedure.

27. In support of its contention, the Com­ from these activities exceeds the costs. In mission submits that Coillte Teoranta fulfils short, neither Coillte Teoranta itself nor the important public functions, such as the con­ conclusion by Coillte Teoranta of contracts servation of national forests and the support with other undertakings is subject to influ­ of forestry development in Ireland. Coillte ence by the State in excess of that which Teoranta owns 12 national parks and pro­ majority shareholders in other companies vides leisure facilities at more than 180 loca­ would be recognised as having. tions throughout Ireland. In order to meet those objectives, the company was established by statute and financially provided for by the Irish Government. It also follows from the Memorandum and Articles of Association that the Government appoints the Board and its 29. As already mentioned, the State, regional Chairman and that the company's finances or local authorities, and — in the case of Ire­ are controlled by the Government. land — other public authorities under Point VI of Annex I whose public supply contracts are subject to control by the State constitute contracting authorities for the purposes of Article 1(b) of Directive 77/62.

30. With regard to the present case, this means that it is first necessary to consider whether Coillte Teoranta can be subsumed within the concept of the 'State'.

financed the public works contracts which it 34. A similar approach should be adopted in awarded. the present case. The objective of the direc­ tive which is here relevant does not differ in any essential respects from that at issue in Beentjes. According to the first and second recitals in its preamble, Directive 77/62 is designed to ensure better supervision of the prohibition of restrictions on the free move­ ment of goods in regard to public supply 32. The provisions applicable at that time contracts. In addition, the directive — 14 were contained in Directive 71/305; how­ according to the 12th recital in its preamble ever, the definition of a contracting authority — set itself the task of developing effective contained therein corresponds to that in Direc­ competition in the field of public contracts. tive 77/62. In order, however, to guarantee competition free from any discrimination, those to whom the directive is addressed — namely, the con­ tracting authorities — must be determined on the basis of a functional and not exclusively formal approach.

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time also been guaranteed through private 39. Against this, the Irish Government points commercial activities. No public contracts are again to the commercial character of the com­ awarded at the expense of the State. All things pany, which finds itself in competition with considered, State influence on the business other private undertakings on the market in activities of Coillte Teoranta must be regarded question. It does not enjoy any preferential as being appreciably less than was the case rights such as would give it an advantageous with regard to the facts underlying Beentjes. position in relation to others. State influence The functional approach thus does not point is limited to that which other shareholders to the company's being dependent on the are recognised, or may be recognised, as State in such a way as to justify the conclu­ having. From the legal point of view, the State sion that it constitutes part of the State. has no possibility of influencing day-to-day business, nor has it ever attempted to exercise such influence. Coillte Teoranta is treated under company law in the same way as any other company. Its activities are directed at making profits and are independent of min­ isterial instruction.

37. Once it is held that Coillte Teoranta, in accordance with the view here expressed, cannot be subsumed within the notion of the State under Article 1(b) of Directive 77/62, it remains to be examined whether it may be a public authority whose public supply con­ tracts are subject to control by the State within the meaning of Annex I. The decisive factor in this, apart from the fact of looking 40. The crucial question is therefore the fol­ after public interests, is the degree of influ­ lowing: were the public supply contracts ence which the State may exercise on the which Coillte Teoranta awarded subject to award of public contracts. control by the State, in the terms used for Ireland by Annex I to Directive 77/62?

42. The concept of public undertakings is to in the company. The annual land and timber be found in Article 90(1) of the EC Treaty. sale plan must be agreed with the Depart­ That provision prohibits Member States from ment. The company directors are appointed enacting or maintaining in force, in relation by the competent ministers; investments to such undertakings, measures that are con­ exceeding a total amount of IR £250 000 trary to Community competition policy. The require the approval and consent of the com­ characteristic feature of public undertakings petent ministers. The Minister for Energy can is that public authorities can influence the set out financial objectives. The company also conduct of their business. For that purpose, carries out functions in the public interest, it suffices if there is a possibility of influence such as the provision of leisure, recreation, being exerted, and this possibility will always sporting, educational, scientific, cultural and exist if the State holds the greater part of the holiday facilities on its property. The Board 18 company capital. of Directors looks after the day-to-day busi­ ness of the company, which includes deci­ sions on awarding contracts.

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ties to intervene for the purpose of regulating of meeting needs in the general interest, not the company's day-to-day activities. having an industrial or commercial nature. This would probably have to be answered in the affirmative, since Coillte Teoranta also — or predominantly — has the function of pro­ viding leisure and recreational facilities for the public on its property. Even though these do not represent the company's only func­ 46. Therefore, although the criteria mentioned tions, this does not affect the outcome, so make it possible to point to a general State long as it attends to needs which it is specifi­ influence on the company, that influence does 20 cally required to meet. In addition, Coillte not, under the provisions material to the Teoranta has its own legal personality. If the present case, suffice to exercise specific con­ company's Board consists in the majority of trol over the award of public supply con­ State appointees, Coillte Teoranta may well tracts. The conclusion of contracts relating to be a contracting authority within the meaning public supplies is not dependent on the action of the new Directive 93/36. As stated above, of State authorities. Coillte Teoranta is for however, that directive is not applicable to that reason not a contracting authority within the present case. the meaning of Directive 77/62.

D — Costs 47. It follows from the foregoing consider­ ations that Coillte Teoranta does not come within the scope of Directive 77/62 and that the action alleging failure to fulfil Treaty obli­ gations is therefore unfounded.

(2) order the Commission to pay the costs of the proceedings.

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