C-306/97

* Original language: German. 1 — Council Directive 77/62/EEC of 21 December 1976 coordi­ nating procedures for the award of public supply contracts (OJ 1977 L 13, p. 1), as amended by Directive 88/295/EEC (OJ 1988 L 127, p. 1). 5. Connemara argues in its action that those 2 — Council Directive 93/36/EEC of 14 June 1993 coordinating procedures for the award of public supply contracts (OJ 1993 provisions were infringed; Coillte Teoranta, L 199, p. 1). on the other hand, submits that it is not a 3 — In Case C-353/96, Treaty-infringement proceedings have been brought by the Commission against Ireland, the Commission contracting authority and is therefore not arguing that Coillte Teoranta failed to publish notice of its under any obligation to comply with those invitations to tender. See Advocate General Alber's Opinion of 16 July 1998 in that case ([1998] ECR I-8565, I-8567). provisions of Community law.

I - 8763

OPINION OF MR ALBER — CASE C-306/97

6. The High Court of Ireland has accord­ persons governed by public law or, in ingly referred the following questions to the Member States where the latter are Court for a preliminary ruling: unknown, bodies corresponding thereto as specified in Annex I;

'(1) Is the defendant a "contracting authority" within the definition of the term "con­ tracting authorities" contained in Article 1(b) of Council Directive 77/62/EEC of 21 December 1976? ...'

(2) Is the defendant a "contracting authority" within the definition of the term "con­ tracting authorities" contained in Article 1(b) of Council Directive 93/36/EEC of 14 June 1993?' 8. Annex I to Directive 77/62, as amended by Directive 88/295, contains a list of the legal persons governed by public law and bodies corresponding thereto mentioned in Article 1(b). Point VI refers to these as being, in the B — Relevant legal provisions case of Ireland:

10. The concept of a contracting authority is — having legal personality, and henceforth defined as follows in Article 1:

— financed, for the most part, by the State, or regional or local authorities, or other 'For the purpose of this Directive: bodies governed by public law, or subject to management supervision by those bodies, or having an administrative, mana­ gerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities or by other bodies governed by public law;

(b) "contracting authorities " shall be the State, regional or local authorities, bodies gov­ ...' erned by public law, associations formed by one or several of such authorities or bodies governed by public law;

"a body governed by public law" means any body: 11. The relations between the Department of Agriculture, Food and Forestry, the Depart­ ment of Finance and the shareholders of Coillte Teoranta are defined by the Forestry Act 1988 and by the Memorandum and Arti­ cles of Association of the company itself. For — established for the specific purpose of reasons of clarity, it will be necessary to return meeting needs in the general interest, not to the individual provisions of those rules having an industrial or commercial char­ during the examination of what constitutes a acter, and contracting authority.

I - 8765

OPINION OF MR ALBER — CASE C-306/97

16. First, it should be noted in this regard that the wording of the definition of a con­ tracting authority in Directive 93/36 has been 13. It is common ground that Directive 77/62, substantially extended and now contains indi­ as amended by Directive 88/295, is relevant. vidual features which were nowhere men­ In the view of Coillte Teoranta, the Irish, tioned in the earlier version. United Kingdom and French Governments, however, Directive 93/36 or its underlying premisses should also be enlisted for the pur­ pose of reaching a decision in the case. 17. The first recital in the preamble to Direc­ tive 93/36 does admittedly mention that a new version is required for reasons of clarity. This, it is stated, is necessary since Directive 77/62 had in the past been amended on a number of occasions and further amendments were sub­ sequently to be made. In this way, it was intended to achieve an alignment with the 14. It should, however, be pointed out that provisions on the award of contracts for public the latter directive did not require to be trans­ 5 works and service contracts. According to posed until 14 June 1994 and that Ireland had 4 the third recital, however, this alignment relates not yet done so by 22 July 1994. The invita­ also to the introduction of a functional defi­ tions to tender, however, were made in March nition of contracting authorities. On an a 1993 and 1994, and thus at a time when contrario reading, however, this means that Directive 93/36 had not yet been transposed in Irish law and also did not yet require to be so transposed. 5 — Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts (OJ 1993 L 199, p. 54) and Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of 4 — This becomes apparent from the Irish Government's reply of procedures for the award of public service contracts (OJ 1992 22 July 1994 to the Commission's letter of formal notice. L 209, p. 1).

18. In the view of Conncmara, the United Kingdom and French Governments, as well 20. Against this, Coillte Tcoranta and the as the Commission, Coillte Tcoranta is a con­ Irish Government argue that it is simply a tracting authority within the meaning of State-owned private undertaking. Although Directive 77/62, with the result that notice of the State has a majority shareholding, it does the supply contracts required under Article 9 not exercise any influence over the day-to-day of the directive to be published in the Official running of the company. Coillte Teoranta is Journal of the European Communities, some­ required under the Forestry Act to carry on thing which, however, was not done in this its business in a commercial manner. State case. influence is limited to general commercial policy, in the same way as that which any majority shareholder in any other company might exercise. The objectives and tasks of the company, however, are exclusively com­ mercial in nature. Coillte Teoranta is thus in competition with other undertakings and is in no different position whatever compared with 19. In support of this contention, it is sub­ those undertakings. If Coillte Teoranta makes mitted that Coillte Tcoranta fulfils important its facilities and property available to the public functions, such as the conservation of public for leisure and recreational purposes, national forests and the support of forestry this is done on commercial grounds, since the benefit derived from these activities exceeds the costs. In short, neither Coillte Teoranta 6 — Case C-84/95 Bosphorns v Ministerfor Transport, Energy anditself nor the conclusion by Coillte Teoranta Communications, Ireland and the Attorney General [1996] ECR I-3953, paragraph 11and the references contained therein. of contracts with other undertakings is sub-

VI of Annex I whose public supply contracts The aim of the directive was, for the Court, are subject to control by the State constitute to ensure '... the effective attainment of contracting authorities for the purposes of freedom of establishment and freedom to pro­ Article 1(b) of Directive 77/62. vide services in respect of public works con­ 10 tracts ...'. The Court accordingly concluded that the body at issue in that case had to be regarded as coming within the notion of the State, since its composition and functions were laid down by legislation and it was 22. This means that in the present case it is dependent on the authorities for the appoint­ first necessary to examine whether Coillte ment of its members, the observance of the Teoranta can be subsumed within the concept obligations arising out of its measures and the of the 'State'. financing of the public works contracts which it was its task to award. That, the Court ruled, was the case even though the body was not part of the State administration in formal 1 terms. 1

in regard to public supply contracts. In addi­ to the company's being dependent on the tion, the directive — according to the 12th State in such a way as to justify the conclu­ recital in its preamble — set itself the task of sion that it constitutes part of the State. developing effective competition in the field of public contracts. In order, however, to guarantee competition free from any discrimi­ nation, those to whom the directive is addressed — namely, the contracting authori­ ties — must be determined in a functional and not exclusively a formal perspective. 29. 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 looking after public 27. In functional terms, Coillte Teoranta interests, is the degree of influence which the cannot be regarded as part of the State. Admit­ State may exercise over the award of public tedly, the company was established by statute contracts. and provided with financial means by the public authorities, it must consult with the Minister for Finance in regard to issues of forestry development in areas of economic interest, its directors are Government appoin­ tees, and the annual plan for the sale of land and timber must be agreed with the Govern­ 30. Connemara, the United Kingdom and ment. French Governments, and the Commission take a similar viewpoint to that on the issue previously discussed. They argue that, par­ ticularly in view of the fact that the company was established by statute, that its Board is appointed by the Government, and that its initial capital was provided by the State, which continues to control its finances, it follows 28. Coillte Teoranta does, however, have a that Coillte Teoranta is an authority whose separate legal personality. The public con­ public contracts are controlled by the State. tracts which it awards are financed out of the company's capital, which, although originally provided by the State, has in the meantime also been guaranteed through private com­ mercial activities. No public contracts are awarded at the expense of the State. All things considered, State influence on the business 31. Against this, Coillte Teoranta and the activities of Coillte Teoranta must be regarded Irish Government again point to the com­ as being appreciably less than was the case mercial character of the company, which finds with regard to the facts underlying Beentjes. itself in competition with other private under­ The functional approach thus does not point takings on the market in question. It does not

33. Here, too, an approach should be adopted which does not consider the matter merely from the formal aspect. All public undertak­ ings are subject to some form of State con­ trol; that, however, is not tantamount to their 36. The State initially provided Coillte also being contracting authorities within the Teoranta with its entire company capital. In meaning of the directive. return, the State received corresponding shares in the company. The annual land and timber sale plan must be agreed with the Depart­ ment. The company directors are appointed by the competent ministers; investments

34. The concept of public undertakings is to 12 — Joined Cases 6/73 and 7/73 Commercial Solvents v Com- be found in Article 90(1) of the EC Treaty. mission [1974] ECR 223,paragraph 41, and Joined Cases 188/80 to 190/80 France, Italy and United Kingdom v Com- That provision prohibits Member States from mission [1982] ECR 2545,paragraph 26. enacting or maintaining in force, in relation 13 — See in this connection the Opinion of Advocate General Lenz in Case C-247/89 Commission v Portugal [1991] to such undertakings, measures that are con­ E CR I-3659, 3670, point 59.

I - 8770

CONNEMARA MACHINE TURF v COILLTE TEORANTA

37. There is, however, no provision under which it would be possible for the Minister or any civil servant to instruct the company or its directors to award contracts (possibly 40. Even though Directive 93/36 is not appli­ on the basis of non-commercial criteria). The cable to the present case, given that the con­ company is under an obligation to conduct tracts were concluded before that directive its business in a cost-effective and economic entered into force, and since that directive manner. Its directors are under an obligation also modifies and docs not simply clarify, the to exercise their powers, in accordance with following may, in the alternative, be noted their duty of loyalty to the company, in a with regard to the national court's second manner independent of their own interests. question. In view of the definition of a con­ Although the company is required to abide tracting authority in Article 1(b), as extended by the principles of national forestry policy, by amendments, it would be necessary to this applies in equal measure to every owner examine whether Coillte Teoranta is a body of forest land in Ireland. The directors must governed by public law. It would first have to submit annually a five-year development plan, have been established for the specific purpose indicating in detail the plans regarding man­ of meeting needs in the general interest, not agement and development of the company having an industrial or commercial character. and its assets, as well as acquisition and sale This would probably have to be answered in of property, forestry objectives and profit the affirmative, since Coillte Teoranta also — forecasts. Here too, the relevant provisions or primarily — has the function of providing do not grant any powers to the State authori­ leisure and recreational facilities for the public ties to intervene for the purpose of regulating on its property. Even though these do not the company's day-to-day activities. represent the company's only functions, this

14 — See in this connection the judgment in Case C-44/96 Man- nesmann Anlagebau Austria and Others v Strohal Rotations- druck [1998] ECR I-73, in particular paragraphs 25 and 26, and the Opinion delivered on 19 February 1998 by Advo­ cate General La Pergola in Case C-360/96 BFI Holding y Gemeente Arnhem and Gemeente Rheden [1998] ECR I-6821, I-6824.

I - 8772