C-16/98

I-8318

COMMISSION V FRANCE

4. Article 4(2) provides: 'Contracting enti- In particular, where a supply, work or ties shall ensure that there is no discrimina- service is the subject of several lots, the tion between different suppliers, contrac- value of each lot shall be taken into account tors or service providers.' when assessing the value referred to in paragraph 1. Where the aggregate value of the lots equals or exceeds the value laid down in paragraph 1, that paragraph shall apply to all the lots. However, in the case of works contracts, contracting entities may 5. Article 14 provides: derogate from paragraph 1 in respect of lots the estimated value net of VAT for which is less than ECU 1 million, provided that the aggregate value of those lots does not exceed 20% of the overall value of the lots. '1. This Directive shall apply to contracts the estimated value, [net] of VAT, for which is not less than:

13. Contracting entities may not circum- vent this Directive by splitting contracts or (c) ECU 5 000 000 in the case of works using special methods of calculating the contracts. value of contracts.'

6. Articles 21, 24 and 25 of the Directive fall within Title IV, 'Procedures for the award of contracts'. Article 21(1) provides that calls for competition are to be made by means of a notice drawn up in accordance 10. The basis for calculating the value of a with one of the annexes to the Directive, works contract for the purposes of para- which is to be published in the Official graph 1 shall be the total value of the work. journal of the European Communities (the "Work" shall mean the result of building 'OJEC') in accordance with Article 21(5). and civil engineering activities, taken as a The relevant annex in the present case is whole, which are intended to fulfil an Annex XII, which lists in detail the infor- economic and technical function by them- mation to be provided. Under Arti- selves. cle 24(1), contracting entities which have

2 — Although the legal framework has not been explained to the Court by either the Commission or the French Government, it appears that the normal situation in France, governed principally by Laws of 15 June 1906 and 8 April 1946, is that local authorities are responsible for electricity supply within their areas, in respect of which they grant conces- sions, on standard terms, to the national corporation Électricité de France (EDF), which enjoys a near-monopoly in the production and supply of electricity in that country. (2) joint organisation of the services which See, for example, J. Bergougnoux and W. Varoquaux, they are to provide in order to ensure the 'Caractéristiques du service public de l'électricité', Cahiers juridiques de l'électricité et du gaz (CJEG), 1987, Librairies Techniques, Paris, p. 811; P. Sablière, 'Le nouveau modèle de cahier des charges pour la concession à Electricité de France de la distribution publique d'électricité', CJEG, 3 — This type of arrangement appears to be the norm in France: 1993, p. 1; P. Sablière, 'Le nouveau cahier des charges type see the Opinion of Madame Devillers, Commissaire du de la concession du réseau d'alimentation générale en gouvernement, in SIEP c/État et SDE, Cour administrative énergie électrique', CJEG, 1995, p. 87. d'appel de Nantes, 17 September 1997, CJEG, 1998, p. 398.

I - 8320

COMMISSION V FRANCE

proper operation and best possible exploi- Annonces des Marchés Publics (the official tation of their distribution of electricity; French bulletin of notices concerning public works and service contracts, the 'BOAMP') invitations to tender for a number of works contracts, 37 of which are in issue in the present case. 4The contracts in question related to extension and maintenance work (3) in general, interest and participation, to be carried out, over a period of three where appropriate, in all activities pertain- years, on existing electricity supply and/or ing to electricity and its use within the street lighting networks under the respon- framework of the laws and regulations in sibility of the members of SYDEV. All the force.' invitations to tender were published in the BOAMP on 12 January 1995.

4 — The Commission refers, throughout the pre-litigation pro- cedure and in its written pleadings, to 36 contracts. Since the number of contracts notified i n the BOAMP was in excess of that number, the Court requested clarification. In 11. On 21 December 1994, SYDEV sent reply, the Commission identified the 37 contracts to which it considered the case related, and the French Government has for publication in the Bulletin Officiel des not objected to that definition of the scope of the action.

I - 8321

OPINION OF MR JACOBS — CASE C-16/98

5 — See the notice published by the Commission on 18 Decem- ber 1993, OJ 1993 C 340, p. 10. 6 — OJ 1995 S 3, pp. 211 to 213.

I - 8322

COMMISSION V FRANCE

19. On 17 January 1996, its attention having been drawn to the possibility that the above procedures infringed Community 18. The French Government has produced law, the Commission sent the French records of the award procedure for the Republic a letter of formal notice alleging

I - 8323

OPINION OF MR JACOBS — CASE C-16/98

that separate lots had been treated as Analysis separate contracts, that two -thirds of those contracts had not been notified in the OJEC and that an inappropriate procedure had been used. On 7 April 1997, following the French Government's denials, the Com- mission sent a reasoned opinion under Applicability of the directive Article 169 of the EC Treaty (now Arti- cle 226 EC) alleging that: (i) inaccurate information of the volume of work had been given, thus discriminating against tenderers from other Member States; (ii) a 21. The contracts in issue were advertised single programme of works had been split and awarded in early 1995. From the on geographical and technical pretexts in Court's judgment in Case C-311/96 Com- order to avoid publication of a number of mission v France,7 it is clear that the lots in the OJEC; (iii) the concepts of Directive had not been transposed in contracting entity, association of contract- France at that time, but it is not disputed ing entities, lots and contracts had been that the relevant authorities should have misapplied; and (iv) the procedure used was complied with it or that the Commission is not provided for in the Directive. entitled to bring an action concerning an individual instance of failure to comply with a directive which has not yet been implemented. 8

Failure to provide certain details and to send notices of awards Scope of the allegation relating to separate treatment of the contracts

23. The French Government does not, essentially, dispute the second claim, which relates to failure to comply with Articles 21 25. The main issue is whether the contracts (as regards the missing information which should have been aggregated for the pur- should have been provided in the notices poses of Article 14(10) and/or whether which were sent to the OJEC), 24 and 25 of their separation constituted illegitimate the Directive. 9It admits that the informa- splitting, contrary to Article 14(13), lead- tion sent was incomplete and that no ing in either case specifically to a failure to notices of the awards were sent. It is thus publish notices in the OJEC where such undisputed that, by failing to provide full notices should have been published under details in accordance with Annex XII in Article 21. respect of the six calls for competition published in the OJEC and by failing to communicate details of the award of those contracts, the French Republic failed to fulfil its obligations under Articles 21(1) and 24(1) and (2) of the Directive. 26. In the French Government's view it was correct to treat them all as separate con- tracts for separate works.

24. However, in view of the admission that no notices were sent other than in respect 27. The Commission considers that for the purposes of the Directive they should have been treated as lots of the same overall 9 — See paragraph 6 above. works contract and not separately, whether

31. If, on the other hand, all the contracts 29. Of the 37 notices with which this case for the département were aggregated in is concerned, five were for an estimated each category (if separation were justified value of over ECU 5 000 000, those five on technical but not on geographical and one more (all for electrification con- grounds), both categories would be well tracts) were in fact published in the OJEC above the ECU 5 000 000 threshold. One and 14 (all but one of which were for electrification contract (for FRF 6 000 000) lighting contracts) were for amounts below would then have been exempt from the ECU 1 000 000. need for publication by being under the threshold of ECU 1 000 000 and 20% of the total for electrification. Those of the lighting contracts which fall below the threshold total more than 20% of the total for lighting, but up to six of them could be exempted before that percentage (some 30. If the electrification and lighting con- FRF 25 000 000) was reached. Thus, if tracts had been aggregated for each local separation were justified on technical but entity separately (if separation were justi- not geographical grounds, the infringement fied on geographical but not technical would concern 12 electrification contracts grounds) the value would have risen above and 12 lighting contracts.

I - 8326

COMMISSION V FRANCE

37. Article 14(13), on the other hand, introduces a subjective element. It speaks of 'circumventing' the Directive by specific types of conduct, namely splitting contracts or using special methods of calculating Article 14(10) and Article 14(13): aggrega- value. That wording implies a degree of tion and splitting intent in the conduct adopted. Circumven- tion, like the equivalent concepts used in other language versions, involves deliberate conduct rather than a fortuitous escape. Both the splitting of contracts and the use of special methods of calculation require 34. It will be recalled that Article 14(1) some intention on the part of the splitter or provides that the Directive is to apply to calculator. works contracts for an estimated value of at least ECU 5 000 000. Under Arti- cle 14(10), where work is the subject of several lots, it is the aggregate value of all the lots which is to be taken for the purposes of Article 14(1). Article 14(13) provides that contracting entities may not 38. It is also true, however, that Arti- circumvent the Directive by splitting con- cle 14(13) of Directive 93/38 appears to tracts. contrast with the equivalent provision

I - 8327

OPINION OF MR JACOBS — CASE C-16/98

I - 8328

COMMISSION V FRANCE

throughout France. 11 Nor is it relevant obligations thereunder. The examination of whether, as the Commission alleges, com­ that provision will, therefore, be crucial in mon sense may dictate that electricity my analysis. supply and street lighting work should be dealt with together — a matter which I shall examine more fully in the context of Article 14(10) — unless it is established that they were deliberately separated in defiance of such an approach. And com­ mon sense is often an elusive guide. Identity of the contracting entity

11 — Indeed, it may be noted that the notices of award of contracts for the département of Dordogne produced with the application m fact show that, in addition to the 49. The Commission, after appearing to procedure to which the Commission refers, separate seek to refute that argument, asserting that procedures were followed simultaneously for the northern, north-eastern and south-western parts of the département. the true contracting entity was SYDEV in

I - 8329

OPINION OF MR JACOBS — CASE C-16/98

all cases, stated in response to a question at and ECU 1 000 000 for works contracts) the hearing that the identity of the con- are clearly designed to deal with that tracting entity was not in its view an concern. In order to ensure, though, that essential factor in the application of Arti- those thresholds are effectively observed, cle 14(10) of the Directive, the aggregation there are provisions to prohibit deliberate requirement in which could apply also to circumvention (Article 14(13)) and to avert contracts awarded by a number of different a possible failure to apply them if a single contracting entities, provided that they overall works project is subdivided on were for a single 'work' within the meaning other — and possibly otherwise legiti- of that provision. mate — grounds (in Article 14(10)).

I - 8330

COMMISSION V FRANCE

specifies that it is a contract concluded by Article 14(10): a single 'work' or several? 'one of the contracting entities referred to in Article 2' (my emphasis), which might suggest that for the purposes of Article 14 each works contract must be concluded with a separate entity. However, Article 2 refers to 'contracting entities' in the plural, 55. The crucial point to be decided is classifying them in two basic categories, whether the contracts awarded separately those which are public authorities or under- for electrification and street lighting work takings and those which are not. It thus by each of the local entities formed a single seems more probable that the definition in 'work' ·— or a number of larger 'works' Article 1(4) is intended to refer to contract- aggregated either geographically or techni- ing entities of one of the types referred to in cally — for the purposes of the Directive Article 2. Moreover, as the Commission and should thus have been treated together. has pointed out, the definition of 'public authorities' includes 'associations formed by one or more of such authorities', which means that a contracting entity need not be a single public authority and need not be the body which actually concludes the contract. It is clear also that the criterion 56. A 'work' is defined in Article 14(10) as of the 'total value of the work' in Arti- 'the result of building and civil engineering cle 14(10) is not the value of a single activities, taken as a whole, which are contract, or the provision would be self- intended to fulfil an economic and techni- defeating. On the basis of those considera- cal function by themselves'. This is not a tions, I suggest that too much significance particularly precise definition, nor is any should not be attached, for the purposes of specific help to be found in the guidelines Article 14, to the use of the singular in produced by the Commission. As one Article 1(4). commentator has put it, 'identifying a single work should be like defining the proverbial elephant: awarding authorities will know one when they see it'. 12 In the present case, however, the Court is called upon to provide some guidance on how to recognise an elephant.

essentially to ensure that undertakings interpreted in the light of its aims, the throughout the Community enjoy the criterion here is specific. It is to the opportunity to compete for contracts intended economic and technical function exceeding a certain fixed threshold value that we must look, rather than to the way above which it is likely to be economically in which the work may be seen by potential profitable to do so. Since in several tenderers. instances contracts for both electrification and street lighting work were awarded to the same tenderer in different localities — from which it may be deduced that, in theory, a single contractor could have performed all the work of both kinds throughout the département — and since 59. I take the criterion set out in Arti- seven of the ten successful tenderers were cle 14(10) to mean that the boundary awarded contracts totalling considerably between work which must be aggregated more than ECU 5 000 000, it would seem for the purposes of the Directive and work logical that tenderers from other Member which may legitimately be treated sepa- States should have been given an opportu- rately lies between bundles of contracts nity to compete. At the hearing, the Com- which, as regards their intended objective, mission argued that the requirement to share a common economic and technical treat a number of contracts as forming a function and those which do not. single 'work' and to publish them in the OJEC arises when the contracts are so linked that a Community undertaking is likely to regard them as a single economic operation and to wish to tender for the whole, as it claims was the case here. 60. The Commission's position is, essen- tially, that the work to be done in the present case formed a multiannual electri- fication programme covering the whole of Vendée and thus had a single economic and technical function. It stresses that the work descriptions are identical within each cate- gory and similar as between categories, with all the work to be carried out over the same period within the same geographical and administrative area. The concept of a 'work' cannot be confined in a case such as the present to that of a specific structure or 58. However, I do not consider that to be construction. the correct approach. Article 14(10) refers to the economic and technical function which the contracted activities are intended to fulfil by themselves and not to the interest which a potential tenderer may have in being fully informed, even though one of the overall aims of the Directive is to 61. The French Government contends that protect and further that interest. Although separate improvement and extension the provisions of the Directive should be operations on a number of independent

networks cannot be regarded as forming a invitation to tender published by the bodies single 'work' intended to fulfil a single equivalent to SYDEV in two other French economic and technical function. It con- départements (Calvados and Dordogne) in siders that, in the absence of a specific 1995. The French Government emphasises structure or construction, it is for the that the work on the electricity supply contracting entity to define its needs and network is essentially underground, thus determine the identity of the 'work'. In whereas the street lighting work is essen- the present case, each local entity defined tially above ground, and that the two types its own needs in respect of its own net- of work fall under different headings ('civil works, independently of any hypothetical engineering' and 'installation' respectively) overall 'work'. in the NACE classification as set out in Annex XI to the Directive. At the hearing, it suggested that work on the street lighting networks might not fall within the scope of the Directive at all, since those networks do not involve the production, supply, trans- 62. Neither of the parties has provided the port or distribution of electricity u but Court with a very full description of the rather its consumption for the benefit of networks involved. However, it appears the public. from what has been said by the French Government, and not denied by the Com- mission, that the local entities are respon- sible for individual low-voltage electricity supply networks radiating from transfor- mer substations and serving consumers within their areas; that those networks are interconnectable; and that the street light- ing networks, controlled by the individual local entities, are powered from those electricity supply networks. 64. Of those considerations, I consider only the last to be significant. It highlights — even without there being any need to consider that street lighting falls entirely outside the scope of the directive — the distinction which may legitimately be — Electrification and street lighting: tech- drawn, in terms of intended economic and nical considerations technical function, between the two types of network. An electricity supply network is intended, technically, to transport elec- tricity from a supplier to individual end- consumers who, economically, must pay that supplier for what they consume. A street lighting network provides lighting in 63. The Commission stresses that the public places. It is itself an end-consumer of description of both types of work (electri- fication and street lighting) includes work on the public address system and that both 13 — See Article 2(2) of the Directive, cited in paragraph 3 types of work were included in the same above.

67. It is thus unnecessary to decide for the purposes of this case whether street lighting falls within the scope of the Directive or not, an issue which has in any event not been properly debated before the Court. If it does not, however, then clearly there can 65. It is thus clear, in my view, that an be no question of aggregating such work electricity supply network and a street with electrification work for the purposes lighting network are intended to fulfil of the Directive. different economic and technical functions. That being so, I do not consider that work to maintain, improve and/or extend net- works of the two different types, whether in the same area or not, can be treated together as a single 'work' for the purposes 68. I conclude that it was not necessary to of Article 14(10) of the Directive. aggregate the values of the electrification and lighting contracts for the purposes of the Directive, whether for the département as a whole or for each local entity. The question remains, however, whether the contracts should have been aggregated for the whole département for either category individually.

66. That conclusion is not outweighed by the other considerations put forward by the Commission. The fact that a public address system is mentioned in both types of — Electrification: technical and geographi- invitation to tender, as 'associated gener- cal considerations ated' work, does not imply a single eco- nomic or technical function. Different parts of a public address system may be carried by electricity supply ducts and by street lighting masts, so that work on either network may generate work on that sys- 69. It appears 14 that each local entity is tem, without affecting the economic or responsible for the electricity supply net- technical functions of the networks them- selves. Nor does the fact that some other contracting entities may have chosen to 14 — See note 2 and paragraph 62 above.

work in its area, although the networks are place, time and action. All the electrifica- interconnected and the electricity is sup- tion contracts in issue were for work to be plied by the national corporation EDF. The done within the same département over the Commission stresses the geographical con- same period, bearing the same general tiguity of the networks, the simultaneity of description and subject to the same techni- the work programmes, the identical nature cal control. There is no suggestion that of the work descriptions and the overall there was work of the same nature to be coordination by SYDEV. The French Gov- carried out at the same time over any wider ernment emphasises above all that each area — covering neighbouring départe- local entity entered into a separate contract ments or regions, or even the whole for its own network. national network. In particular, it is implausible that any such work would have come under the supervision of SYDEV. Had that been the case, however, then it could indeed have been argued that all such work constituted a single 'work' for the purposes 70. That latter consideration, I have con- of the Directive. And in that case, I cluded, 15 is not relevant to the question of consider, the conclusion would be not the determining whether there was a single reductio ad absurdum which the French 'work' for the purposes of the Directive. Government seeks to establish but rather Indeed, the present situation would appear that all the invitations to tender would have comparable to the example which I have had to be notified in the OJEC. cited of a public highway passing through the territories of several local authorities. Although, for administrative reasons, the different local entities have responsibility for the low-voltage supply networks within their areas, those interconnectable net- works taken as a whole are intended to fulfil a single economic and technical function: the conveyance and sale to con- sumers of electricity produced and supplied by EDF. 72. The fact that the contracts are for a series of separate operations to be carried out at different points in time and space (within the same period of time and the same geographical area) does not mean that 71. It is true that, as the French Govern- they should not be regarded as a single ment has pointed out, that reasoning would 'work'. If that reasoning were followed, apply to the whole of the national electri- each operation would be a separate 'work', city supply system. However, I agree with and not even the French Government has the Commission that the 'work' in the suggested that such should be the case. On present case is clearly circumscribed by the contrary, a series of operations to be what one might call the three unities — of carried out within a specified period on a group of networks having a shared eco- nomic and technical function must itself be 15 — See paragraphs 51 to 54 above. regarded as intended to fulfil a shared

75. I find it more difficult to apply the same reasoning to the work to be carried out on 73. I thus reach the view that all the the street lighting networks. It is certainly electrification contracts in issue formed a true that the economic and technical func- single 'work' within the meaning of Arti- tion of each individual network is the same cle 14(10) of the Directive. Their values as that of all the others, but I do not should have been aggregated for the pur- consider that they thereby share a common pose of determining whether calls for function. competition should have been published in the OJEC. Six such calls were in fact published, and one other contract was for an estimated value lower than ECU 1 000 000 and 20% of the total, thus qualifying for a derogation in accordance with the second subparagraph of Arti- cle 14(10). The failure to publish notices of the remaining 12 contracts, however, all 76. Whilst we have not been given any for estimated values above that threshold specific account of how street lighting is and totalling somewhat over ECU organised in Vendée, I think it not unrea- 26 000 000, constituted an infringement sonable to assume that the networks are of the Directive. independent of each other, as the French Government says. Since street lighting is an activity which consumes electricity, for which each local entity responsible must pay, there would not appear to be any purpose in interconnection, in contrast to the situation as regards the electricity net- 74. That infringement involved a failure to work, which is a supply system with a comply with not only Article 14(1) and single supplier. Each network is likely to be (10) of the Directive, as regards the calcu- supplied from a separate point on the lation of the value of the work, but also electricity supply system, enabling the con- Article 21(1) and (5), because notices were sumption of each local entity to be deter- not drawn up and sent for publication in mined. Lighting is, moreover, generally the OJEC, and Article 25(5), because confined to built-up areas. Where such notices were published in the BO AMP. areas are separated by open countryside, as may well be predominantly the case in a largely rural département such as Vendée, 16 — Cited in paragraph 9 above. the different networks are unlikely to be

78. I thus consider that the Commission has not established the existence of a 80. Since Article 4(2) prohibits discrimina- shared economic and technical function tion specifically between 'suppliers, con- within the meaning of Article 14(10) of tractors or service providers', it might be the Directive and that it was not necessary wondered whether it extends also to dis- to aggregate the values of all the street crimination between tenderers or, a for- lighting contracts in order to determine tiori, potential tenderers (since we have not whether the Directive was applicable, even been informed that any undertaking from assuming that street lighting falls within the another Member State in fact submitted scope of the Directive. any tender in this case).

I - 8337

OPINION OF MR JACOBS — CASE C-16/9 8

81. I consider that it does. For one thing, Article 4(2) of Directive 90/531, 18 the the terms 'supplier', 'contractor' and 'ser- direct and almost identically-worded pre- vice provider' are not defined in the Direc- decessor of Article 4(2) of the present tive, whereas 'tenderer' is defined in Arti- Directive. Although the Court described cle 1(6) as 'a supplier, contractor or service the principle as that of equal treatment provider who submits a tender'. The term between tenderers, I consider that, by its 'contractor' is thus not used in the Directive very nature, it must apply also to those who in the sense of one who has been awarded a may be discouraged from tendering because contract but in the wider sense of one who they have been placed at a disadvantage. aspires to be awarded a contract.

I - 8338

COMMISSION V FRANCE

predominantly French, had fuller informa- Costs tion at their disposal.

86. Since, in my view, the Commission has established breaches of the Directive in 85. However, with regard to the six calls respect of the failure to publish all the for competition actually published in the required details of the electrification con- OJEC, the information published in the tracts in the OJEC but has failed to OJEC was the same as that published in the establish a breach of Article 14(13) or any BOAMP, so that the failure to communi- breach in respect of the lighting contracts in cate all the information required by Arti- issue, I consider that, in accordance with cle 21(1) of the Directive read in conjunc- Article 69(3) of the Rules of Procedure, the tion with Annex XII thereto did not entail parties should each be ordered to pay their any discrimination. own costs.

Conclusion

87. In view of all the foregoing considerations, I consider that the Court should:

— to communicate details of the award of all the contracts, the French Republic failed to fulfil its obligations under Article 24(1) and (2) of Directive 93/38/EEC;

(2) dismiss the remainder of the application;

(3) order the parties to bear their own costs.

I - 8340