C-283/00

2. According to Article 1(b) of Directive 93/37, '"contracting authorities" shall be the State, regional or local authorities, bodies governed by public law, associations — financed, for the most part, by the formed by one or several of such authorities State, or regional or local authorities, or bodies governed by public law; or other bodies governed by public law, or subject to management supervision by those bodies, or having an adminis- 1 — Original language: German. trative, managerial or supervisory 2 — OJ 1993 L 199, p. 54. board, more than half of whose I - 11700

COMMISSION v SPAIN

members are appointed by the State, public law, or that their management is regional or local authorities or by other subject to supervision by those bodies, bodies governed by public law.' or that more than half the members of their administrative, managerial or supervisory board are appointed by the public authorities or by other bodies governed by public law.'

3. That provision was transposed into Spanish law by Ley 13/1995 de Contratos de las Administraciones Públicas 3 ('Law 13/1995'). Article 1(3) of that Law reads: 4. The sixth provision supplementing Law 13/1995, entitled 'Rules applicable to the award of contracts in the public sector', reads:

'This law shall also apply to the award of contracts by independent bodies in all cases and by other bodies governed by public law 'When awarding public procurement and possessing legal personality, connected contracts, commercial companies in the to or controlled by a public authority, if capital of which public authorities or their they meet the following criteria: independent bodies, or bodies governed by public law, have a majority holding, whether direct or indirect, shall comply with the rules on advertising and compe- tition, unless the nature of the transaction to be effected is incompatible with those (a) that they were established for the rules.' specific purpose of meeting needs in the general interest, not having an industrial or commercial character,

6. According to Article 2 of its statutes, SIEPSA's remit is to implement pro- grammes and measures provided for in 8. Having carried out the pre-litigation the Plan de Amortización y Creación de procedure by sending a letter of formal Centros Penitenciarios (Plan for the amor- notice on 6 November 1998 and a reasoned tisation and establishment of penitentiary opinion on 25 August 1999, but without institutions) approved by the Council of success, the Commission brought the pres- Ministers. They involve on the one hand ent action. selecting and purchasing appropriate sites for the construction of new prisons either by SIEPSA itself or by third parties, includ- ing issuing invitations to tender for, imple- menting and financing the planning and construction work required to bring the institutions into operation, and on the other hand selling institutions which are surplus to requirements. The Spanish State IV — Claims of the parties is SIEPSA's sole shareholder. It is managed by an administrative board whose members are chosen by the Spanish Government. SIEPSA is subject only to Spanish private law, apart from public rules governing its 9. The Commission claims that the Court budget, accounting and financial control. of Justice should:

7. In connection with the construction of (1) declare that, by not complying with the the Centro Educativo Penitenciario Experi- provisions of Directive 93/37/EEC as a mental de Segovia, SIEPSA issued an invi- whole and more specifically with the tation to tender in which the public notice provisions on public notices contained (Article 11), 4the time-limit for receipt of in Article 11(2), (6), (7) and (11) and tenders (Article 12), suitability criteria those of Articles 12(1), 29(3), 18, 27 (Articles 24, 27 and 29(3)), award criteria and 30(4), in connection with the tendering procedure for the execution of works for the Centro Educativo 4 — Articles without any further reference are those of Directive Penitenciario Experimental in Segovia 93/37. issued by Sociedad Estatal de Infrae-

V — Submissions of the parties

11. The Kingdom of Spain did not address 14. The Commission bases its opinion first the alleged infringements of the provisions of all on Article 2 of SIEPSA's statutes, of Directive 93/37 in detail in its pleadings, according to which SIEPSA was set up to

I - 11703

OPINION OF MR ALBER — CASE C-283/00

carry out projects approved by the Council 17. However, even if SIEPSA's activities of Ministers as part of the 'Plan de were to be classified as commercial, that Amortización y Creación de Centros Peni- does not preclude the application of Direc- tenciarios'. It deals with the construction tive 93/37, since any economic activity and equipment of prisons and with the sale carried out is merely a means of meeting of institutions that are no longer needed, a general interest (of a non-commercial and thereby helps to implement State policy nature) in the form of the implementation on prisons. The Commission underlines, of policy on prisons. referring to the judgment in Mannes- mann, 5 that meeting this need in the general interest is closely linked to the maintenance of public order and that the State has a monopoly on criminal pros- ecution and imprisonment.

18. The Commission also refers to the judgment in BFI Holding, 6which states that the fact that private undertakings may also meet the same needs as the undertak- ing whose definition is at issue does not mean that that body may not be regarded as a contracting authority, nor is the 15. Furthermore, in operational terms absence of corresponding competition a SIEPSA is dependent on ministerial admin- condition for assuming a body to be public. istration. When carrying out its activities it follows the recommendations of the general management of the prison administration, and this too is evidence that SIEPSA belongs to the public sector.

20. The Commission considers that the Spanish Government's reference to SIEP- SA's classification under Spanish law is inappropriate. First, the term 'body gov- erned by public law' is to be interpreted according to Community law, and 23. The reference to the distinction drawn domestic law is thus irrelevant. If Ley in Directive 93/38/EEC 7between bodies 13/1995 excludes SIEPSA from the scope governed by public law on the one hand of the rules of Community law on public and public undertakings on the other also contracts, then Directive 93/37 has not does not justify the assumption that public been correctly transposed. undertakings are excluded from the scope of Directive 93/37. The Commission takes the view, referring to Article 2 of Directive 93/38, that the purpose of specifically mentioning public undertakings is to include within the scope of Directive 93/38 undertakings with exclusive rights perform- ing substantial activities in the sectors covered by that directive. That does not alter the meaning of the term 'body gov- erned by public law', which is the same in all four directives on public procurement. 21. Second, the fact that under Spanish law In the opinion of the Commission, 'public SIEPSA, in accordance with its legal form, undertakings' are different from 'bodies is a private body governed by private law is governed by public law' in so far as they are irrelevant. Classification as a public law set up for commercial purposes. body does not depend on whether the rules governing the body's establishment and activity are those of public or private law, 7 — Council Directive 93/38/EEC of 14 June 1993 coordinating but on the purpose for which it is estab- the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, lished. OJ 1993 L 199, p. 84.

27. The Spanish Government also bases its argument on the fact that, unlike the other public procurement directives, only Direc- tive 93/38 distinguishes between bodies governed by public law and public under- 25. The Spanish Government submits that takings and declares that the rules on the wording 'body governed by public law' procurement also apply to public under- in Directive 93/37 refers to a public law takings. This is not the case with Directive body. Spanish public institutions, however, 93/37, however, which was adopted on the have traditionally made use of certain same day and is relevant in the present case, private law bodies in performing their and that is why public undertakings like duties. These are the 'State business under- SIEPSA do not fall within its scope. If takings' ('Sociedades Mercantiles Esta- public undertakings are to be subsumed tales'). Their capital is held, at least for under the term 'body governed by public the most part, by the State or other public law', it then becomes difficult to under- bodies. However, regardless of their legal stand why Directive 93/38 specifically dis- form they are subject in their activity solely tinguishes between those two categories.

I - 11706

COMMISSION v SPAIN

29. Spain does not dispute that the invi- tation to tender issued by SIEPSA does not satisfy the requirements of Directive 93/37, but it considers that the directive does not apply to SIEPSA. The following discussion will therefore consider solely whether Directive 93/37 is applicable to SIEPSA. 32. None of the public procurement direc- tives 9 defines the concept of non-commer- cial needs in the general interest. Up to now the Court has, as far as can be seen, considered the interpretation of this cri- terion only in BFI Holding 10 and Agorà. 11 30. The answer to that question depends on whether the company is to be regarded 9 — Council Directive 93/36/EEC of 14 June 1993 coordinating as a body governed by public law within procedures for the award of public supply contracts, OJ 1993 L 199, p. 1; Directive 93/37, cited in point 1; the meaning of the directive. The parties Directive 93/38, cited in footnote 7; Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of both agree that SIEPSA has its own legal procedures for the award of public service contracts, OJ 1992 L 209, p. 1. 10 — BFI Holding, cited in footnote 6. 11 — Joined Cases C-223/99 and C-260/99 Agorà and Excelsior 8 — BFI Holding, cited in footnote 6, paragraphs 32 to 36. [2001] ECR I-3605.

I - 11707

OPINION OF MR ALBER — CASE C-283/00

33. In BFI Holding it held that the absence the existence of significant competition, of a commercial character is a criterion and in particular the fact that the entity intended to clarify the meaning of the term concerned is faced with competition in the 'needs in the general interest' as used in the marketplace, may be indicative of the second subparagraph of Article 1(b) of absence of a need in the general interest, Directive 92/50. 12 It based its findings not having an industrial or commercial primarily on the practical effect of the character. 16 provision. 13

I - 11708

COMMISSION v SPAIN

they should apply to the entity. The Court ators. On the other hand, the directive does confirmed this approach in its judgment in apply to bodies which carry out commer- Agorà. 21 cial activities, but which were actually established in order to meet other needs in the general interest. 22

37. Against the background of this case- law we may conclude the following with 39. There is no open market for the goods regard to SIEPSA. We have to agree with and services offered by SIEPSA in planning the Spanish Government that the require- and constructing prisons. Because of the ment for the needs to be of a non-commer- State's penal monopoly there is only one cial nature has its own independent signifi- single taker for those services, the Spanish cance. For the directive to apply to SIEPSA State, which is alone in needing prisons. it is not sufficient that it meets a need in the This argues against the assumption that general interest in constructing prisons. SIEPSA meets needs of a commercial nature.

44. On the question of who is economically responsible for SIEPSA's decisions, too, account should be taken of the fact that it was established in order to implement the Spanish Government's decisions concern- ing the institutions required for its prison system. This concerns the practical require- ments for implementing State prison policy, a need which the State has to meet some- how. The Spanish State established SIEPSA 42. From the parties' submissions it is not for this purpose and entrusted it with entirely clear whether SIEPSA has to bear carrying out the tasks associated with it. any losses incurred itself, or whether they In this respect it is to be assumed that the are offset from the national budget. The Spanish State also has an interest in SIEP- Spanish Government submits that it is SA's continued existence, since if it SIEPSA's aim to make a profit from its becomes insolvent, the State itself must activities. The Commission disputes this once again directly meet the needs which and provides evidence that SIEPSA made SIEPSA was fulfilling. The State's interest substantial losses in 1997 and 1998. How- in SIEPSA's continuation is evident from ever, its submissions do not indicate who the extension of the period for which the was required to bear the losses incurred. undertaking was established. The com- pany, originally set up for only eight years from the start of its activities, has since been converted into a company of unli- mited duration (see point 5 above). That interest in SIEPSA's continuation provides grounds for assuming that the Spanish State as the sole shareholder will do everything to prevent SIEPSA from becoming insol- vent. 24 So even if there is no official mechanism for offsetting any losses, 43. Whether or not SIEPSA operates with SIEPSA will probably ultimately not have the intention of making a profit does not to bear sole responsibility for the economic ultimately appear, on the basis of previous consequences of its actions. There could case-law, to be conclusive for its classifi- therefore be a risk that, when awarding cation. In the view of the Court of Justice the aim of making a profit may at best be an indication of commercial activity. In 23 — Agorà, cited in footnote 11, paragraphs 40 and 43. 24 — See, on similar facts, my Opinion in Korhonen, cited in Agorà it regarded Ente Fiera as a body footnote 20, points 80 and 81.

49. In my Opinions in Truley 26 and Kor- honen 2 7 I explained why I consider that it is not compatible with the spirit and purpose of the public procurement direc- tives to interpret needs in the general interest according to how the Member 47. It should be pointed out here that State concerned itself defines its sphere of drawing a distinction according to the field activity. The independent nature of Com- of law to which the entity in question is subject is consistent with the wording of Article 1(b) of Directive 93/37. That provi- 25 — On this point, see BFI Holding, cited in footnote 6, paragraph 29. sion talks about bodies governed by public 26 — Cited in footnote 19, points 42 to 44. law, which suggests that bodies governed 27 — Cited in footnote 20, point 57.

I - 11711

OPINION OF MR ALBER — CASE C-283/00

munity law and the aim of its uniform is therefore immaterial in the present pro- application argue in favour of understand- ceedings that SIEPSA is subject only to ing and interpreting the term as an auton- private law in Spain. omous concept of Community law. This view is supported by the spirit and purpose of the public procurement directives, which is to contribute to the establishment and functioning of the single market.

53. It is true that the wording of Directive 93/37 does not specifically determine whether it is applicable to 'public under- takings'. However, such undertakings may be subsumed under the legal definition of 51. The determination of the personal 'contracting authorities'. As the example of scope of Directive 93/37 cannot therefore SIEPSA shows, they too may have been depend on whether the body is subject to established for the specific purpose of public or private law under domestic law. It meeting needs in the general interest (of a I-11712

COMMISSION v SPAIN

56. The historical development of the provisions on public procurement also argues against the Spanish Government's interpretation. 54. The provision on 'public undertakings' in Article 1 of Directive 93/38 indeed only makes sense if they do not come under 'public authorities' within the meaning of that article. And since the definition of 'public authorities' is identical to that of 'contracting authorities' in the other pro- curement directives, it must also be assumed that these provisions are to be interpreted in the same way. Then, how- ever, bodies covered by the term 'public 57. It is true that Directives 93/36, 93/37 undertaking' could not be 'contracting and 93/38 were all adopted on 14 June authorities' within the meaning of Directive 1993. It is therefore to be assumed that the 93/37. The wording of the provisions legislature intended the terms to be used in therefore initially supports the Spanish the same way. However, the question then Government's position. arises — if we follow the Spanish Govern-

I - 11713

OPINION OF MR ALBER — CASE C-283/00

ment's approach — why it did not also use adapted by Directive 89/440/EEC. 29 The the term 'public authorities' in Directives public supply contracts regulated in Direc- 93/36 and 93/37 if the definition of that tive 93/36 were already covered by Direc- term was the same as that of 'contracting tive 77/62/EEC, 30 as amended by Direc- authorities' in the other two directives. tives 80/767/EEC 31 and 88/295/EEC. 32 The field covered by Directive 93/38, on the other hand, was regulated for the first time considerably later, in Directive 90/531/EEC 33 The chronology of these developments is another argument against referring to the rules contained in Directive 93/38 for the interpretation of Directive 93/37.

29 — Council Directive 89/440/EEC of 18 July 1989 amending Directive 71/305/EEC concerning coordination of pro- 59. The development of public procure- cedures for the award of public works contracts, 01 1989 ment law as a whole also argues in favour L 210, p. 1. 30 — Council Directive 77/62/EEC of 21 December 1976 coor- of this approach. The field of public works dinating procedures for the award of public supply contracts governed by Directive 93/37 was contracts, OJ 1977 L 13, p. 1. 31 — Council Directive 80/767/EEC of 22 July 1980 adapting a l r e a d y c o v e r e d by D i r e c t i v e s and supplementing in respect of certain contracting auth- 71/304/EEC 28 and 71/305/EEC and was orities Directive 77/62/EEC coordinating procedures for the award of public supply contracts, OJ 1980 L215,p.1. 32 — Council Directive 88/295/EEC of 22 March 1988 amend- ing Directive 77/62/EEC relating to the coordination of procedures on the award of public supply contracts and 28 — Council Directive 71/304/EEC of 26 July 1971 concerning repealing certain provisions of Directive 80/767/EEC, the abolition of restrictions on freedom to provide services OJ 1988 L 127, p. 1. in respect of public works contracts and on the award of 33 — Council Directive 90/531/EEC of 17 September 1990 on public works contracts to contractors acting through the procurement procedures of entities operating in the agencies or branches, OJ, English Special Edition 1971 water, energy, transport and telecommunications sectors. (II), p. 678. OJ 1990 L 297, p. 1.

I - 11714

COMMISSION v SPAIN

34 — Proposal for a Council Directive amending Directive 71/305/EEC concerning the coordination of procedures for the award of public works contracts, COM(86) 679 final of 23 December 1986, pp. 6 and 22. 63. As explained earlier, the reason why 35 — Proposed amendment No 4, report by the Committee on Directive 93/37 is applicable is also valid Economic and Monetary Affairs and Industrial Policy, European Parliament session documents 1988/89, Docu- for 'public undertakings' within the mean- ment A2-37/88, p. 6, and the statement of reasons, p. 31. ing of Directive 93/38. They too are under- 36 — See the abovementioned report, statement of reasons, p. 31. 37 — See the statement by the rapporteur, Mr Beumer, at the takings which, although organised as pri- European Parliament session on 17 May 1988, European vate companies, are controlled and directed Parliament Verbatim Report of Proceedings, No 2-365, p. 83. by the public authorities. That influence on

I-11715

OPINION OF MR ALBER — CASE C-283/00

the part of the public authorities justifies public law', in the other public procure- their inclusion in the scope of the directive. ment directives.

65. The fact that the fields regulated by Directive 93/38 are subject to considerable change is clear from two Commission communications. In 1998 it stated in its communication on 'Public procurement in the European Union': 38

I - 11716

COMMISSION v SPAIN

The Commission was the prime mover in expressly include 'public undertakings' in the process of liberalisation in the sectors its scope that they do not come under the covered by Directive 93/38/EEC... It must term 'contracting authorities'. This plea by now take account of the changes that have the Spanish Government must therefore occurred and the new factors that are also be dismissed. emerging on the market, by excluding from the scope of the Directive entities operating under real competitive conditions in the same way as private entities which base their decisions on purely economic criteria.'

68. It must therefore be concluded that SIEPSA is a body governed by public law within the meaning of Article 1(b) of Directive 93/37. As the Spanish Govern- ment has admitted the individual infringe- ments of the tendering rules complained of by the Commission, the decision given 66. In 1999 the Commission declared that should be in accordance with the form of Directive 93/38 was largely inapplicable to order sought by the Commission. the telecommunications sector. 39 These considerations confirm that Directive 93/38 contains special rules taking account of particular circumstances on the market in the relevant sectors at the time. It therefore does not give a generally applicable defini- tion of the operators concerned, but regu- lates a special case.

VH — Costs

69. In the light of the foregoing the appli- cation must be granted. Under Article 69 of 67. It consequently cannot be inferred from the Rules of Procedure, the unsuccessful the fact that Directive 93/37 does not party must be ordered to pay the costs if they are applied for by the successful party. As the Spanish Government has been 39 — Communication from the Commission pursuant to Article 8 of Directive 93/38/EEC: List of services regarded unsuccessful in its application and the as excluded from the scope of Council Directive Commission has made such an application, 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the water, energy, Spain must be ordered to pay the costs of transport and telecommunications sectors, pursuant to Article 8 thereof, OJ 1999 C 156, p. 3. the proceedings.

I-11718