The Current Situation Regarding PP Ps and Concessions in the EU S á ndor Szalai European Commission, DG MARKT.C 1

1. The Current Situation Regarding PPPs and Concessions in the EUSándor SzalaiEuropean Commission, DG MARKT.C1 http://europa.eu.int/comm/internal_market/publicprocurement Regional Workshop on Concessions / Public-Private Partnerships Tirana, 11-12 December 2007

2. Importance of PPPs and concessions Cooperation of public authorities and the private sector leads to - more private financing of projects - less involvement of public authorities - make use of the experience and methods of the private sector - more efficiency

3. Importance of PPPs and concessions Such cooperations are used especially in high-value infrastructure or environmental projects The Commission’s interest in regulating these areas: to ensure real competition Alignment to the acquis: public contracts and concessions should have priority

4. The current legal situation EU legislation regulating concessions and PPPs : - The EC Treaty (general principles) • Procurement directives 2004/17 and 2004/18(works concession and definition of service concession) • The case law of the European Court of Justice(Teleaustria, Coname, Stadt Halle, Teckal, Lottomatica, etc.) • Commission Interpretative Communications (2006/C 179/02; 2000/C 121/02; 2005/0569)

5. ConcessionsGeneral questions • NOT concessions in the EU sense: • when a public authority authorises the exercice of an economic activity (e.g.: taxi concessions) • acts concerning non-economic activities (e.g. obligatory schooling)

6. ConcessionsGeneral questions Main characteristics of concessions: • Contracting authority entrusts to a third party • Total or partial management of services (which constitute economic activities) • For which that authority would normally be responsible • For which the third party assumes the economic/operational/financial risk • Leaves the public authority functions/powers of the grantor untouched

7. ConcessionsGeneral questions Main characteristics of concessions (which separate them from public contracts): - the right of exploitation - the transfer of the responsabilities of the operation - the transfer of risks inherent in the exploitation (who bears the costs)

8. ConcessionsThe procurement directives Works concessions (Title III of 2004/18; excluded from 2004/17) • Definition • Scope and exclusions • Advertising and time limits • Subcontracting and additional works • Rules on the award of contracts by concessionaires

9. ConcessionsThe procurement directives Works concessions - Rules on the award of contracts by concessionaires • Concessionaires which are contracting authorities: - provisions for public work contracts • Concessionaires which are NOT contracting authorities: - advertising - time limits + principles of the Treaty!

10. ConcessionsThe procurement directives Service concessions • Only its definition in the directives, otherwise its excluded from their scope • Only principles of the Treaty apply

11. ConcessionsService concessions ECJ in TELAUSTRIA judgment (C-324/98): The fundamental rules of the Treaty, in particular the principle of non discrimination apply to service concessions. Advertising must be sufficient to open the services market up to competition. The fundamental rules of the Treaty include: • Equality of treatment • Transparency • Proportionality • Mutual Recognition

12. Public Private Partnership (PPP) • Not a legal term in the EU sense • Describes only a specific situation when public authorities and private entities cooperate in order to meet a general interest • In legal terms it can be a public contract or a concession, depending on the case • Its specific form is the Institutionalised PPP

13. Public Private Partnership (PPP) Public contract or concession? - the right of exploitation - the transfer of the responsabilities of the operation • the transfer of risks inherent in the exploitation • the sharing of costs

14. Public Private Partnership (PPP) - PPPs qualifying as public works contracts or as priority service contracts: application of the detailed provisions of the Procurement Directives. - PPPs qualifying as public works concessions or non-priority service contracts: application of few provisions of the Procurement Directives. - PPPs qualifying as service concessions: EC Treaty principles only.

15. PPPs and concessionsCurrent issues of policy making andnew legislation Communication on PPPs and Community Law on public procurement and concessions (COM2005(569)) • Draws political conclusions from PPP Green Paper consultation and • sets out the key initiatives at EC level in this area.

16. PPPs and concessionsCurrent issues of policy making and new legislation Areas where Community action not required at this stage • No need for horizontal PPP legislation at EC level • No immediate need for initiatives on private initiative PPPs, subcontracting or the contractual framework

17. PPPs and concessionsCurrent issues of policy making and new legislation Key areas requiring further consideration at EC level • Concessions • Institutionalised PPPs

18. PPPs and concessionsCurrent issues of policy making and new legislation Concessions • Demand for a stable, consistent legal environment for the award of concessions – legal certainty • EU action needed to avoid patchwork of national rules

19. PPPs and concessionsCurrent issues of policy making and new legislation New directive on concessions? • It is in the Commission’s working programme • Clear interest from the stakeholders • The Commission services are working on it and have discussions on it with Member States • It will be a part of a legislative package on services of general interests • Waiting for the result of the impact assessment • Due to the political sensitivity of it clear political decisions are needed from the Commissioner and the College

20. PPPs and concessionsCurrent issues of policy making and new legislation Interpretative Communication on Institutionalised PPPs? • No community legislation is needed • Addressing the creation and operation of IPPPs/ »in-house » • The Commission services are working on it and have discussions on it with Member States • Political decision is necessary from the Commissioner and the College • The fate of the proposal on the directive on concessions may have an effect on the adoption of the communication