Report for the Hearing in Case C-247/89
I — Legal background and procedure
The Community legislation
Council Directive 77/62/EEC of 21 December 1976 (Official Journal 1977 L 13, p. 1) coordinates procedures for the award of public supply contracts. Article 1(a) defines public supply contracts as contracts for pecuniary consideration concluded in writing between a supplier and a contracting authority for delivery of the products.
Article 1(b) defines contracting authorities as 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 as specified in Annex I. In the case of Portugal these include legal persons governed by public law whose public supply contracts are subject to State control (Section XIII of Annex I to Directive 77/62, added by the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties, Official Journal 1985 L 302, p. 217).
Article 2(2)(a) excludes public supply contracts awarded by bodies which administer transport services from the scope of the directive.
Article 5(l)(a) provides that the advertising rules laid down in Article 9 shall apply to contracts whose estimated value net of VAT is not less than 200000 European units of account (approximately ESC 34200000). Article 9 requires contracting authorities who wish to award a public supply contract to make known their intention by means of a notice (paragraph 1). They are to send the notice to the Office for Official Publications of the European Communities (hereinafter: ‘the Publications Office’) for publication in the Official Journal of the European Communities (paragraph 2). The notice is not to be published in the Official Journals or in the press of the country of the contracting authorities before the date of its dispatch (paragraph 5).
Pursuant to Articles 392 and 395 of the Act of Accession, Directive 77/62 should have been transposed into national law by Portugal by 1 January 1986.
Article 3(2)(a) of Council Directive 88/295/EEC of 22 March 1988 (Official Journal L 127, p. 1) amends Article 2 of Directive 77/62. The new text of Article 2. excludes public supply contracts awarded by carriers by land, sea or inland waterway from the scope of the directive.
Council Directive 71/305/EEC of 26 July 1971 (Official Journal L 185, p. 5) concerns the coordination of procedures for the award of public works contracts. Article 3(4) thereof excludes from the scope of the directive public works contracts awarded by bodies which are governed by public law and which administer transport services.
Council Directive 90/531/EEC of 17 September 1990 (Official Journal L 297, p. 1) on the procurement procedures in the water, energy, transport and telecommunications sectors deals, as its sixth and seventh recitals indicate, with public procurement markets in sectors excluded from the scope of Directives 71/305 and 77/62. Article 2(2) of the directive expressly states that it shall apply to the firm Aeroportos e Navegação Aérea (hereinafter ‘ANA-EP’).
The Portuguese legislation
Article 13(l)(c) of Decree-Law 260/76 of 8 April 1976, laying down the basic rules governing public undertakings, subsequently amended by Decree-Law 29/84 of 20 January 1984, provides that the acquisition and disposal of property the value of which exceeds ESC 50000000 shall be subject to authorization or approval by the relevant Minister.
Decree-Law 235/86 of 18 August 1986, Diano da República 188, series I, transposes Directive 71/305 into national legislation. It lays down the ground rules for public works contracts.
ANA-EP was set up by Decree-Law 246/79 of 25 July 1979, Diario da República 170, series I. Article 2(1) thereof, and Articles 1(1) and 34(1) of the constitution of ANA-EP (annexed to Decree-Law 246/79) provide that ANA-EP is a legal person governed by public law, empowered to act autonomously in administrative and financial matters and in regard to its own assets, and exercising the powers conferred on it by law or by its own constitution, without prejudice to the supervisory powers entrusted to State bodies.
Article 2(2) of Decree-Law 246/79 provides that the State's supervisory powers shall cover, inter alia, the granting of the right to use public airport facilities; determination of the level of fees charged for using airports; expropriation in the public interest; the occupation of sites; the protection of facilities and staff; and non-contractual civil liability.
Article 2(3) of Decree-Law 246/79 and Articles 2 and 34 of ANA-EP's constitution, itself approved by the Decree-Law, stipulate that ANA-EP shall make its works and supply contracts subject to the rules of private law. Article 1(3) of Decree-Law 235/86 states that an order from the relevant ministry is necessary for the Decree-Law to apply to a public undertaking. No such order has been issued to apply the rules of public law as set out in the Decree-Law to the contract concluded by ANA-EP.
Article 3 of Decree-Law 246/79 states that ANA-EP's activities shall include the following:
operation and development of the public civil aviation support system according to business methods, in order to guide, direct and control air traffic, to enable aircraft to take off and land safely, and to arrange for passengers, freight and mail to be embarked, disembarked and routed correctly;
performance of the tasks which form an intrinsic part of existing airport and air-navigation infrastructure (i.e. the nine Portuguese civil airports) ;
the study, planning, construction and development of new civil airport and air-navigation infrastructure projects.
Article 4 of Decree-Law 246/79 provides that ANA-EP's initial capital shall consist inter alia of the airport infrastructure made over by the State and all rights and assets belonging to the ‘Office of Lisbon Airport’. Article 26(1) of ANA-EP's constitution stipulates that ANA-EP may dispose of its property freely, without being subject to the legal constraints governing State property.
The members of ANA-EP's organs, including the Board and the Management Board, are appointed by the Minister of Transport and Communications (ANA-EP's constitution, Articles 5, 7 and 14).
Article 21 of the constitution states that the Minister of Finance and the Minister of Transport and Communications shall approve inter alia the multiannual finance and activities programmes, the annual activity programme, the annual investment budgets and the annual operating accounts, and that they shall also determine public-service charges and approve the general prices and fees policy for the operation of other services, the contracting of loans and the issue of bonds.
Article 22 of the constitution states that approval of the staff rules, in particular in regard to remunerations policy, shall require authorization by the abovementioned ministers, and by the Minister for Labour and the Minister for Economic Planning.
The State will compensate ANA-EP for any charges or reductions in income resulting from activities which are inherently lossmaking or where there is a policy of social prices (constitution of ANA-EP, Articles 3(3) and 23(2)).
Article 31(3) of ANA-EP's constitution provides that the Government may give ANA-EP shareholdings, grants or subsidies.
The State will only be liable vis-à-vis third parties for actions and situations which may be attributed to ANA-EP to the extent that it has explicitly undertaken such liability (constitution of ANA-EP, Article 35(2)).
Article 36 of ANA-EP's constitution states that ANA-EP shall be subject to the general scheme of taxation of public undertakings; however, it may be granted special benefits and exemptions in view of its public service obligations.
Article 41 of ANA-EP's constitution states that any doubts arising as to the interpretation or application of the constitution shall, where necessary, be resolved by an order issued by the Minister of Transport and Communications and the Minister for Finance and Economic Planning.
Procedure
In 1987, ANA-EP held a tendering procedure for the supply and assembly of a telephone exchange at Lisbon Airport and published a notice to that effect in the Portuguese weekly Expresso dated 29 August 1987. The notice, based on the public tender programme, indicated that the base price of the contract was ESC 120000000. In regard to the legislation applicable, reference was made to the provisions of Decree-Law 235/86, of 18 August 1986, for all matters not dealt with in the call for tenders, provided that the provisions concerned were compatible with the principal's status as an undertaking.
On 28 September 1987, the Commission, considering that ANA-EP had not complied with the obligation to send the notice of the tendering procedure to the Office for Official Publications of the European Communities with a view to its being published in the Official Journal of the European Communities, requested the Republic of Portugal to make known its observations within 15 days. By letter of 20 October 1987 the Portuguese authorities denied that Directive 77/62 applied to the situation in question.
By a telex message of 4 February 1988 the Commission asked the Portuguese authorities to forward to it certain documents. In reply to that telex message, the Portuguese Government, by a communication of 8 April 1988, forwarded to the Commission the file on the tendering procedure, the aforementioned Decree-Law No 246/79 and ANA-EP's constitution.
Having failed to discover any factor such as might justify the failure to publish notice of the contract in the Official Journal of the European Communities, the Commission, by reasoned opinion of 21 November 1988, requested the Portuguese Government to take all necessary steps to comply with the reasoned opinion within one month from the date of service.
By a telex message of 17 January 1989 and by letter of 31 March 1989, the Portuguese authorities reported that they intended to amend Decree-Law No 29/84, of 20 January 1984, in order to repeal Article 13(l)(c) of Decree-Law No 260/76, thereby terminating the infringement. By letter of 10 May 1989, they forwarded a text of the relevant draft legislation. On 4 August 1989 the Commission, having noted that the infringement had still not been terminated, lodged the present application.
The written procedure followed its normal course.
The Court, upon hearing the Report of the Judge-Rapporteur and the views of the Advocate General, decided to open the oral procedure without any preparatory inquiry. However, it decided to put a question to the Commission.
II — Forms of order sought
The Commission claims that the Court should:
1) Declare that, by not sending to the Official Publications Office of the European Communities a notice of an open tendering procedure relating to the supply and assembly of a telephone exchange for Lisbon Airport for publication in the Official Journal of the European Communities, the Portuguese Republic has failed to fulfil its obligations under Title III, and in particular Article 9, of Council Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public supply contracts;
2) Order the Portuguese Republic to pay the costs.
The Portuguese Republic contends that the Court should:
1) Declare the objection of inadmissibility raised by the Portuguese State well founded, and accordingly dismiss the application; in the alternative, hold that the Portuguese State has not infringed the Treaty, and that the application is therefore unfounded;
2) Order the applicant to pay the costs.
III — The parties' pleas in law and arguments
Admissibility
In its defence, the Portuguese Government raised an objection of inadmissibility founded on three pleas in law.
1. The alleged infringement, it contends, could not be attributed to the Portuguese State. ANA-EP was a public undertaking, with its own legal personality, separate from that of the Portuguese State, empowered to act autonomously in administrative and financial matters and in regard to its own assets. Admittedly, Article 9 of Directive 77/62 imposed on the Portuguese State a specific obligation to publish in the Official Journal of the European Communities the tendering procedures for which the State itself was the contracting authority. However, for contracting authorities other than the State, the Community directive did not and could not impose on the State a specific obligation to publish in the Official Journal tendering procedures organized by legal persons other than the State; in the normal course of events, the State would not even be aware of such contracts. The only infringement with which the Commission might charge the Portuguese State in Treaty infringement proceedings is its failure to have enacted the necessary provisions in its internal legal order, in conformity with Directive 77/62, in order to impose on ANA-EP the obligation to publish notices of public tendering procedures in the Official Journal. ANA-EP cannot be regarded as an extension of the Portuguese State for the purpose of applying Directive 77/62, since the directive drew a clear distinction between the two legal persons, specifying at Annex 1, Point XIII, that a public undertaking could be deemed to be an contracting authority only when the supply contracts which it concludes were subject to approval by the State. ANA-EP's infringement of its duty to publish notices of the tendering procedures which it organized could only be attributed to the Portuguese State if the Commission had claimed and demonstrated that, even though it was not for the Portuguese State to approve the supply contracts concluded by ANA-EP, the State had used its authority over ANA-EP to oppose publication of the notice of the tendering procedure.
2. The Portuguese Government claims to have been misled by a contradiction between the reasons set out in the reasoned opinion, and those contained in the application. The reasoned opinion stated that ANA-EP must be deemed to be a contracting authority within the meaning of Directive 77/62 as the conclusion of supply contracts was subject to approval or authorization by the Portuguese Government. In the light of the reasoned opinion, the Portuguese Government proposed an amendment to the law, formally eliminating the requirement of State approval or authorization in respect of certain contracts concluded by public undertakings (Article 13 of Decree-Law No 260/76), in order to terminate the infringement. However, in its application the Commission intimated, for the first time, that eliminating the requirement of Government authorization or approval would not prevent ANA-EP from being considered a contracting authority.
3. The Commission's conduct during the pre-litigation procedure was equivocal. The Commission never specified what sort of action would be appropriate to terminate the alleged infringement. However, it did not oppose the Portuguese Government's intention to repeal the requirement of State approval or authorization in respect of certain public contracts. In any case, it would never have been possible to amend the law by the deadline set in the reasoned opinion. The Commission disagrees with the Portuguese Government on all three points. The Commission's answer to the first plea is that the Portuguese State's responsibility for the infringement committed is based on the control which the Portuguese State exercised over the public undertaking concerned, ANA-EP. Moreover, whether or not any particular conduct may be attributed to the State does not depend on whether the body whose conduct is in issue has separate legal personality, nor on whether its constitution gives it autonomy in administrative and financial matters and in regard to its assets. Nor can the Portuguese Government found any argument on the failure to transpose Directive 77/62 into national legislation. The directive should have been transposed by the Republic of Portugal on 1 January 1986. Whenever a contracting authority fails to publish a notice of a public supply contract, the State is liable for that omission, regardless of whether the directive has been transposed into national law. In regard to the second plea in law, the Commission denies having redefined the impugned conduct in the application. The conduct impugned both in the reasoned opinion and in the application was the issuing by ANA-EP of a call for tenders without publishing a notice in the Official Journal of the European Communities. The Commission never sought an amendment to Article 13 of Decree-Law No 260/76; the application merely stated that the proposed legislative change would not resolve the problem raised by the infringement which had already been committed. On the third plea in law, the Commission denies that it is obliged to indicate in the reasoned opinion what national measures should be taken to eliminate an infringement. It did not think it appropriate to specify such action in a field where full harmonization had not been achieved. Moreover, it expected that it would be possible to reach agreement with the Portuguese Government. In any case, the fact that the contract had already been awarded when the reasoned opinion was served extinguished neither the infringement itself nor the Commission's entitlement to pursue the proceedings in respect of it. The Commission never suggested or urged that Article 13 of Decree-Law No 260/76 be amended. The time allowed was reasonable and sufficient, 22 months having elapsed between the Commission's first communication to the Portuguese State and the institution of proceedings.
Merits
The Commission maintains that all the conditions for the application of Article 9 of Directive 77/62 were fulfilled, and that none of the derogations relating to its scope was applicable. However, the contracting authority, ANA-EP, did not comply with the obligation to send the notice of the contract to the Publications Office in order for it to be published in the Official Journal, pursuant to Article 9 of Directive 77/62.
The Portuguese Government's first plea is that ANA-EP cannot properly be considered to be a contracting authority within the meaning of Article 1(b) of Directive 77/62 and Point XIII of the Annex thereto. It advances two arguments:
1. ANA-EP did not in fact award a public supply contract since the contract awarded was not subject to the rules of public law. The size, significance and price of the contract were relatively small. Accordingly, pursuant to Article 2(3) of Decree-Law No 246/79 and Article 34 of ANA-EP's constitution, ANA-EP awarded the contract to private law. Moreover, the role of the public law regime contained in Decree-Law No 235/86 and referred to in the public-tender prospectus was merely complementary, and subject to the proviso that the provisions concerned only applied if they were not incompatible with the principal's status as an undertaking (Article 24 of the public-tender prospectus). In any case, Article 1(3) of Decree-Law INo 235/86 stated that an order was required from the Ministry responsible before the Decree-Law could apply to public undertakings. No such order having been issued by the relevant ministry, the contract awarded by ANA-EP was not subject to the rules of public law.
2. Point XIII in Annex 1 to Directive 77/62 did not require general control by the State of an undertaking — ex hypothesi a State undertaking — but rather specific control over public supply contracts. ANA-EP was exempt from having to submit its supply contracts for such specific control. In that connection the Portuguese Government points out first that Article 13(l)(c) of Decree-Law No 260/76, as amended by Decree-Law No 29/84, does not apply to supply contracts. The words ‘acquisition and disposal of property’ in the article concerned do not include supply contracts, or contracts where the payment takes the form of a lump sum; they refer solely to the acquisition of immovable property intended to house departments of public undertakings. Secondly, the Portuguese Government argues that the provision in question does not apply to ANA-EP since Decree-Law No 29/84, being general in scope, was not capable of repealing the specific rule in Article 2 of the Annex to Decree-Law No 246/79 on ANA-EP's constitution. Decree-Law No 260/76 and the other specific Decree-Laws were all of the same rank in the hierarchy of legislation. The term ‘framework law’, used by the Commission, was not a term used in the Portuguese Constitution, and was consequently immaterial. Finally, the provisions setting up ANA-EP, in particular Article 4 of Decree-Law 246/79, and Articles 34(1), 26(1), 3(3), 35(2) and 36 of ANA-EP's constitution demonstrated that in the event no specific control within the meaning of Point XIII was exercised. On the first argument, the Commission points out that Directive 77/62 does not state that whether or not it is to apply shall depend on the type of contract awarded. The directive only applies to public contracts — contracts awarded under an open or restricted procedure determined by one of the contracting authorities defined by Article 1(b) of the Directive. The fundamental condition which had to be fulfilled for ANA-EP to qualify as a contracting authority was the existence of State control over public supply contracts, and it was hence immaterial whether, under national legislation, the contract in question was governed by private law. None the less, the Commission takes the view that the circumstances in which the call for tenders was issued indicate that the contract was governed by public law. Indeed, the prospectus, in particular Article 24, referred to the provisions of Decree-Law No 235/86. In regard to the second argument, the Commission states that the expression ‘State control’ used at Point XIII does not mean that there has to be specific authorization or approval by the State. Directive 77/62 and Annex I to the directive only require that the award of supply contracts be subject to State control, howsoever effected. The Portuguese State did exercise effective control over ANA-EP, including its contracting practices. In support of that assertion the Commission refers to the following provisions: Articles 3 and 4 of Decree-Law No 246/79; Articles 5(1), 8(1), 9A(2) and 10(2) of Decree-Law No 26/76, as amended by Decree-Law No 29/84; and Articles 3, 5, 7, 14, 21, 22, 23(2), 31, 35(2) and 36 of ANA-EP's constitution, annexed to Decree-Law No 246/79. Decree-Law No 260/76 was in reality the framework law applicable to all public undertakings. Under no circumstances might the specific Decree-Laws creating such undertakings (such as Decree-Law No 246/79) conflict with Decree-Law No 260/76; if they did, they would be unconstitutional. In its second plea in law, the Portuguese Government asserts that ANA-EP, being a body which administers transport services, is excluded from the scope of Directive 77/62 under Article 2(2)(a) thereof; it adduces the following facts in support: ANA-EP's activities pursuant to Directive 246/79 and to its constitution complement, and are inherently linked with, air-transport services. ANA-EP should therefore be deemed to be a body which administers transport services. Article 2(2) of Directive 77/62, which excludes from the scope of the directive bodies which administer transport services, has a wider meaning than the new text of that article contained in Article 3 of Directive 88/295, which limits the exclusion to ‘carriers by land, air, sea or inland waterway’. The distinction demonstrated that the old version of the exception contained in Article 2(2) of Directive 77/62 included bodies which, like ANA-EP, administer ground services. Article 3(4) of Directive 71/305 excludes from the scope of that directive public works contracts awarded by bodies which are governed by public law and which administer transpon services. The terms used in that article are the same as those used in Article 2(2)(a) of Directive 77/62. The intention of both directives is therefore to exclude bodies such as ANA-EP. the proposal for a Council Directive on procedures for the award of contracts in the water, energy and transport sectors deals inter alia with public contracts in the sectors excluded from the application of Directives 71/35 and 77/62, as amended by Directive 88/295. The fact that ANA-EP is expressly mentioned (at Article 2(2) of the proposal) among the bodies subject to the rules of the proposed Directive demonstrates that ANA-EP did not come within the scope of Directive 77/62. The Commission takes the view that administering an airport does not constitute a transport service within the meaning of Article 2(2)(a) of Directive 77/62/EEC. The same interpretation of the article concerned is to be found in the Guide to the Community Rules on Open Government Procurement (Official Journal 1987 C 358, p. 1), issued by the Commission in order to publicize its interpretation of the public-procurement directives. The purpose of Article 2(2)(a) was to preclude unequal treatment of transport bodies, the legal status of which varied widely (see the sixth recital in the preamble to Directive 77/62). Such unequal treatment might have ensued from the fact that some of the bodies concerned, being public bodies, would have been subject to the Directive, whereas others, notably the public undertakings, would not. Article 2(2)(a) of Directive 77/62 was reformulated by Directive 88/295 solely to make it clearer, and not in order to widen the scope of Directive 77/62. In that regard the Commission refers to the eighth recital in the preamble to Directive 88/295: ‘.. it is necessary... to define the extent of the exemptions by sector in order to ensure, in view of the divergent interpretations, that the imbalances in the application of the directives between Member States do not increase’. The proper interpretation of Article 3(4) of Directive 71/305 is no different from the interpretation which the Commission has supported in the case of Article 2(2)(a) of Directive 77/62. The purpose of including ANA-EP within the scope of the proposal for a directive on procurement procedures in the water, energy and transport sectors was to place on an equal footing public undertakings which administer airports, and their private sector counterparts.
IV — Reply to the question from the Court
The Commission was requested to explain the divergent interpretations of Article 2(2)(a) of Directive 77/62 which necessitated the publication of an interpretative clarification by the Commission in the Guide, and the amendment of the article concerned by Directive 88/295 (Reply, p. 29).
The Commission replied that, initially, some Member States had maintained that bodies which administered ports and airports were excluded from the scope of Directives 77/62 and 71/305. However, in the course of proceedings under Article 169 of the EEC Treaty, all such Member States had come to accept the Commission's view that the exclusion concerned carriers alone.
The Commission had none the less wished to clarify the situation in order to settle the difficulties relating to the interpretation of the directives in regard to bodies which administer ports and airports. It had accordingly incorporated its interpretation of Article 2(a) of Directive 77/62 in the Guide, and had taken advantage of the amendments to Directives 77/62 and 71/305 in order to provide a definitive clarification of the provisions concerned.
P. J. G. Kapteyn
Judge-Rapporteur
1 Language of the case: Portuguese.