Ruling of 13 October 2005 of the Court the First Chamber in Case [C-458/03], Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG  ECR I-08585
Referred by [Verwaltungsgericht, Autonome Sektion für die Provinz Boz (Italy)]
In 2001, the Municipality of Brixen (Italy) converted Stadtwerke Brixen, a municipal undertaking, into a company limited by shares, Stadtwerke Brixen AG. The company’s nominal capital was 100% owned by the municipality which, however, was allowed under national legislation to remain the sole shareholder for only the following two years.
In 2002, the Municipality of Brixen concluded an agreement with Stadtwerke Brixen AG for the management, for a nine-year term, of a car park with about 200 spaces.
In consideration of the management of the car park, Stadtwerke Brixen AG collects the parking charges. In addition, it provides a free bicycle hiring service and accepts that theweekly market continues to be held on the area in question. Finally, the routine and non routine maintenance of the area is the task of that company which takes full responsibility in
Parking Brixen GmbH, the company which managed another car park in the Municipality of Brixen, challenged before the Verwaltungsgericht, Autonome Sektion für die Provinz Bozen, the award of the management of the car park to Stadtwerke Brixen AG. In its submission, the Municipality of Brixen should have issued a public call for tenders.
The Municipality of Brixen maintained that it completely controls Stadtwerke Brixen AG and that there was therefore no award of a contract or concession to a third party. There was no obligation to proceed by way of a public call for tenders.
In that context, the Verwaltungsgericht, Autonome Sektion für die Provinz Bozen, referred two questions to the Court of Justice of the European Communities for a preliminary ruling.
Interpretation of Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts (OJ 1992 L 209, p. 1) Articles 43 EC, 49 EC and 86 EC, and the principles of non-discrimination, transparency and equal treatment/ whether the award of the management of the public pay car parks in question in the main proceedings involves a public service contract within the meaning of Directive 92/50, or a public service concession and; whether the award of a public service concession without it being put out to competition is compatible with Community law, if the concessionaire is a company limited by shares resulting from the conversion of a special undertaking of a public authority, a company whose share capital is at the time of the award 100% owned by the concession-granting public authority, but whose administrative board enjoys all extensive powers of routine administration and can effect independently, without the agreement of the shareholders’ meeting, certain transactions up to a value of EUR 5 million.
ANSWER of the COURT:
The award, by a public authority to a service provider, of the management of a public pay car park, in consideration for which that provider is remunerated by sums paid by third parties for the use of that car park, is a public service concession to which Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts does not apply.
Articles 43 EC and 49 EC, and the principles of equal treatment, non-discrimination and transparency, are to be interpreted as precluding a public authority from awarding, without putting it out to competition, a public service concession to a company limited by shares resulting from the conversion of a special undertaking of that public authority, a company whose objects have been extended to significant new areas, whose capital must obligatorily be opened in the short term to other capital, the geographical area of whose activities has been extended to the entire country and abroad, and whose Administrative Board possesses very broad management powers which it can exercise independently.
REASONING of the Court
The Court points out, first, that the Directive relating to the coordination of procedures for the
award of public service contracts applies to contracts which involve consideration which is paid directly by the contracting authority to the service provider, but does not apply to service concessions.
In this case, the service provider’s remuneration comes from the sums paid by third party users of the car park concerned. That method of remuneration means that the provider takes the risk of operating the services in question and is thus characteristic of a public service concession.
Therefore, since it is a public service concession, the directive does not apply.
Nevertheless, the Court makes clear that a concession-granting public authority is, as a rule, bound to comply with the general rules of the EC Treaty such as freedom of establishment and freedom to provide services, as well as the principles of equal treatment, nondiscrimination and transparency.
The application of those rules is excluded only if the concession-granting public authority exercises over the concessionaire a control similar to that which it exercises over its own departments and if that concessionaire carries out the essential part of its activities with the controlling authority. Such control must enable the concession-granting authority to have a decisive influence over both the concessionaire’s strategic objectives and its significant decisions.
In this case, Stadtwerke Brixen AG enjoys a high degree of independence which precludes the municipality from exercising over it control similar to that which it exercises over its own departments. Indeed, the company’s objects were broadened to other fields such as the carriage of persons and goods, its activities expanded to the whole of Italy and abroad, and its capital had to be opened to other shareholders. In addition, broad powers were conferred on its Administrative Board with, in practice, no management control by the municipality. Consequently, the award cannot be regarded as an ‘in-house’ transaction to which the rules and principles of Community law do not apply.
The Court concludes therefore that the complete failure to put out to tender the award of a public service concession such as that in question is not compatible with Community law.
After the Court found that Directive 92/50 is not applicable, carried on with assessing the case in the light of the freedom of establishment and services, as governed by the principles of equal treatment and non-discrimination, on the basis of the obligation of transparency, that is incumbent to the public authority when granting a concession. Moreover, the Court made reference to the competition provisions as enshrined by the Treaty, namely Article 106 (1) TFEU, which states that, “in the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in the Treaty, in particular to those laid down in Articles 18 TFEU and 101 EC to 109 TFEU”.
In this respect, even if the secondary legislation was not found to be applicable to the situation brought before the Court, the Case was analysed under primary legislation, in relation to the fundamental rules that govern EU law. In this regard, the discrimination matter was not assessed as in the light of Article 8 TFEU, which provides for a general expression, but as derived from the freedoms of establishment and services and, consequently in relation to the competition rules.
The Case is retains a high degree of complexity in respect of anti-discrimination law. In this respect, the court emphasized that a member State legislation must always comply with the fundamental freedoms, in particular with the principle of non-discrimination on grounds of nationality.
Next, the court found that more specifically applicable provisions, other than the Directive aforementioned, include, so they are not limited to, in particular Articled 49 and 56 TFEU, freedom of establishment and freedom to provide services. In addition, the Court noted that Articles 49 and 56 TFEU are expressions of the principle of equal treatment and not of the principle of non-discrimination, as stated in other Cases that were brought before it.
In order to reach its conclusions in this Case, the Court considered that this was not a matter of internal affairs, but one of the Internal Market, and consequently assessed together the principles of equal treatment and non-discrimination, which sets up a duty of transparency which enables the concession public authority to ensure that these principles are complied with. Moreover, the obligation of transparency consist in ensuring , for the benefit of any potential tenderer a degree of advertising sufficient to enable the service concession to be opened up to competition and the impartiality of procurement procedures to be reviewed.
The parties’ arguments sought to maintain that EU law is not applicable, namely the defendants in the main proceedings and the Italian Government, referred to the fact that the situation is an internal one, given that all the parties’ premises are located in Italy and that the plaintiff in the main proceedings is not an entity independent of that municipality.
None of them ware accepted, as the Court assessed the Case in the hypothesis that if a Member State would be interested to provide the same services. When the case maybe, if there is no advertising, then other member States are discriminated and that will hinder the free movement of establishment and services. Moreover, it will distort competition within the Internal Market.
No issues of direct or indirect discrimination were dealt with here, as the principle of discrimination was used to decide whether EU law was applicable or not to the Case brought before the Court. But when the Treaty contains fundamental freedoms based on fundamental rights, that are generally valid, it would be difficult for one not to find them applicable, even if there was a hypothetical situation that the Court ruled on.
 Council Directive 92/50/EEC of 18 June 1992
 Case [C-458/03], Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG  ECR I-08585, paragraph 46