Rules for local authorities awarding contracts without a mandatory tender procedure have been laid down by the European Court of Justice.
A tender is not mandatory where the local authority exercises control over the company to whom it awards the contract which is similar to that exercised over its own departments.
The ECJ has now ruled that, where the local authority is a minority shareholder in the company, its control may only be regarded as similar to that exercised over its own departments when:
- the company's activity is limited to the local authority's territory and carried out essentially for its benefit, and
- the authority (through its representation on the company's statutory bodies) exercises a decisive influence on the company's strategic objectives and its significant decisions.
Law: Case C-573/07 (judgment delivered on 10 September 2009)
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 18/09/2009.