The Role of Procurement and SGEI After Altmark

Abstract

This chapter examines the role of public procurement in the financing of Services of General Economic Interest (SGEI) following the Altmark judgment. The chapter explores the interplay between the application of State aid, service concessions and the use of procurement Directives in financing SGEI against a backdrop of public sector austerity measures and the privatisation of some public service obligations. The author charts how the Commission and the Courts have interpreted the landmark judgment both through case law and the application of soft law communications and Frameworks. The chapter focuses on the often complex issues that arise in interpreting the four Altmark conditions and the resulting stages in the evolution of the Commission’s guidance on the financing of SGEI, culminating in the 2011 ‘Almunia Package’. The author argues that whilst the Altmark judgment was a step in the right direction, it also added a level of ambiguity, particularly in the interpretation of the fourth Altmark condition where the CJEU adopted a hybrid public procurement/compensation mechanism for determining whether the financing of SGEI was State aid. Clarke argues that there is a case for contracting authorities to apply a public procurement process as a default position for the financing of SGEI unless specific exemptions apply. He suggests that this would reduce the level of control currently being applied by the Commission and reporting would be by exception.