ECJ Rules On Direct Contract Awards By Local Authorities

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)

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