3 Public procurement and state aid
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3 Public procurement and state aid
The purpose of the EU directives on public procurement is to create cross-border competition on public contracts within the EU. The aim is to ensure that suppliers from all EU Member States have equal access to bidding for public contracts. This promotes cross-border competition and leads to procurement on the best possible terms. Also in 2003, the work of the Competition Authority within public procurement was dominated by international activities. Average duration of case handling 2000–2003, Procurement (months)
The legal package The negotiations on a set of new Public Procurement Directives (the so-called legal package) continued throughout the year. After second reading in Parliament and Council, the proposals went into the conciliation procedure during the Italian Presidency. From the outset, about 50 proposals from Parliament were on the table. During the conciliation procedure especially the following questions showed to be of interest:
The Conciliation Committee reached a result in December and thus the way was paved for the adoption of the legal package. 3.1 Public Procurement NetworkIn January 2003, the Competition Authority hosted the first meeting of the newly established Public Procurement Network. The network comprises not only all the current EU Member States. Also all accessing countries, the candidate countries, the EEA and Switzerland have joined the network. The network has the full support of the European Commission. The main functions are:
The network works with a minimum of administrative costs. The participants meet once a year, whereas more regular contact is established via the Internet or in working parties on specific topics. In 2003, the Competition Authority handled 4 cases for Danish companies via the PPN. The complaints systems During the year attention has been drawn to the complaints systems in various ways. The Commission is preparing a review of the Remedies Directives. The first step is to gather information and experiences from the Member States as to the functioning of the national systems. Supplementing the national efforts, the Commission has launched a public consultation on the subject. At the same time Danish law, setting up the Complaints Board, has been through an evaluation in order to assess whether the law is fulfilling its purpose or not. The result of the evaluation showed no immediate need for changes to the complaints system. Finally an infringement case against Denmark – deriving from the judgement by the European Court of Justice in the Alcatel case – has been closed with the issuing of a circular on simultaneous notification of all candidates and tenderers of the decision taken by the contracting authority when concluding a tender procedure. Tender procedures for public works contracts below threshold The fairly new rules on tender procedures for public works contracts that do not exceed the EU threshold still give rise to discussion among the parties in the construction industry. Accordingly, the Competition Authority has launched a survey on the practical use of these rules. The purpose of the survey is to give a picture of whether there is a need for adjustments, new initiatives or potentially for further simplification of the rules. A further purpose is to ensure consistence with the forthcoming EU legislation. The survey covers both the public and the private sectors and has been carried out by questionnaires and telephone interviews. The results will be presented in spring 2004. A broad range of interested parties in the construction sector has been invited to comment on the survey. Case processing and information activities An enterprise can launch a complaint to the Competition Authority if it has reason to believe that the public procurement rules have been violated in the course of a tender procedure. The Competition Authority only deals with cases where the contract has not yet been signed. In such a situation, the Competition Authority takes the opportunity of contacting the contracting authority in question and of examining the case in order to find solutions to the problems presented. Often this may mean that infringements can be remedied and the tender made to comply with the rules prior to the award of the contract. In 2003, the Competition Authority received a total of 23 complaints. On top of this informal problem solving system, the Competition Authority has upgraded its information activities on its homepage. In addition, the Competition Authority operates a telephone hotline where contracting authorities and enterprises can get quick answers to their questions. Production figures, procurement and state aid 2000–2003
3.2 State aidState aid policy has many things in common with competition policy. Both state aid and restrictions on competition distort competition between companies and can result in considerable losses for society. State aid policy is covered by the competition rules of the EC Treaty and serves the same purpose as competition policy, namely to ensure an efficient use of society's resources. For this reason the state aid area is under the auspices of the Danish Competition Authority. The Danish policy on state aid concentrates on state aid being used in the most efficient way, encouraging the desired objectives and avoiding unintended negative consequences, such as distortion of competition and/or a waste of public money. It is the responsibility of the Authority to participate in the EU co-operation on matters relating to state aid. Thus, the Authority takes part in negotiations within the EU on new measures in respect of state aid. An important part of the Authority's work in this context is to ensure that Danish interests are safeguarded in the best possible way. In addition to international work, the Authority plays a national advisory role. The State Aid Office offers advice to the Danish authorities on state aid issues and may provide recommendations; however, it cannot make decisions regarding EU regulation. The European Commission and the European Court of Justice make the final decision as to whether a given scheme constitutes state aid, and whether such an arrangement may be approved. The Authority can – within the provisions of the Danish Competition Act – investigate state aid that falls outside the EU definition of state-aid. New rules on state aid and modernising state aid control During 2003 the Commission has come up with a series of changes in different areas. As regards research and development aid for small and medium-sized enterprises, the Commission launched in July 2003 a formal consultation of Member States and interested parties on a draft regulation to amend the rules on aid for SMEs in order to incorporate the new Community definition of an SME and to exempt aid for R&D from notification. With regard to state aid procedures in the agricultural sector, the Commission has adopted a block exemption regulation for certain types of state aid up to certain levels, granted to small and medium-sized enterprises (SMEs). Due to the SME definition (up to 250 employees, 40 million turnover or a 27 million balance sheet) this would cover almost all farms and companies active in the agriculture sector. The Commission will continue to review its state aid instruments to simplify and clarify them, and remove possible conflicts between the different texts. At present, priority is being given to reviewing the rules on rescue and restructuring aid for companies in difficulty, to look at the reform of the Community's regional aid rules after enlargement, to prepare new rules for shipbuilding, to simplify the rules on research and development for small and medium-sized enterprises, to clarify the area of services of general economic interest, and to review the state aid guidelines for the maritime and aviation sectors. Moreover, the Commission is currently preparing a significant impact test (SIT). Services of General Economic Interest (SGEI) In July 2003, the Court of Justice delivered a judgement in the Altmark case. The judgement provides clarification on how Articles 87 and 88 of the EC Treaty apply to the public financing of undertakings responsible for services of general economic interest. In its judgement, the Court states that “where a State measure must be regarded as compensation for the services provided by the recipient undertakings in order to discharge public service obligations, so that those undertakings do not enjoy a real financial advantage and the measure thus does not have the effect of putting them in a more favourable competitive position than the undertakings competing with them, such a measure is not caught by Article 87(1) of the Treaty.” The judgment nominated four conditions to be fulfilled in order to escape classification as state aid. The conditions concern the definition of a public service, the parameters on the basis of which the compensation is calculated, the level of the compensation and the analysis of the costs. The Commission will now draw up a document laying down the conditions governing their actual application by the Member States. Version 1.0 March 2004 • © Danish Competition Authority. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
