AGAC was a corporate entity set up by a consortium of Italian local authorities to provide energy and environmental services to those participating. Prior to 1997 Teckal had supplied fuel to Viano and had serviced its heating systems. In May 1997 Viano decided to switch its custom to AGAC, but without inviting competing tenders from other interested persons. Teckal challenged this decision on the ground that Viano had failed to comply with Directives 92/50/EEC (as to services) and 93/36/EEC (as to goods). Viano’s said that it had decided to undertake these matters itself through a body which had been set up for the purpose.
Held: ‘In order to determine whether the fact that a local authority entrusts the supply of products to a consortium in which it has a holding must give rise to a tendering procedure as provided for under Directive 93/36, it is necessary to consider whether the assignment of that task constitutes a public supply contract.’
As to whether there was a contract for this purpose, it said that the national court must determine whether there had been an agreement ‘between two separate persons’.
The ourt gave guidance as to how the issue as to whether it was a public service contract was to be determined: ‘In that regard, in accordance with article 1(a) of Directive 93/36, it is, in principle, sufficient if the contract was concluded between, on the one hand, a local authority and, on the other, a person legally distinct from that local authority. The position can be otherwise only in the case where the local authority exercises over the person concerned a control which is similar to that which it exercises over its own departments and, at the same time, that person carries out the essential part of its activities with the controlling local authority or authorities.’
The Directive applied only to contracts between a public authority and an entity which was ‘formally distinct from it and independent of it in regard to decision-making’.
There is an exception to the requirement that decisions by public authorities to engage contractors are subject to the requirements of the Directives: ‘In that regard, in accordance with Article 1(a) of Directive 93/36, it is, in principle, sufficient if the contract was concluded between, on the one hand, a local authority and, on the other hand, a person legally distinct from that local authority. The position can be otherwise only in the case where the local authority exercises over the person concerned a control which is similar to that which it exercises over its own departments and, at the same time, that person carries out the essential part of its activities with the controlling local authority or authorities’
Citations:
[1999] ECR I-8121, [1999] EUECJ C-107/98
Links:
Statutes:
Directive 92/50/EEC, Directive 93/36/EEC
Jurisdiction:
European
Cited by:
Cited – Tachie and Others v Welwyn Hatfield Borough Council QBD 13-Dec-2013
The three appellants each challenged decisions refusing their homelessness reviews, saying that the decisions had been made by outside contracters and were unlawful.
Held: The company was a subsidiary of the Council, and the Teckal exception . .
Cited – The United States of America v Nolan SC 21-Oct-2015
Mrs Nolan had been employed at a US airbase. When it closed, and she was made redundant, she complained that the appellant had not consulted properly on the redundancies. The US denied that it had responsibility to consult, and now appealed.
Cited – Brent London Borough Council and Others v Risk Management Partners Ltd SC 9-Feb-2011
The council had put out to tender its insurance requirements. The respondent submitted its bid. The council then withdrew the tender in order to take up membership of a mutual company providing such services created by local authorities in London. . .
Lists of cited by and citing cases may be incomplete.
Local Government
Updated: 04 June 2022; Ref: scu.162361