IBA Molecular Italy (Public supply contracts - Judgment) [2018] EUECJ C-606/17 (18 October 2018)

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(Reference for a preliminary ruling — Public supply contracts — Directive 2004/18/EC — Article 1(2)(a) — Contract awarded outside a public procurement procedure — Definition of ‘contracts for pecuniary interest’ — Definition of ‘public entity’)

REQUEST for a preliminary ruling under Article 267 TFEU from the Consiglio di Stato (Council of State, Italy), made by decision of 6 July 2017, received at the Court on 20 October 2017, in the proceedings

composed of M. Vilaras, President of the Fourth Chamber, acting as President of the Eighth Chamber, J. Malenovský and D. Šváby (Rapporteur), Judges,

– the Regione Veneto, by C. Zampieri, E. Zanon, A. Manzi, C. Drago and B. Barel, avvocati,

– the European Commission, by G. Gattinara and P. Ondrůšek, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

1 This reference for a preliminary ruling concerns the interpretation of Articles 49, 56 and 105 et seq. TFEU and Articles 1 and 2 of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114).

2 The request has been made in proceedings between IBA Molecular Italy Srl (‘IBA’) and the Azienda ULSS No 3 (Local Health Authority No 3, Italy), the Regione Veneto (Veneto Region, Italy), the Ministero della Salute (Ministry of Health, Italy) and the Ospedale dell’Angelo di Mestre (Angelo di Mestre Hospital, Italy) concerning the direct award by the Local Health Authority No 3 and the Angelo di Mestre Hospital of a contract for the supply of the radiopharmaceutical product which is the basis for 18 F-Fluoro-deoxy-glucose, referred to as ‘fluorodeoxyglucose (18F) IBA’ (‘the medicinal product 18-FDG’) for a period of three years to the Istituto Sacro Cuore — Don Calabria di Negrar (‘the Sacro Cuore’).

3 Under the heading ‘Definitions’, Article 1(2)(a) and (9) of Directive 2004/18, provides:

‘2 (a) “Public contracts” are contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services within the meaning of this Directive.

(9) “Contracting authorities” means the State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law.

(a) established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character, and

(c) financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law.

4 Article 2 of Directive 2004/18, entitled ‘Principles of awarding contracts’, provides:

‘Contracting authorities shall treat economic operators equally and non-discriminatorily and shall act in a transparent way.’

5 It is clear from Article 1 of legge n. 132, recante norme sugli enti ospedalieri e sull’assistenza ospedaliera (Law No 132 laying down the rules on hospitals and hospital care) of 12 February 1968 (GURI No 68 of 12 March 1968) that ‘classified’ hospitals are ‘ecclesiastical institutions and bodies recognised in civil law which provide hospital care’. The fifth paragraph of that provision provides more specifically:

‘With the exception of the technical-healthcare supervision for which the Ministry of Health is responsible, the provisions in force shall remain unchanged in so far as concerns the administrative and legal regime applicable to ecclesiastical institutions and bodies recognised in civil law which provide hospital care.’

6 According to the referring court, it is clear in particular from Article 41 of legge No 833 — Istituzione del servizio sanitario nazionale (Law No 833 instituting a national health service) of 23 December 1978 (Ordinary Supplement to the GURI No 360 of 28 December 1978, ‘Law No 833’), first, that ‘relations between the territorially competent local health bodies and institutions, bodies and hospitals as referred to in the first paragraph which have been classified in accordance with Law No 132 of 12 February 1968, as well as the hospital Galliera di Genova and the Sovereign Military Order of Malta, shall be governed by appropriate agreements’ and second, that ‘recognised health institutions which provide public healthcare shall retain their position as actors within the public health system’.

The dispute in the main proceedings and the questions referred for a preliminary ruling

7 IBA is an undertaking specialised in the production of radiopharmaceutical products. It is the exclusive distributor in Italy of the medicinal product 18-FDG which is an isotopic tracer used in certain radiological examinations.

8 By an action of 29 April 2015, it challenged before the Tribunale amministrativo regionale del Lazio (Administrative Court, Lazio, Italy) the measures and contractual arrangements by which the Local Health Authority No 3 and the Angelo di Mestre Hospital awarded directly, and without a prior public tendering procedure, a contract for the provision of medicinal product 18-FDG for a period of three years to the Sacro Cuore.

9 Although a faith-based institution governed by private law, the Sacro Cuore forms part of the public system for healthcare planning of the Veneto region, on the basis of a special agreement, in its capacity as a ‘classified’ hospital equivalent to a public institution.

10 According to the terms of that supply contract the Sacro Cuore undertook to supply the medicinal product 18-FDG free of charge to nine regional public hospitals in return for the payment of the transport costs fixed at a flat rate of EUR 180 per delivery.

11 In support of its action seeking (i) the annulment of the direct award to Sacro Cuore of the contract for the supply of medicinal product 18-FDG and (ii) the subsequent organisation of a tender procedure for the supply of that medicinal product, IBA challenged the following acts:

– the grant of the sum of EUR 700 000 by the Veneto Region to the Sacro Cuore to cover the cost of the supply, free of charge, of medicinal product 18-FDG to all interested healthcare establishments in that region;

– the model agreement relating to the establishment of the supply relationship between each regional public hospital and the Sacro Cuore, drawn up by the Veneto Region; and

– various regional and State measures concerning the contested award and the conditions relating to the production and supply of that medicinal product.

12 By judgment of 26 April 2016, the Tribunale amministrativo regionale del Lazio (Regional Administrative Court, Lazio) dismissed IBA’s action, principally on two grounds.

13 First, the supply of the medicinal product 18-FDG at issue is free of charge, since neither the regional funding of EUR 700 000 granted to the Sacro Cuore nor payment of the transport costs for the medicinal product constitute direct consideration.

14 Second, even if the contract for the supply of that medicinal product were pecuniary in nature, the award of that contract which is challenged constituted an agreement between public authorities to which EU law on public procurement does not apply.

15 As a consequence, IBA brought an appeal against that judgment before the Consiglio di Stato (Council of State, Italy). In substance, the latter considers that the assessment by the court of first instance as to the interpretation of the concept of a contract for pecuniary interest is incorrect. However, the Consiglio di Stato (Council of State) agrees with its assessment that the contested supply contract establishes cooperation between public bodies which falls outside the scope of public procurement legislation.

16 In the first place, it considers principally that, apart from the reimbursement of transport costs for medicinal product 18-FDG, the Sacro Cuore does not formally receive any payment in consideration for the supply of that medicinal product to the recipient public health establishments.

17 However, according to a purposive interpretation of Article 1(2)(a) of Directive 2004/18, the nature of the contract as a contract for pecuniary interest is established if the operator which makes the supply of the goods concerned receives a significant economic advantage from a public authority other than the contracting authority and it is reasonable to believe that that payment is made specifically for the supply of those goods. In the present case, that is the purpose of the grant of the EUR 700 000 made by the Veneto Region to the Sacro Cuore.

18 In the second place, the Consiglio di Stato (Council of State) considers that the Italian Public Procurement Code and EU law on public procurement apply to a procedure such as that mentioned in paragraph 8 of the present judgment.

19 It is clear from settled case-law of the Court that contracts for pecuniary interest concluded between two public authorities are public contracts, including the situation in which the authority which operates as a private operator is not primarily profit-making. Furthermore, a contract cannot fall outside the definition of public contract merely because the remuneration remains limited to reimbursement of the expenses incurred to provide the agreed service.

20 Moreover, neither of the two situations which permit derogation from the application of public procurement law correspond to the facts in the dispute in the main proceedings. The referring court does not consider that it is dealing with a contract concluded by an authority with another legally distinct public body over which that authority exercises a control which is similar to that which it exercises over its own departments, within the meaning of the judgment of 18 November 1999, Teckal (C‑107/98, EU:C:1999:562), nor a contract establishing cooperation between public bodies aiming to implement a public service task common to them, within the meaning, in particular, of the judgment of 13 June 2013, Piepenbrock (C‑386/11, EU:C:2013:385).

21 However, according to the Consiglio di Stato (Council of State), the Sacro Cuore, as a classified hospital, should be treated, in the context of the dispute in the main proceedings, as fully equivalent to a contracting authority, even if it is not a body governed by public law.

22 Finally, the referring court observes that the Court of Justice has not yet adjudicated on the very specific situation of bodies such as classified hospitals, which are functionally integrated into the regional healthcare system, even though they are still privately managed in terms of funding, the appointment of their directors and their internal operating rules.

23 It is on that basis that the Consiglio di Stato (Council of State) decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1) Do the EU rules on the award of public works contracts, public service contracts and public supply contracts, and in particular Articles 1 and 2 of [Directive 2004/18], also include within their scope complex operations whereby a public contracting authority means to award directly to a given economic operator specific-purpose funding, the sole purpose of which is the manufacture of products intended to be supplied free of charge, without any subsequent tendering procedure, to various authorities which are not required to make any payment to the supplier; and, consequently, do the abovementioned rules of EU law preclude national rules which permit the direct award of specific-purpose funding for the manufacture of products intended to be supplied free of charge, without any subsequent tendering procedure, to various authorities which are not required to make any payment to the supplier?

(2) Do the EU rules on the award of public works contracts, public service contracts and public supply contracts, and in particular Articles 1 and 2 of [Directive 2004/18] and Articles 49, 56 and 105 [TFEU et seq.], preclude national rules which treat private “classified” hospitals as the equivalent of public hospitals, by bringing them within the system of national public healthcare planning, governed by special agreements that are distinct from ordinary accreditation relationships with other private parties that participate in the system of provision of healthcare services, in the absence of the requirements for recognition as a body governed by public law and the requirements for direct awards in accordance with the “in-house provision” model, and thereby take them outside the scope of national and EU rules on public contracts, including in cases where such classified hospitals are entrusted with the manufacture and supply, free of charge, to public healthcare establishments of specific products which are necessary for the provision of healthcare services and where, at the same time, they receive specific-purpose public funding for the purpose of providing such supplies?’

24 By its first question, the referring court asks essentially, whether Article 1(2)(a) of Directive 2004/18 must be interpreted as meaning that the concept of ‘contracts for pecuniary interest’ includes the decision by which a contracting authority directly awards to a specific economic operator, and therefore without organising a public tendering procedure, specific-purpose funding for the manufacture of products to be supplied free of charge by that economic operator to various authorities which are not required to make any payment to the supplier, except for the payment to cover transport costs of a flat-rate of EUR 180 per delivery.

25 As a preliminary point, it appears that, in the case in the main proceedings, the Veneto Region and the Sacro Cuore concluded a contract by which the Sacro Cuore undertook to produce and distribute the medicinal product 18-FDG free of charge to regional public hospitals against payment by the latter of transport costs at a flat-rate of EUR 180 per delivery. For that purpose, the Veneto Region granted the Sacro Cuore specific-purpose funding of EUR 700 000 for the production of that medicinal product.

27 In accordance with Article 1(2)(a) of Directive 2004/18, in order to be covered by the definition of public contracts, a contract concluded between one or more economic operators and one or more contracting authorities must have been concluded ‘for pecuniary interest’.

28 It is clear from the usual legal meaning of ‘for pecuniary interest’ that those terms designate a contract by which each of the parties undertakes to provide a service in exchange for another.

29 Thus, a contract providing for the exchange of services is covered by the concept of public contract, even if the remuneration provided for is limited to the partial reimbursement of costs incurred in order to supply the services agreed (see to that effect, judgments of 19 December 2012, Ordine degli Ingegneri della Provincia di Lecce and Others, C‑159/11, EU:C:2012:817, paragraph 29, and of 13 June 2013, Piepenbrock, C‑386/11, EU:C:2013:385, paragraph 31).

30 In the case in the main proceedings, the determination as to whether the contract for the production and supply of a medicinal product is for pecuniary interest must therefore take into account the existence of consideration paid to the supplier of that medicinal product by means of a grant from the Veneto Region of EUR 700 000.

31 It follows that a contract, such as that at issue in the main proceedings, by which an economic operator undertakes to manufacture and supply a product to various authorities in exchange for specific-purpose funding granted for the achievement of that objective, falls within the definition of contract ‘for pecuniary interest’ within the meaning of Article 1(2)(a) of Directive 2004/18, even though the costs of production and distribution of that product are not fully covered by that grant or by the transport costs which may be charged to those authorities.

32 Therefore, the answer to the first question is that Article 1(2)(a) of Directive 2004/18 must be interpreted as meaning that the concept of ‘contract for pecuniary interest’ includes a decision by which a contracting authority directly awards, to a specific economic operator, and therefore without organising a public tendering procedure, specific-purpose funding for the manufacture of products to be supplied free of charge by that economic operator to various authorities which are exempt from payment of any consideration to the supplier, except for the payment of a fixed sum of EUR 180 per delivery, for transport costs.

33 By its second question, the referring court asks essentially whether Article 1(2)(a) and Article 2 of Directive 2004/18 must be interpreted as precluding national rules, such as those at issue in the main proceedings, which, by treating private ‘classified’ hospitals as the equivalent of public hospitals by bringing them within the system of national public healthcare planning governed by special agreements that are distinct from ordinary accreditation relationships with other private parties that participate in the system of provision of healthcare services, take them outside the scope of national and EU rules on public contracts, including in cases where such classified hospitals are entrusted with the manufacture and supply, free of charge, to public healthcare establishments of specific products which are necessary for the provision of healthcare services in exchange for public funding granted for the manufacture and supply of those products.

34 In that connection, it must be recalled that, under Article 1(2)(a) of Directive 2004/18, in order to constitute a public contract, and consequently, to be covered by the relevant EU legislation, the contract concluded for pecuniary interest concerned must have been concluded between one or more economic operators and one or more contracting authorities.

35 As is clear from settled case-law, two types of contracts entered into by a public entity do not fall within the scope of European Union public procurement law (judgment of 19 December 2012, Ordine degli Ingegneri della Provincia di Lecce and Others, C‑159/11, EU:C:2012:817, paragraph 31).

36 First, contracts concluded between a public body fulfilling the conditions laid down in Article 1(9) of Directive 2004/18 to be classified as a ‘contracting authority’ within the meaning of that directive and a person legally separate from it, where, that body simultaneously exercises over that person a control which is similar to that which it exercises over its own departments and that person carries out the essential part of its activities with the controlling authority or authorities (see, to that effect, judgments of 18 November 1999, Teckal, C‑107/98, EU:C:1999:562, paragraph 50, and of 11 January 2005, Stadt Halle and RPL Lochau, C‑26/03, EU:C:2005:5, paragraph 49).

37 In that connection, it suffices to state that it is clear from the information from the referring court that neither the Veneto Region nor the contracting authorities mentioned in paragraph 8 of the present judgment exercise control over the Sacro Cuore similar to that which they exercise over their own departments.

38 Thus, national rules, such as those at issue in the main proceedings cannot take contracts concluded between an institution such as the Sacro Cuore and a public body out of the scope of application of the rules on public tendering on the basis of the exception laid down in paragraph 36 of the present judgment.

39 Second, public contracts for pecuniary interest which establish cooperation between public entities with the aim of ensuring that a public task that all of them have to perform is carried out fall outside the scope of EU law on public tendering, as long as such contracts are concluded exclusively by public bodies, without the participation of a private party, so no private provider of services is placed in a position of advantage vis-à-vis competitors and implementation of that cooperation is governed solely by considerations and requirements relating to the pursuit of objectives in the public interest (see, to that effect, judgments of 9 June 2009, Commission v Germany, C‑480/06, EU:C:2009:357, paragraphs 44 and 47, and of 13 June 2013, Piepenbrock, C‑386/11, EU:C:2013:385, paragraphs 36 and 37).

40 Since all of the criteria mentioned in the preceding paragraph of the present judgment are cumulative, a contract concluded between public entities can fall outside the scope of European Union public procurement rules by virtue of that exception only if that contract fulfils all of those criteria (see, to that effect, judgment of 13 June 2013, Piepenbrock, C‑386/11, EU:C:2013:385, paragraph 38).

41 The first of those criteria is based specifically on the requirement that that form of cooperation is between public bodies.

42 It must be held that that criterion is clearly not satisfied in the present case. ‘Classified’ hospitals, such as the Sacro Cuore, are legal persons, which are entirely privately managed in terms of funding, the appointment of their directors and their internal operating rules, as is apparent from paragraph 37 of the present judgment.

43 Therefore, the answer to the second question is that Article 1(2)(a) and Article 2 of Directive 2004/18 must be interpreted as precluding national rules, such as those at issue in the main proceedings which, by treating private ‘classified’ hospitals as equivalent to public hospitals on account of their integration into the system of national public healthcare planning governed by special agreements that are distinct from ordinary accreditation relationships with other private parties that participate in the system of provision of healthcare services, take them outside the scope of national and EU rules on public contracts, including in cases where such classified hospitals are entrusted with the manufacture and supply, free of charge, to public healthcare establishments of specific products which are necessary for the provision of healthcare services and where, at the same time, they receive public funding specifically for the manufacture and supply of those products.

44 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

1. Articles 1(2)(a) of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts must be interpreted as meaning that the concept of ‘contract for pecuniary interest’ includes a decision by which a contracting authority directly awards, to a specific economic operator, and therefore without organising a public tendering procedure, specific-purpose funding for the manufacture of products to be supplied free of charge by that economic operator to various authorities which are exempt from payment of any consideration to the supplier, except for the payment of a fixed sum of EUR 180 per delivery, for transport costs.

2. Article 1(2)(a) and Article 2 of Directive 2004/18 must be interpreted as precluding national rules, such as those at issue in the main proceedings which, by treating private ‘classified’ hospitals as equivalent to public hospitals on account of their integration into the system of national public healthcare planning governed by special agreements that are distinct from ordinary accreditation relationships with other private parties that participate in the system of provision of healthcare services, take them outside the scope of national and EU rules on public contracts, including in cases where such classified hospitals are entrusted with the manufacture and supply, free of charge, to public healthcare establishments of specific products which are necessary for the provision of healthcare services and where, at the same time, they receive public funding specifically for the manufacture and supply of those products.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> IBA Molecular Italy (Public supply contracts - Judgment) [2018] EUECJ C-606/17 (18 October 2018) URL: http://www.bailii.org/eu/cases/EUECJ/2018/C60617.html Cite as: ECLI:EU:C:2018:843, EU:C:2018:843, [2018] EUECJ C-606/17

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