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Brussels, 28 October 2010

Public procurement: Commission acts to ensure fair access to waste management contracts in Sweden

The European Commission has acted to ensure that EU rules on public procurement – the spending of public money by public authorities – are respected in Sweden. The Commission is concerned that Sweden has breached EU public procurement rules by allowing local authorities to award contracts for waste management without any tendering procedure. These rules are designed to ensure fair and transparent competition for public contracts in Europe, thereby creating opportunities for European companies while ensuring best value for public money. If the rules are not respected, there is a risk of a closed market and waste of public money. The Commission's request to Sweden takes the form of a reasoned opinion. If Sweden does not reply satisfactorily within two months, the Commission may refer this matter to the Court of Justice.

What is the aim of the EU rule in question?

Public procurement is about how public authorities spend public money. It covers purchases of everything from coffee to computer systems, waste water plants, ship building or consulting services. Total public procurement in the EU is estimated at about 17% of the Union’s GDP. The open and transparent tendering procedures required under EU public procurement rules mean more competition, stronger safeguards against corruption, and better service and value for money for taxpayers.

How is Sweden not respecting these rules?

The Swedish municipalities of Ängelholm and Helsingborg awarded several waste management contracts to a company they co-own with other municipalities. The municipalities of Tomelilla and Simrishamn also awarded waste management contracts to a company they co-own with other municipalities. In both cases, no prior call for tender was published.

Only under very strict conditions can authorities directly award contracts to companies they own themselves or co-own with other authorities. In previous rulings, the Court of Justice has made it clear that authorities are only allowed to do so when it concerns an "in-house" situation: this is when an authority exercises the same amount of control over the company as it does over its own administrative departments. Another condition is that the major part of the company's activities is carried out for their owners, in this case the municipalities.

However, the Commission has learned that the two companies concerned are clearly active in the private market where they make a significant share of their turn-over. Therefore, the so-called "in-house" conditions developed in the case law of the Court of Justice are not met.

Informed of the facts by a complainant, the Commission asked Sweden in a letter of formal notice to comment on the situation in January 2010. As no satisfactory response was provided, the Commission has decided to initiate the second stage of the formal infringement procedure by issuing a reasoned opinion.

Why are citizens and businesses suffering as a result?

As the contracts were directly awarded to the two companies, no contract notices were published or transparent procedures launched. This meant that other interested companies, be they Swedish or from elsewhere in the EU, were precluded from participating. By disrespecting the principles of transparency and equal treatment enshrined in the EU public procurement rules, the Swedish municipalities concerned have distorted competition and may have wasted taxpayers' money.

More information

Public procurement:

Latest information on infringement proceedings concerning all Member States:

For more information on EU infringement procedures, see MEMO/10/530.

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