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Brussels, 14 March 2011

Public procurement: Commission seeks Germany's compliance with Court judgment on pension schemes for local authority employees

The European Commission today decided to ask Germany for information on measures taken to comply with a 2010 Court of Justice judgment (C-271/08) that Germany had failed to fulfil its obligations under EU public procurement rules by directly awarding contracts for group pension services on the basis of a collective agreement without an EU-wide call for tender. The Commission considers that the German authorities have not taken the necessary measures to comply with the judgment of the Court as the collective agreement and the framework contracts are still in place. If the German authorities do not inform the Commission within two months of measures taken to comply with the Court ruling, the Commission may refer the case to the Court for a second time and request the Court to impose financial penalties on Germany.

What is the aim of the EU rule in question?

Public procurement is about how public authorities spend public money on construction, goods and services. It covers purchases of everything from coffee to computer systems, waste water plants, shipbuilding 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 Germany not respecting these rules?

A collective agreement concluded in 2003 between the Association of Municipal Employers (Vereinigung kommunaler Arbeitgeberverbände, VKA) and the trade union (ver.di – Vereinigte Dienstleistungsgewerkschaft e.V.) states that salary conversion has to be provided by the municipal employers either through public supplementary pension providers (öffentliche Zusatzversorgungseinrichtungen), or by using members of the Sparkassen-Finanzgruppe (group of savings banks) or municipal insurance companies (Kommunalversicherer). On the basis of this collective agreement, German municipalities and municipal enterprises have awarded pension service contracts directly and without transparent tendering procedures to undertakings belonging to the three groups of service providers mentioned in the agreement.

In 2007, the European Commission referred Germany to the EU Court of Justice for failing to conduct competitive tendering procedures, as required by EU public procurement law (see IP/07/925).

The Court ruled in 2010 that under EU public procurement rules (Directive 2004/18/EC), service contracts for occupational old-age pensions for employees of local authorities can only be awarded following an EU-wide call for tender. In this case, the practice of awarding contracts above the threshold for application of Directive 2004/18/EC, without a call for tender, to pension providers identified in a Collective Agreement1 constituted a breach of this Directive.

Under Article 260 of the Treaty on the Functioning of the European Union, Member States are obliged to take the necessary measures to comply with Court judgments. In order to terminate the infringement identified in the Court ruling, all framework contracts between local authorities and pension service providers concerned by the judgment have to be terminated, and the provisions of the Collective Agreement must be brought into line with EU law.

How are citizens and business suffering as a result?

Under the collective agreement on the conversion, for local civil servants, of earnings into pension savings, the pension services in question are reserved to three specific groups of service providers, which exclude a large number of insurance companies from the market. If the opportunity to provide the pension services in question were opened up to fair and transparent competition in accordance with EU public procurement rules, taxpayers would stand to benefit from the possibility of better quality services and improved value for money.

More information

Public procurement:

Latest information on infringement proceedings concerning all Member States:

For more information on EU infringement procedures, see MEMO/11/162

1 :

The Collective agreement on the conversion, for local authority employees, of earnings into pension savings – "Tarifvertrag zur Entgeltungwandlung für Arbeitnehmer im kommunalen öffentlichen Dienst"

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