Public Procurement: European Court of Justice rules that environmental factors may be taken into account, September 2002

The European Court of Justice delivered a landmark decision on 17 September 2002 when it ruled that public and social authorities may consider social and environmental factors when awarding public contracts.

The case concerned the decision by the City of Helsinki in 1998 to award a contract to a bus company which used buses emitting less pollution and with lower noise pollution than those used by a company offering the lowest price. The company offering the more economic deal, a Finnish company called Concordia, took the Helsinki authorities to court on the basis that its decision went against EU competition public procurement rules which state that contracts should be awarded to the 'most advantageous economic offer'.

However, the European Court of Justice ruled that the contracting authority may take ecological criteria into consideration, provided that those criteria:

• are connected with the subject-matter of the contract
• do not give the contracting authority an unrestricted freedom of choice
• are expressly mentioned in the contract documents or the tender notice
• comply with all the fundamental principles of Community law, in particular the principle of non-discrimination

The Court's decision comes at a time when the EU is in the process of reforming its public procurement regulations. Although the European Commission published a Communication in July 2001 which suggests ways of integrating environmental considerations into public procurement procedures it continues to emphasise that the main criterion should be the cost. However the European Parliament called for greater emphasis on social and environmental criteria in its first reading of the reform proposals in January 2002 and it is expected to reiterate this call at its second reading in Autumn 2002. The Parliament's amendments will be considered at the next Internal Market councils scheduled for 30 September 2002and 14 November 2002 when the reform of the public procurement regulation will be on the agenda.

Links:

European Court of Justice:

• 17.09.02: Press Release: Judgment of the Court of Justice in Case C-513/99 - Concordia Bus Finland Oy Ab v Helsingin kaupunki and HKL-Bussiliikenne
• Judgement of the court in Case C-513/99

European Commission:

• DG Internal Market: Public Procurement
• DG Environment: The Greening of Public Procurement

Eric Davies
KnowEurope Researcher
Compiled: Wednesday, 18 September 2002

The European Court of Justice delivered a landmark decision on 17 September 2002 when it ruled that public and social authorities may consider social and environmental factors when awarding public contracts.