Council of European Municipalities and Regions (CEMR)
European section of United Cities and Local Governments

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Internal market - 30.09.2005

Intercommunal seminar (29.09.05): Local government criticises EU Commission and Court of Justice
Representatives from European local government and the European Commission came face to face at CEMR's seminar on intercommunal cooperation, in Brussels, on 29 September 2005. At issue was the impact of European law on cooperation between municipalities.
Over 80 participants attended the seminar, including local government representatives from Germany, France, Italy, Britain, Poland, Sweden, the Czech Republic, Belgium, Austria, Greece, Denmark, Estonia, Slovakia, the Netherlands, Cyprus, Luxemburg, ...
(note: links to presentations and background documents at bottom of page)
CEMR secretary general Jeremy Smith, gave participants an overview of the current situation facing intercommunal cooperation. He pointed out that recent judgements of the Court of Justice put at risk many long standing arrangements between local governments. These include the delivery of frontline services, but also back-office cooperation between municipalities, whose purpose is to improve efficiency, eg sharing call centers: We cannot accept the full reasoning of the Court in the recent Stadt Halle and Coname cases, and we are also concerned at the approach of the Commission which appears not to understand the advantages of intermunicipal cooperation.
Jeremy Smith explained that the main problem encountered by local governments in the field of intercommunal cooperation is the public procurement directives: The current European legislation is not clear about whether and in which cases a group of municipalities is allowed to directly assign a task to a public company they have created together and for that purpose, or whether and in which cases they must issue a call for tenders open to private companies. CEMR's view is that local governments should be allowed to directly assign a task to a company they control along with other municipalities if the task is a local public service delivered across their joint area, and that the main aim is not to make profit.
The concept of intercommunal cooperation is more than well established throughout Europe. Prior to the seminar, the Council of European Municipalities and Regions conducted a survey amongst its members. The results, presented at the seminar, show that intercommunal cooperation exists in various forms and shapes in every European country. In every country that responded to the survey, the creation of intercommunal cooperation is not subject to tendering procedures, and equally, in almost none of these countries is the participation of private shareholders subject to tendering procedures.
Local government speak with one voice
European local government representatives explained how intercommunal cooperation works in their respective country and what impact the EU legislation and Court of Justice's decision may have on it.
The representative of the association of Flemish cities and municipalities, Christof Delatter, called on the European Commission to aknowledge that intercommunal cooperation can have a positive influence on competition. The presence of companies set up by a group of municipalities can force private companies to take them in consideration when replying to a call for tenders. Similarly, the presence of private companies forces publicly-owned companies to be more economically efficient. Unfortunately, when a group of municipalities tries to become more efficient by creating a jointly-owned company, the European Commission imposes stricter rules on them than on the private sector.
Lee Digings, of the British Improvement and Development Agency for local government, stressed the contradiction British municipalities are faced with: The British government is pressing its local government to be more efficient, i.e. to join forces to provide better services; but at the same time, the current attitude by EU bodies discourages local government to create such groupings. He also explained that "public-public partnership" (as opposed to public-private partnership) in Britain is not only between local governments; it can be between local and regional governments, or even between municipalities and the national government. French participants added that this multi-level cooperation applies to France as well.
The EU institutions reply...
European Commission's DG Internal Market representative, Robert Wein, disagreed with local representatives's views, he explained that the assumption that intercommunal cooperation is a field totally distinct from public procurement laws is erroneous: In many cases, there is an overlap of both concepts. Cooperation without contracts against remuneration is outside the realm of Internal market rules, but when such cooperation includes remuneration between public entities, then the Internal market rules apply. We must make a distinction between procurement activities between public entities, and other forms of intercommunal cooperation.
The Court of Justice was represented at CEMR's seminar through Rita-Maria Kirschbaum. She pointed out that more and more in the recent years, the European Commission has seized the Court on issues connected to public procurement, even in cases when no third party has started court proceedings.
Presentations and background documents
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