Case C-271/08
European Commission
v
Federal Republic of Germany
(Failure of a Member State to fulfil obligations – Directives 92/50/EEC and 2004/18/EC – Public service contracts – Occupational old-age pensions of local authority employees – Direct award of contracts, without a call for tenders at European Union level, to pension providers designated in a collective agreement concluded between management and labour)
Summary of the Judgment
1.Fundamental rights – Right to bargain collectively – Reconciliation with the requirements relating to the fundamental freedoms guaranteed by the Treaty – Freedom of establishment – Freedom to provide services – Directives in the field of public procurement
(Charter of Fundamental Rights of the European Union, Art. 28; European Parliament and Council Directive 2004/18; Council Directive 92/50)
2.Approximation of laws – Procedures for the award of public service contracts – Directives 92/50 and 2004/18 – Scope
(European Parliament and Council Directive 2004/18; Council Directive 92/50)
3.Approximation of laws – Procedures for the award of public service contracts – Directives 92/50 and 2004/18 – Scope – Value of the contract
(European Parliament and Council Directive 2004/18, Art. 9(8); Council Directive 92/50, Art. 7(4) and (5))
1.The fact that the right to bargain collectively is a fundamental right, and the social objective, perceived as a whole, of a collective agreement on the conversion, for local authority employees, of earnings into pension savings, cannot in themselves mean that local authority employers are automatically excluded from the obligation to comply with the requirements stemming from Directive 92/50 relating to the coordination of procedures for the award of public service contracts and Directive 2004/18 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, which implement freedom of establishment and the freedom to provide services in the field of public procurement.
The terms of collective agreements are not excluded from the scope of the provisions on freedom of movement for persons.
Furthermore, exercise of a fundamental right such as the right to bargain collectively may be subject to certain restrictions. In particular, whilst the right to bargain collectively may enjoy constitutional protection in a Member State, the fact remains that, as provided in Article 28 of the Charter of Fundamental Rights of the European Union, that right must be exercised in accordance with European Union law.
Nor can it be considered that it is inherent in the very exercise of the freedom of management and labour and of the right to bargain collectively that the directives which implement freedom of establishment and the freedom to provide services in the field of public procurement will be prejudiced.
Finally, unlike the objective, agreed between management and labour, of enhancing the level of the pensions of local authority employees, the designation, in a collective agreement, of bodies and undertakings to which the award of service contracts in respect of occupational old-age pensions is envisaged does not affect the essence of the right to bargain collectively.
(see paras 41-43, 47, 49)
2.A Member State has failed to fulfil its obligations, until 31 January 2006 under Article 8, in conjunction with Titles III to VI, of Directive 92/50 relating to the coordination of procedures for the award of public service contracts and from 1 February 2006 under Article 20, in conjunction with Articles 23 to 55, of Directive 2004/18 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, by reason of the direct award, without a call for tenders at European Union level, of service contracts in respect of occupational old-age pensions to bodies or undertakings envisaged by a provision of a collective agreement, the contracts having been awarded by local authorities or local authority undertakings which reached the critical size, in terms of the number of employees, beyond which the value of those contracts equals or exceeds the relevant threshold for the purposes of the application of those directives.
Exercise of the fundamental right to bargain collectively must be reconciled with the requirements stemming from the freedoms protected by the FEU Treaty and be in accordance with the principle of proportionality. A fair balance in the account taken of the respective interests involved, namely enhancement of the level of the retirement pensions of the workers concerned, on the one hand, and attainment of freedom of establishment and of the freedom to provide services, and opening-up to competition at European Union level, on the other, is not struck by a provision of a collective agreement which effectively disapplies the rules stemming from Directives 92/50 and 2004/18 completely, and for an indefinite period, in the field of local authority employees’ pension saving, although compliance with the directives concerning public service contracts is not irreconcilable with attainment of the social objective pursued by the signatories of the collective agreement.
In addition, the conditions required by those directives for classification as ‘public contracts’ are met since, first, even though the local authority employers implement, in the field of occupational old-age pensions, a choice predetermined by a collective agreement, they are nevertheless contracting authorities and, second, the group insurance contracts are of direct economic benefit to the employers which conclude them, so that they are contracts for pecuniary interest. The fact that the ultimate recipients of the retirement benefits are the workers who have participated in that measure cannot call into question the fact that those contracts are for pecuniary interest.
(see paras 44, 52-53, 66, 75, 80, 89, 105, operative part)
3.In the case of contracts concerning services for the provision of occupational old-age pensions for local authority employees by means of the conversion of earnings into pension savings, the ‘estimated contract value’, within the meaning of the first indent of Article 7(4) of Directive 92/50 relating to the coordination of procedures for the award of public service contracts and Article 9(8)(a)(i) of Directive 2004/18 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, corresponds to the estimated value of the premiums, that is to say, the estimated value of the contributions deducted, under salary conversion, from the earnings of the relevant workers in the local authority or local authority undertaking concerned and used to finance the ultimate occupational old-age pension benefits. Those premiums constitute the principal consideration for the services provided by the body or undertaking concerned to the local authority employer in the context of the provision of those benefits. In a context where it is not possible to indicate the total value of those premiums precisely at the time when the contract in question is awarded because of the choice left to each employee as to whether to participate in the salary conversion measure, and in the light of the duration of such a contract, which is long, or even indefinite, the second indent of Article 7(5) of Directive 92/50 and Article 9(8)(b)(ii) of Directive 2004/18 respectively require ‘the monthly [instalment/value] multiplied by 48’ to be taken as the basis for calculating the estimated value of that contract. It is therefore necessary, first, to base the calculation on an estimate of the average monthly amount subject to earnings conversion per employee, multiplied by 48, then to determine, in the light of the result of that multiplication, the number of employees individually participating in salary conversion needed in order to reach the relevant threshold for application of the European Union public procurement rules, and finally – on the basis of an estimate of the percentage of local authority employees participating in the salary conversion measure – to define the critical size, in terms of the number of employees, beyond which local authority employers have awarded contracts reaching or exceeding that threshold.
(see paras 86-89)