Questions About the Initiative of the European Commission Concerning the Awarding and Compulsory Competitive Tendering of Public Service Concessions

H. Cox

Annals of Public and Cooperative Economics, 2003, vol. 74, issue 1, 7-31

Abstract: The ruling of the European Commission is that the award of contracts by regional or local authorities for the provision of services of general economic interest must be done by way of competitive tendering. Such contracts must not be awarded to the authority's own public enterprises or to any other enterprise, including by means of unilateral State act, without a call for tenders, a practice that had previously been common in many Member States. Public service concessions are also subject to the competition rules of the EC Treaty. Should the European Commission enact a directive concerning compulsory competitive tendering, this would result, for several Member States, in a serious change of paradigm as regards the awarding of public service concessions. Against this background, this article will attempt to find answers to the following questions: —How is the present relationship of the regional or local authority with its own public enterprise to be considered? —Are there any limits to applying the rules on competition of the EC Treaty to public service concessions? —What kind of positive and negative effects concerning economic efficiency and supply of specific public services result from the awarding of public service concessions and from compulsory competitive tendering? —What kind of, and what amount of, transaction costs result from compulsory competitive tendering and from the awarding of concessions? —Does competitive tendering work properly, and are public tenderers given equal opportunities? —Are there any alternatives to compulsory competitive tendering that would achieve an efficient market performance and provide sufficient supply?

Date: 2003
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