Case C-672/26, Konkurrensverket – when the in-house company sells to everyone else
The in-house exception lets public authorities hand contracts to their own companies without a tender, provided those companies work essentially for them. Sweden’s competition authority says a company that sells on the open market under the contract is not working for its owners.
Facts
Konkurrensverket, the Swedish Competition Authority, is the appellant before the Högsta förvaltningsdomstolen against fourteen municipalities in Skåne — among them Malmö, Lund, Trelleborg and Ystad — which jointly control a legal person to which they award contracts without competition. Article 12(3) of Directive 2014/24/EU permits such awards where, among other conditions, “more than 80 % of the activities of that legal person are carried out in the performance of tasks entrusted to it by the controlling contracting authorities”. Part of what the company does under the contract it was awarded consists of sales to third parties, on a market where it competes with private undertakings. The question is whether those sales count towards the 80% — as performance of a task the municipalities entrusted to it — or against it. The notice gives no further facts about the activity concerned.
Questions Referred
Are sales made by a controlled legal person as part of a contract awarded by the controlling contracting authorities to be considered to form part of the activities carried out in the performance of tasks entrusted to it by those authorities within the meaning of point (b) of the first subparagraph of Article 12(3) of the Procurement Directive, even if the sales are made to third parties on a market in which the controlled legal person is in competition with other companies?
Sources
OJ notice C/2026/4292 (EUR‑Lex) · Case file on CURIA · Directive 2014/24/EU
Comment
The municipalities have the older case law on their side. In Case C‑340/04, Carbotermo (ECLI:EU:C:2006:308) — decided under the predecessor directives, when the test was still that the company carry out “the essential part of its activities” with the controlling authority — the Court held that account must be taken of “all the activities which that undertaking carries out on the basis of an award made by the contracting authority, regardless of who pays for those activities, whether it be the contracting authority itself or the user of the services provided”. On that reading, what matters is the source of the mandate, not the identity of the customer: a task entrusted by the owners is a task performed for the owners, even when members of the public pay for it.
The competition authority’s argument is that Carbotermo was about users of a public service — the people a municipal company supplies with heat or water on the municipality’s behalf — and not about trading on a contestable market. Article 12 codified the in-house case law in 2014 and fixed the threshold at 80%, measured under Article 12(5) by “the average total turnover, or an appropriate alternative activity-based measure”. The purpose of the threshold is to stop a company that enjoys contracts without a tender from using that position to compete with private operators. If sales made in competition count as tasks for the owners merely because the contract mentions them, a municipality could award a contract whose content is largely commercial and place it beyond the reach of the directive by drafting.
So the Court will be choosing between two ideas of what “entrusted” means: a formal one, in which the contract defines the task, and a functional one, in which a task performed on a competitive market is not public in character whoever assigned it. The case belongs with the line that began with Teckal (C‑107/98, ECLI:EU:C:1999:562) and of which this site reported an earlier chapter in Centro Hospitalar de Setúbal (C‑574/12), on the control limb of the test. This is the activity limb’s turn — and for the many jointly owned municipal companies across the Union that sell part of their output on open markets, the answer will decide whether their in-house status survives.