In a judgment of the European Court related to a Greek case (Club Hotel Loutraki), the Court held that in the context of the privatisation of a previously state owned business, an incidental public works obligation was insufficiently central to that contract to bring it within the scope of the public procurement rules.
In this case the contract at issue – which was considered whole and indivisible – was for the purchase of 49% of the shares of a public undertaking, and on the facts this was clearly the heart of the contract by any measure. That there were incidental public works obligations tied in to the purchase of the shares was considered insufficiently central to bring this contract (for the sale of a business) within the procurement rules as a public works contract subject to mandatory OJEU advertisement.
The Court recalled several precedents including the notorious Auroux v Roanne judgment regarding the application of procurement rules to land development agreements. The principle thus established by the Court is that cases of mixed contracts (where the different aspects are inseparably linked and thus form an indivisible whole) the classification of the contract (ie. is it a public contract subject to OJEU or not) must be assessed by what “constitutes the predominant feature of the contract”.
Thus, if the predominant feature is the sale of a business, that is not a public works, services or supply contract, so the rules do not apply.
In practice this can be a difficult test to apply, because in many cases of mixed contracts it may be difficult to determine the “predominant feature” of the contract, in addition to whether all of its elements can be considered indivisible and all part of one contract. In such cases it will pay to err on the side of caution, because if a reminder were needed, the consequences of getting this judgement wrong (ie. concluding a contract is outside the rules when it should not be) now include the potential for declaration of ineffectiveness (post entering into the contract) and a fine against the authority found in breach of the rules.