The European Court of Justice (ECJ) has dismissed an action by the European Commission (Commission) claiming that an agreement between a group of German local administrations over waste disposal breached procurement law. Four local bodies in the Hamburg Metropolitan Region entered into a 20-year contract with the city of Hamburg Cleansing Department (HCD) for waste incineration. Following a complaint, the Commission brought an infringement action against Germany before the ECJ, alleging that the waste disposal contract was awarded in breach of the procurement rules. The ECJ considered whether the arrangement might fall within the exception that applies to "in-house" contracts. The Court also noted that it is now a matter of settled law that the delegation of a public service to an inter-municipal co-operative intended to exclusively provide services to the affiliated municipalities is also outside the scope of the procurement directives.
In this instance, the four administrative authorities did not exercise control over HCD or over the operator of the waste incinerator, consequently the in-house exclusion would not apply. However, upon close examination of the co-operation between the German local authorities and the HCD, the ECJ concluded that the arrangement involved only public authorities without any private parties; and it did not provide for or prejudice the award of any contract that might be necessary for the construction and operation of the waste treatment facility. In essence the co-operation was aimed at allowing the authorities to co-operate in order to carry out their public service tasks jointly. The ECJ held, on 9 June 2009, that this co-operation did not undermine the objectives of procurement law and did not fall within its scope.