The European Court of Justice (ECJ) has given a ruling (C-220/06) on a preliminary reference from a Spanish court on whether the grant of a contract without call for tender for the provision of postal services covering both reserved and non-reserved services, to a state-owned company, infringes procurement law and the EU postal liberalisation directives. With respect to postal services reserved to a single universal provider, the ECJ held that these are not subject to competition. It then went on to consider the more complex issue of the application of the procurement rules to non-reserved services. The ECJ dismissed arguments that the "in-house" exception applied since the provider did not carry out the essential part of its activities with the contracting authority. Nor did it consider that the exemption applicable to services provided under an exclusive right pursuant to law, regulation or administration applied, since this would be inconsistent with the aims of the postal liberalisation directive. The ECJ further rejected an argument that an exemption to the application of competition law to public bodies under Article 86(2) EC would be applicable in this instance. Consequently, the ECJ concluded that public service contracts for non-reserved postal services fall within the scope of the procurement directives in so far as the value of the contract is above the relevant threshold. Below the thresholds, the provisions under the EC Treaty governing: free movement of services, competition and the principles of transparency, equal treatment, and non-discrimination apply.