Opinion of Advocate General Gulmann
Mr President,
Members of the Court,
1. The Raad van State, Belgium, has requested the Court to interpret the Community's directives concerning public works contracts for the purpose of deciding whether it is compatible with those directives to take into account, when examining an application for inclusion on the Belgian list of registered contractors submitted by the dominant legal person in a Netherlands group, only the qualifications of that company itself and not the qualifications of the other companies in the group.
Background to the question referred to the Court
2. The Netherlands company, Ballast Nedam Groep NV (hereinafter referred to as BNG) was, until 1987, registered as a contractor under the Belgian legal provisions on the registration of contractors. The relevant provisions are laid down in a Decree-Law of 3 February 1947 and in two implementing pieces of legislation, a Royal Decree of 9 August 1982 and a Ministerial Notice of 13 August 1982.
3. In 1989 the Ministry of Public Works decided not to renew BNG's registration. The decision was taken on the basis of an adverse opinion of the Committee for the Registration of Contractors which was worded as follows:
4. Referring to that opinion, the Ministry decided that BNG as an individual legal person, does not satisfy the legal criteria, as laid down in Article 2 of the Decree-Law of 3 February 1947 and Article 2 of the Ministerial Order of 13 August 1982, for the purposes of registration. The Ministry continued: Nevertheless, it should be pointed out, to all intents and purposes, that since it is apparent from the examination of the file that works in respect of which references were provided were executed by legally independent subsidiaries, those subsidiaries are in a position to submit an application for registration, if they so wish.
5. BNG took the case to the Raad van State, requesting that the opinion of the Committee for the Registration of Contractors and the decision of the Ministry of Public Works be annulled. The Raad van State referred the following question to the Court.
The Community rules concerning official lists of recognized contractors
6. In a number of Member States there are official lists of recognized contractors. Those lists enable a prior assessment to be made as to whether the contractors have the qualifications regarded as necessary with regard to carrying out a specific type of work of a particular scale. Contractors who wish to take part in a tendering procedure are thus enabled to establish their qualifications simply by submitting a certificate of enrolment in a particular category.
7. Member States' official lists of recognized undertakings are dealt with in Article 28 of Directive 71/305/EEC concerning the coordination of procedures for the award of public works contracts.
8. Article 28(1) requires Member States who have official lists of recognized contractors to adapt them to the provisions of Articles 23 to 26 of the Directive.
9. Article 23 lists various situations involving insolvency and forms of misconduct which can justify a contractor being excluded from participation in a tendering procedure. Article 24 concerns enrolment in a Member State's trade register. Article 25 lays down the way in which a contractor can furnish proof of its financial and economic standing.
10. It is apparent from the foregoing that the prescribed harmonization of the official lists is of limited scope since it only concerns references attesting to the contractors' economic and financial standing and their technical knowledge and ability but not the criteria for their classification.
11. Article 28(3) lays down the extent to which a contractor registered in a list in one Member State is entitled, in relation to the authority awarding contracts in another Member State, to use that enrolment as an alternative means of proof that it satisfies the qualitative criteria of suitability in Articles 23 to 26 of the directive.
12. It cannot be inferred from Article 28 that registration in the official list in the State where the public works contract is being awarded can be required of contractors established in other Member States.
13. Conversely, Article 28(4) gives contractors a right to apply for registration in the official lists in other Member States. The provision states:
Conclusion
14. The opinion of the Committee for the Registration of Contracts quoted above must be understood as a refusal to register BNG on the Belgian list of registered contractors because the company, as a holding company, does not itself fulfil the prescribed technical requirements. The opinion thus refers to the fact that the company's major assets consist of shareholdings in subsidiaries and that the references submitted concerning works carried out relate to work which was not carried out by the company but by its subsidiaries and that no manpower is employed by the company. That gives rise to two remarks by way of introduction.
15. First, BNG and the Commission expressed the view that BNG was refused registration on the Belgian list of approved contractors simply because the company is a holding company in a Netherlands group. On that basis BNG claims that the Belgian authority's interpretation of the relevant legal rules lead to BNG's exclusion for a reason that is not mentioned among the grounds for exclusion which are enumerated exhaustively in Article 23 of Directive 71/305/EEC. BNG and the Commission's view must, however, be rejected because it appears from the opinion quoted that BNG was not refused registration because it is a holding company in a Netherlands group, but because, as a holding company, it does not itself have the necessary technical qualifications. It is, moreover, expressly mentioned in the order for reference that the respondent in the main proceedings denies that BNG was refused registration in the list simply because the company is a holding company in a Netherlands group.
16. Secondly, as mentioned, it is apparent from the opinion cited that it was BNG's inability, as an independent legal person, to produce evidence of its technical ability that was the reason for the refusal to register it on the list. That means that it is specifically Article 26 of Directive 71/305 which is relevant for the purposes of forming an opinion in this case. In the question referred to the Court a ruling is, however, required concerning assessment of the criteria relating inter alia to technical competence (my emphasis). Since the issue is basically the same whether the contractor's technical ability under Article 26 or its economic and financial standing under Article 25 is concerned, no difficulty will arise if the latter provision too is taken into account when replying to the question. With regard to Article 23, from which it follows that an applicant can be excluded from registration in an official list if he is insolvent or has been guilty of various forms of misconduct, it must be the case that the dominant legal person in a group at all events will not be able to obtain registration in an official list of approved contractors on the basis of the qualifications of a subsidiary which finds itself in one of the situations enumerated in that provision. A parent company must therefore, if necessary, produce proof to show that that is not the case.
17. Since Article 28 gives contractors a right to be registered in other Member States' official lists which may only be made conditional on the submission of the proof and declarations laid down in Articles 23 to 26, the reply to the question referred to the Court will depend on whether those provisions are to be interpreted to the effect that they permit a requirement that the proof in question must concern the applicant company as an independent legal entity.
18. As the Commission and BNG, who alone have submitted observations, maintain, grounds can be adduced for interpreting Articles 23 to 26 to the effect that, in examining whether a company has the qualifications required for registration in an official list in another Member State, the authorities have a duty to take account of whether the company, through the other companies in a given legal structure, actually has available to it the necessary qualifications.
19. The Commission and, to a certain extent BNG, maintain that:
20. That groups of contractors are entitled to submit tenders is clear from Article 21 of the directive, which provides: Tenders may be submitted by groups of contractors. These groups may not be required to assume a specific legal form in order to submit the tender; however, the group selected may be required to do so when it has been awarded the contract.
21. That legal persons who are not themselves able to carry out the work and who are therefore not necessarily contractors in the strict sense of the term but guarantee the undertakings which are to carry out the work can take part in the tendering procedure can be supported on various grounds.
22. First, it follows from the express wording of Article 26(e) that it cannot be required that technicians or technical divisions belong to the undertaking itself, since it is sufficient to produce a statement that the contractor can call upon [them] for carrying out the work.
23. Secondly, the Commission maintains that the directive allows for the possibility of work being carried out by agents or branches. That view would appear to be supported by Article 1 of the directive, which defines a public works contract and in this connection refers to Directive 71/304. It is true that Article 1 of Directive 71/304 obliges the Member States to abolish restrictions on the performance of public works contracts in respect of natural persons and companies or firms which provide services or act through agencies or branches. Directive 71/305, however, refers solely to Article 2 of Directive 71/304 and it does so for the purpose of restricting the forms of activity which can be the object of a public works contract within the meaning of Directive 71/305. It is hard to conclude with sufficient certainty from that reference who, under the directive, is entitled to take part in tendering procedures.
24. As indicated by the Commission it would, however, appear that at all events under Directive 89/440 which alters the wording of Article 1 in Directive 71/305, a construction can be deduced to the effect that the legal person to whom the contract is awarded does not necessarily have be the one who carries out the work. Public works contracts are defined here as contracts which have as their object either the execution, or both the execution and design, of works related to particular forms of activity or the execution by whatever means of a work corresponding to the requirements specified by the contracting authority (my emphasis). Since it appears from the eighth recital in Directive 89/440 that the directive aims to define more precisely what is meant by public works contracts and thus hardly to broaden the concept, it must be justified to take that definition into account in examining the present case, even though the directive was adopted after the time relevant to the main proceedings.
25. However, I do not consider that the provisions in Articles 1(c) and 6 of the directive provide any further aid to construction in support of the foregoing arguments, as BNG asserts.
26. It must be correct, as maintained by the Commission and to a certain extent by BNG, that on the basis of the foregoing it can be concluded that the criteria which result from Articles 23 to 26 of the directive must, in the circumstances, be interpreted as meaning that they can be fulfilled by groups of undertakings and legal persons who cannot themselves carry out the work in question. In other words a company must be able to produce evidence that it has the necessary economic, financial and technical qualifications by proving that it has the qualifications available, even though they are not integrated in the company as an independent legal entity.
27. It follows that the relevant authorities in a Member State are not entitled to refuse registration in the official list of recognized contractors solely on the ground that the applicant company cannot produce proof to the effect that, as an independent legal person it has the necessary qualifications. It must suffice, in order to obtain registration, that the applicant company can show that the relationship between the companies in a given legal structure is such that the company must be said actually to have available the required qualifications with the result that it will be in a position to ensure satisfactory execution of the works contract in question.
28. Such a result also seems to accord best with the purpose of the directive, which is to implement freedom of establishment and freedom to provide services in connection with public works contracts and thus seeks to ensure that unnecessary hindrances are not created.
29. It is hardly sufficient to reply to the question referred to the Court to the effect that a requirement can be inferred from the directive that in the assessment of an application for registration in an official list of recognized contractors a specific decision should be reached as to whether the applicant company, through the companies linked to it, actually has available the necessary qualifications. The court of reference formulated its question so that it concerns the assessment of an application submitted by the dominant company in a Netherlands group.
30. BNG has advanced a number of facts intended to establish that, as the dominant legal person in the particular structure which corresponds to the legal definition of a group in Netherlands company law, it does actually have available to it the qualifications of its subsidiaries in the group.
31. BNG has in particular explained that the company owns the entire capital of the other companies in the group and accordingly has a decisive influence on those companies, which inter alia is reflected in the fact that BNG can appoint and remove the managers of those companies and thereby determine the companies' policy. Under Article 3 of its statutes BNG also has as one of its objects to act as a contractor, an activity which also forms part of the objects of a number of companies in the group and which is the most important object for the group. BNG thus ensures the central control of the financing, managerial, building and other capital goods requirements of the group of companies. BNG has explained the way the group enters into works contracts as follows:
32. It seems to me indisputable that a parent company which, like BNG, has 100% ownership of its subsidiaries and has power to take decisions that imply, with sufficient certainty, that the subsidiaries' qualifications are available for the purpose of carrying out specific works satisfies a requirement that it should actually have available the qualifications of its subsidiaries.
33. The question arises whether it is possible for the Court to give a more abstract reply to the question referred to it, in other words to lay down general criteria governing when a company can be said to have available to a sufficient degree another company's qualifications for the purpose of registration as a contractor.
34. The natural starting point would seem to be a company's dominant influence in another company. It must be established when the dominance of the company in question is sufficient in the present connection, that is to say when it is sufficiently certain that its decisions for the purpose of carrying out works can be implemented in relation to the other company.
35. It could perhaps be considered whether in the present connection there is sufficient dominance when the conditions laid down in Article 24a in the second Company Directive are satisfied, that is to say when a public limited liability company directly or indirectly holds a majority of the voting rights in another company or can exercise decisive influence, which is the case when it has the right to appoint or dismiss a majority of the members of the administrative organ, of the management organ or of the supervisory organ, and is at the same time a shareholder or member of the other company or when it is a shareholder or member of the other company and has sole control of a majority of the voting rights of its shareholders or members under an agreement concluded with other shareholders or members of that company.
36. The conditions in the Second Directive were drawn up for the purpose of laying down when a company must be regarded as acquiring its own shares. However, prima fade it would seem reasonable to assume that a company which has the majority of voting rights or otherwise in the ways specified in the directive has a decisive influence on a second company is also, to a sufficient degree, effectively in a position to have available that company's qualifications.
37. I would, nevertheless, not wish to suggest that the Court apply those criteria in this case, not only because it cannot be excluded than there might be a sufficiently decisive influence by means other than those set out above, but also because there might be grounds for not regarding a company as actually having another company's qualifications available to it even though it is dominant in the way stated. It cannot, for example, be excluded that in relation to the legislation of a Member State other shareholders or creditors of the subsidiary company might have to be taken into account with the result that the dominant company does not actually have available to it the resources necessary in the present connection, nor can it be excluded that there are rules applicable in national law which could prevent the dominant company from putting its decisions into effect with sufficient certainty and speed for the purpose of ensuring the availability of its subsidiary company's qualifications. Not least because the Belgian Government has not submitted observations in the case, it is not possible to evaluate the extent to which the Belgian rules might be based on such factors.
38. I would accordingly suggest that the Court confine itself to ruling that in any event a legal person whose dominant influence is founded on the factors set out in paragraph 32 should be able to obtain registration in an official list of recognized contractors on the basis of the qualifications of its subsidiary companies.
39. With regard to the court of reference's question whether it is incompatible with Directive 71/304 to refuse registration in an official list on the ground that the applicant does not, as an independent legal person, have the necessary qualifications, it is my view that that directive, the purpose of which was to liberalize freedom to provide services in respect of public works contracts, has lost its independent meaning in view of the direct applicability of Article 59 of the EEC Treaty. It would, therefore, if need be, be more correct to examine the issue on the basis of Article 59, which does not simply prohibit direct and indirect discrimination as is the case in Directive 71/304, but also other restrictions on freedom to provide services. Since a reply to the question referred to the court can be derived from Directive 71/305,1 see no reason in this case to examine the application of the Treaty's general prohibition of restrictions on freedom to provide services.
Conclusion
In the light of the foregoing considerations, I suggest that the Court should reply as follows to the question referred to it:
When an application for inclusion on a Member State's list of registered contractors submitted by the dominant legal person in a group formed in accordance with the legislation of another Member State is being assessed, Articles 23 to 26 and 28 of Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts preclude the tailing into account only of the qualifications of the dominant legal person alone, where that legal person is in a position to establish that it actually has available to it the qualifications of the other companies in the group and that requirement should in any event be regarded as satisfied where the dominant company has 100% ownership of its subsidiaries and can take decisions that imply with sufficient certainty that the subsidiaries' qualifications are available for the purpose of carrying out specific works.
1 Original language: Danish.
2 Article 1. A of the Decree-law lays down the general conditions which a contractor which is to carry out public works must fulfil. In Article 1. B it is specifica that special prior registration is required for works exceeding a particular value laid down by Royal Decree. Article 2, setting up a committee which is to give opinions on applications for registration, states in the third paragraph that the committee is to take into account the applicant's technical and economic standing, its performance ability in the form of plant and qualified manpower, the scale and importance of the work it has carried out previously, the quality of the work carried out and its business probity.
3 OJ, English Special Edition 197101), p. 678.
4 OJ, English Special Edition 1971(11), p. 682. The Directive was amended after the date in question in the main proceedings by Council Directive 89/440/EEC of 18 July 1989 (OJ 1989 L 210, p. 1) and now appears in a codified version in Council Directive 93/37/EEC of 14 June 1993, OJ 1993 L 199, p. 54.
5 The Court of Justice has stated that the directive's enumeration of the proof that may be required to be submitted to show that the tenderer fulfils the conditions of probity and so forth and technical ability is exhaustive, but on the other hand there is nothing to prevent the authority awarding contracts from requesting references other than those mentioned in the directive for the purpose of assessing financial and economic standing: sec tnc judgment in Case 76/81 Transporoitte [1982] ECR 417, paragraphs 9 and 10, and the judgment in Joined Cases 27/86 to 29/86 Belimi [1987] ECR 3347, paragraph 10.
6 See the judgment in Joined Cases 27/86 to 29/86 Bellini [1987] ECR 3347, paragraphs 21-22.
7 Sec the judgment in Joined Cases 27/86 to 29/86 Bellini [1987] ECR 3347, at paragraphs 23-27, where the Court inter alia stated that registration m an official list can replace the references referred to in Articles 25 and 26 in so far as such registration is based upon equivalent information. Consequently, the authorities awarding contracts arc required to accept that a contractor's economic and financial standing and technical knowledge and ability arc sufficient for works corresponding to his classification only in so far as that classification is based on equivalent criteria in regard to the capacities required.
8 See the judgments in Case 76/81 Transparante [1982] ECR 417, paragraphs 12 and 13, and Case C-71/92 Commission v Spain [1993] ECR 5923, paragraphs 45 and 56.
9 See footnote 4.
10 See footnote 3.
11 Article 1(c) defines a tenderer as a contractor who has submitted a tender and a candidate as one who lias sought an invitation to take part in a restricted procedure. The provision docs not, as BNG maintains, define the term contractor.
12 Article 6 enables a special procedure to be adopted in the case of the award of contracts relating to the design and construction of public housing schemes whose size and complexity, and the estimated duration of the work involved, require that planning be based from the outset on close collaboration within a team comprising representatives of the authorities awarding contracts, experts and the contractor to be responsible for carrying out the works. It is not clear to me how BNG find that provision to be relevant to this particular case.
13 Sec the Council's Second Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capita!, with a view to making such safeguards equivalent (OJ 1977 L 26, p. 1), as amended by Council Directive 92/101/EEC of 23 November 1992 (OJ 1992 L 347, p. 64).