Public Procurement and State Aid: Reopening the Debate?

Abstract

The relationship between public procurement and State aid control rules had been controversial for a long time. However, a growing academic consensus and, more significantly, the official position of the European Commission, ruled out that the award of a public contract can amount to the grant of State aid - as long as it is in compliance with the current EU public procurement Directives. The underlying idea is that compliance with procurement rules ‘objectives’ the award of the contract and, hence, excludes the element of ‘undue economic advantage’ (or, even further, the prerequisite of ‘selectivity’) - consequently eliminating all risks of disguised granting of State aid by means of public contracts. However, this blunt exclusion of State aid control in the field of public procurement (which has not been free from criticism) may be about to require re-examination if the push for more flexibility and increased scope for negotiations in the 2011 Commission’s proposal for new procurement Directives gets approved. This papers aims to contribute to this ‘new wave’ of debate regarding the interplay of State aid control and public procurement rules, and advocates for stronger and more effective controls of the State aid implications of public procurement.

Keywords: public procurement, state aid, modernization

JEL Classification: H25, H57, K21, K23