On 3 February 2021, the European Court of Justice (ECJ) passed a judgment from which follows that the Italian Football Association may be classified as a body governed by public law (within the meaning of Article 2(1)(4) of Directive 2014/24 and its Dutch implementation in Article 1.1 of the Public Procurement Act. National sports associations may therefore be subject to (European) public procurement law. To date, the KNVB (the Dutch counterpart of the Italian Football Federation) has not acted as a contracting authority, but the ECJ’s judgment raises the question whether the KNVB has acted and is acting correctly from a legal perspective.
Legal framework
Institutions, organisations and other private companies may be obligated to put a contract out to tender if they qualify as “contracting authorities”. In addition to the state, provinces and municipalities, bodies governed by public law are also regarded as contracting authorities.
A body governed by public law is a body that (i) has legal personality and (ii) is established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character. It must furthermore (iii) be mostly dependent on public authorities because:
- it is financed for the most part by public authorities; or
- it is subject to their management supervision; or
- more than half of the members of its administrative, managerial or supervisory board are appointed by public authorities.
The FCGI judgment of 3 February 2021
The ECJ’s judgment of 3 February 2021 focused specifically on requirements (ii) and (iii)(b), in response to two questions raised by the referring Italian court.
General interest, not having an industrial or commercial character?
The first question is whether the Italian Football Federation meets requirement (ii), because it is a legal entity governed by private law and, in addition to its public tasks, it also has non-public tasks, which it finances itself.
The ECJ found that this requirement must be interpreted broadly and in a functional way. A specific legal form is not a requirement in order to qualify as a body governed by public law (Beentjes and Universale Bau). It furthermore found, with reference to earlier judgments, including BFI Holding, that it is irrelevant whether an entity pursues “alongside the activities of general interest (…) other activities which constitute a large part of its overall activities and are self-financed” (paragraph 42). This requirement may be met even if meeting needs in the public interest forms only a relatively small part of the overall activities. That is the case as long as the entity in question actually performs its public duties (be it a large or small part of its activities) (paragraphs 42-48).
In sum, the Italian Football Federation meets requirement (ii).
Management supervision?
The second question raised by the Italian court was whether the Italian Football Federation met requirement (iii)(b), partly because the Italian Olympic Committee (CONI) has powers of control over the football federation.
The ECJ first of all drew attention to the fact that “the close dependency of a body on the State, regional or local institutions or other bodies governed by public law” is apparent from the alternative criteria under requirement (iii) (paragraph 50). In the case of management supervision, “such supervision is based on the finding that there is active control over the management of the body concerned such as to give rise to the dependency of that body on the public authorities (...), which is likely to enable those authorities to influence that body’s decisions with regard to public contracts.”
The ECJ found that, prima facie, there did not appear to be any such relationship of dependency, because CONI did not appear to be capable of controlling the Italian Football Federation’s decisions with regard to public contracts (paragraph 56). CONI does, however, have various (other) powers in relation to the Italian Football Federation.
The ECJ emphasised that this is a presumption. The referring Italian court will have to assess whether, in light of other circumstances, a relationship of dependency may nevertheless be deemed to exist, which would imply management supervision. Such an assessment must then be based on CONI’s powers of recognition, oversight, approval and appointment of a multitude of activities and documents (see paragraphs 60-73).
In other words, the Italian court will have to decide the matter, taking into account the ECJ’s instructions.
KNVB: a body governed by public law?
What does the ECJ judgment mean for a football federation such as the KNVB? It is likely that the KNVB, like the Italian Football Federation, will meet requirement (ii), since the KNVB’s characteristics do not appear to differ substantially from the Italian Football Federation as regards the general interest. Defences based on the KNVB’s legal form or possible ancillary commercial activities are unlikely to be upheld. But how about requirement (iii): is the KNVB dependent on a public authority, as described in one of the cases of requirement (iii)(a) to (c)?
The KNVB receives subsidies to organise the European championships, to make the sports climate safer and to stimulate and combat racism in sports. It is clear that the KNVB’s financial resources do not consist for the most part of government subsidies, but only for a small part.
With regard to the management supervision, the KNVB – unlike the Italian Football Federation – does not appear to have a committee that supervises or oversees the KNVB.
Finally, ground (c) does not appear to apply to the KNVB, since its management is appointed by the Supervisory Board and the Supervisory Board is appointed by the general meeting at which the members’ council meets. However, the exact composition of the members’ council is not entirely clear. It is therefore possible that requirement (iii)(c) would be met (at least in part).
In the Explanatory Memorandum regarding the definition of a body governed by public law, the Dutch legislature noted that it follows the functional interpretation given to that term by the ECJ. This means that if all the dependency criteria are only partially met, a body may nevertheless be classified as a body governed by public law.
Conclusion
The ECJ’s judgment means that the referring Italian court will have to decide whether the Italian Football Federation may be classified as a body governed by public law. In the case of the KNVB and other private-law entities that meet needs in the general interest, it remains important to determine whether they may also be classified as bodies governed by public law, in which case they would be subject to the obligation to call for tenders. Whereas the Netherlands, for instance, does not classify housing corporations as bodies governed by public law, the ECJ and the European Commission do regard them as contracting authorities. In the Netherlands, the discussions on the classification as a body governed by public law continue. In late 2018, the District Court – and in late 2019 the Court of Appeal – found that NS Stations must be classified as a contracting authority. NS Stations filed an appeal with the Supreme Court. The Advocate General found that NS Stations was indeed a body governed by public law. The Supreme Court has not yet issued a ruling.
More information on sustainable procurement or contracting, whether or not as a contracting authority, can be found at innovatiepartnerschap.info.
