Modification of concession contracts without conducting a new procurement procedure? – On the judgment of the Court of Justice of the European Union (EuGH) of 7.11.2024 – Case C-683/22 – 'Morandi Bridge'

A concession award designates the transfer of usage rights or the permission to carry out certain economic activities by a public authority to an enterprise or organisation.

This often concerns the provision of public services such as energy supply and water supply, waste disposal or the operation of transport infrastructure.

What applies in the case of a modification of concession contracts?

Legally, concession award is subject in particular to the requirements of public procurement law, which is regulated at national and European level. At EU level, Directive 2014/23/EU on concession awards applies, which is intended to ensure transparency, equal treatment and competition. In Germany, the regulations are laid down inter alia in the Act against Restraints on Competition (GWB) and in the Concession Award Regulation (KonzVgV).

Concessions must thus comply with public procurement law principles. For this reason, the question occasionally arises whether a new procurement procedure must be carried out in the event of a planned modification of concession contracts, which would result in (significant) changes to an already ongoing concession contract.

Judgment of the Court of Justice of the European Union (EuGH) in the case of the 'Morandi Bridge'

The Court of Justice of the European Union (EuGH) has clarified in its judgment of 07.11.2024 under what conditions modifications of concession contracts during the term of the contract are possible without conducting a new procurement procedure. Specifically, it concerned a contract modification in the context of the collapse of the Morandi Bridge in Genoa. In particular, the previous concessionaire was required to sell shares to a third party in order to increase reliability. The judgment concerns the interpretation of Article 43 of Directive 2014/23/EU.

It contains, in summary, the following essential points:

1. Modification of concessions without new procurement procedure:

• Modifications are permissible if they do not fall under the conditions mentioned in Art. 43 para. 5 of the Directive and the contracting authority has adequately set out the reasons for dispensing with a new procurement procedure. This means that a contract modification in the case of 'minor' adjustments, unforeseen circumstances or mere corporate restructuring of the concessionaire, all of which fall under the rules of Art. 43 para. 1 or 2 of the Directive, does not require a fresh award.
• Breaches of contract by the concessionaire alone do not justify modification without procurement-law competition, as they are not 'unforeseen':

"Having regard to the purpose of this provision as set out in recital 76 of that Directive, a breach of contractual obligations by the concessionaire cannot therefore justify the modification of a concession during its term without opening it up to competition."

2. Assessment of the reliability of the concessionaire:

• A modification of existing concession contracts is possible without prior assessment of reliability, provided that the modifications do not fall under Art. 43 para. 1 letter d point ii or Art. 43 para. 5 of Directive 2014/23/EU.
• The rules for sanctioning serious breaches of contract by the concessionaire are a matter for the Member States.

3. Obligations of contracting authorities:

The contracting authority is obliged to provide transparent reasoning when it forgoes a new procurement procedure in order to enable affected undertakings to seek legal review.

Recommendation for contracting authorities on modification of concession contracts

In order to implement modifications to existing concession contracts in a legally sound manner, contracting authorities should take the following aspects into account:

1. Clear documentation: The reasons for modifications without a new procurement procedure should be documented in detail, in particular in the case of substantial contract modifications.
2. Transparent communication: The amendments should be published in the Official Journal of the European Union to ensure transparency in accordance with the requirements of the Directive.
3. Assessment of reliability: In cases of serious breach of duty, a formal assessment of the reliability of the concessionaire should be carried out, even if this is not explicitly required.
4. Regular review of contracts: Ongoing reviews and adjustments of national regulations for concession awards should be carried out in order to comply with the requirements of EU law.
5. Ensure legal compliance: It should be ensured that Articles 43 and 44 of Directive 2014/23/EU are complied with in the event of substantial changes. If necessary, a new procurement procedure should be carried out.
6. Training for decision-makers: Decision-makers should be trained to understand and implement the legal requirements and transparency obligations in connection with contract modifications.

These steps help to minimise legal risks and to comply with the requirements for transparency and the principles of "Good Governance".

Conclusion

Even after this judgment, the following applies: In cases of doubt, public contracting authorities or competitors of a concessionaire should seek legal advice. In this way, serious mistakes and legal disputes can be avoided and economic opportunities can be utilised.