Last week, the European Court of Justice gave its judgment on certain procurement questions relating to the supply of a radiopharmaceutical product, referred by the Italian Court in Case C-606/17, IBA Molecular Italy Srl. An Italian regional health authority and a public hospital were seeking to award a substantial contract to a private hospital, without conducting a public tender. They argued that as no direct consideration was provided to the hospital, and as the hospital was “classified” as part of the public healthcare system, any award constituted an agreement between public authorities to which EU law on public procurement does not apply. The European Court disagreed, and concluded that (i) public authorities cannot circumvent the EU procurement rules by awarding “funding” to an organisation in return for the provision of free products, and (ii) it was not possible to treat a “private” hospital as a public hospital in order to award contracts to them outside the EU procurement rules.

From the information available about the case, the answers to the questions referred seem straightforward and may be limited to the Italian system. However, it is nonetheless useful to have confirmation from the Court on the extent to which the provision of healthcare falls within the EU procurement regime.

The questions referred to the Court

In this case, it was argued that awarding a private hospital funding or a grant, and in return, the hospital providing certain medicinal products free of charge, does not fall within the EU procurement rules. It was said that the hospital did not receive any direct payment for the supply of product, other than reimbursement of transport costs. However, a competitor company stated that according to a purposive interpretation of the legislation, a “contract for pecuniary interest” exists, and so should be covered by the procurement rules, if the supplier receives a significant economic advantage from a public authority. The competitor also argued that it is reasonable to believe that any such payment is made specifically for the supply of those goods.

The Court agreed, and concluded that it is clear from the usual meaning of “contract for pecuniary interest” that it refers to a contract by which each of the parties undertake to provide a service in exchange for another (while the case referred to the previous legislation, the same wording is used in Directive 2014/24/EC). In this case, an economic operator who agrees to supply a product to various authorities, in exchange for funding, falls within the definition of “contract for pecuniary interest”, even though the costs of production and distribution are not fully covered by any such grant. As such, the funding provided in this case was covered by the procurement regime.

The second question concerned the fact that the hospital supplier in this case was an institution that, while a private entity, formed part of the public healthcare system on the basis of a special agreement (a “classified” hospital). It was therefore said that any grant provided to it was outside the scope of the procurement rules because, in order to constitute a public contract, it must have been concluded between one or more economic operators and one or more contracting authorities.

While it was accepted that certain contracts between public contracting authorities do not fall within the procurement regime, the Court concluded that this contract was not covered by the exemption. It was clear from the facts that the hospital in question was not under the control of the public contracting authority, even though the private hospital carried out certain public healthcare services. Therefore, just because a private hospital is treated as a public hospital, does not mean it will be covered by the exemption under the Directive, and any contract awarded to it should have followed a public tendering process.