City of Pori – Assisting in a Matter Concerning Transfer of Competences and In-House Procurement in the Court of Justice of the European Union and in the Supreme Administrative Court

Related services

We successfully represented the City of Pori in a procurement case before the Supreme Administrative Court (KHO 2020:146) and in a related procedure concerning a preliminary ruling from the Court of Justice (C-328/19) that concerned the procurement of transport services for disabled people from an in-house entity of the City of Pori on the basis of a cooperation agreement in the health care area formed by Pori and its neighboring municipalities. This decision is a very important guideline concerning the nature of the cooperation agreement between municipalities under procurement rules and the forming of the position of an in-house entity in a situation where competences have been transferred to one contracting authority.

The Supreme Administrative Court submitted a reference for a preliminary ruling to the Court of Justice that gave a preliminary ruling on 18 June 2020. The Court of Justice approved that municipalities can transfer powers to produce transport services for disabled people to a responsible municipality. Furthermore, the Court of Justice approved that the City of Pori can procure the transport services for disabled people in their entirety from its own in-house entity. According to the court, in-house procurement is not prevented by the fact that the municipalities that transferred their powers to Pori do not own shares in the City of Pori’s in-house entity. In addition to disabled transport services, public transport services were also purchased from the in-house entity owned by the City of Pori. A cooperation arrangement was also established between Pori and certain other municipalities for these purchases. The turnover was not considered sales to other parties than contracting entities under this agreement.

This decision is important when planning cooperation arrangements between municipalities in accordance with Chapter 8 of the Local Government Act and other structural cooperation arrangements between authorities.