Horizontal aims in public procurements as an additional reason for assessment of conformity with state aid rules

Abstract

The present article is devoted to the problems of horizontal aims implementation in public procurement, in particular in the field of environmental and social protection, within the framework of state aid rules. The authors give special consideration to the problems of applying a “purchaser’s test on market conditions” to determine whether there is an unjustified economic advantage in procurement with horizontal goals, as it is generally assumed that in such procurement contracting authorities pay a higher price that it would have had to pay without the use of the horizontal criteria. Such overcompensation could put the economic operators at a competitive advantage. For the purpose of defining whether public procurement with horizontal aim involves state aid the article dwells on the influence of the distinction between public procurement with horizontal policy which is related to the subject matter of the awarded contract and which is not. The study indicates that public procurement with horizontal measure which does not relate to the subject matter will probably entails the obligation of contracting authorities to assess if such procurement is in conformity with state aid rules. The article provides an in-depth analysis of the European Union (EU) experience and cases of the Court of Justice of the EU in determining the ratio of public procurement and state aid, and the decisions whether public procurement with horizontal objectives constitutes state aid which distorts competition. The authors elaborate recommendations for contracting authorities and the Antimonopoly Committee of Ukraine how to determine whether procurement of horizontal objectives constitutes state aid that may distort or threaten to distort economic competition.