Managing the unintended consequences of competitive tendering : Monopolies, public monopolies, competitive tendering: how and when should each be used under EU law?

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Lang, John Temple (2017) Managing the unintended consequences of competitive tendering : Monopolies, public monopolies, competitive tendering: how and when should each be used under EU law? Fraser of Allander Economic Commentary, 41 (1). pp. 27-37. ISSN 2046-5378

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Abstract

This paper outlines the legal position in terms of EU regulations of the various options for delivering public services. It considers the situation where for a number of reasons the service is delivered by a public or private monopoly. The circumstances in which the procuring authority uses competitive tendering, regulation or some combination of both are outlined. The regulations around State aid and the Altmark and Teckal exemptions are explained. Crucially, for the Scottish ferry industry, the question of what happens when the domestic incumbent loses a contract is raised. The broad scope for taking into account social and environmental considerations in awarding a contract for the delivery of a public service are elucidated. The difficulty of ensuring such contracts are specified in a way that is both lawful and effective are explained. The paper concludes that regulation rather than tendering of public contracts may be a simpler and more effective method to ensure that the ‘most economically advantageous’ outcome is achieved.

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