On 15 January 2026, the Court of Justice of the European Union (CJEU) delivered a long-awaited and significant preliminary ruling in Case C-692/23 concerning the interpretation of the Public Procurement Directive. The judgment substantially clarifies the application of the conditions for in-house procurement and restricts the possibilities to circumvent procurement legislation through subsidiaries. Going forward, the market activities of publicly owned companies will be assessed more closely in relation to private companies, which may contribute to a more balanced competitive environment.

What Was the Case About?

The case before the CJEU originated from a request for a preliminary ruling from the Netherlands concerning waste management arrangements involving municipally owned in-house companies. The Court was asked to determine whether market-based activities may be carried out through a subsidiary owned by an in-house company without triggering the obligation to apply public procurement procedures.

Under the Public Procurement Directive, a contracting authority may award contracts to a company it owns without a competitive tendering procedure, provided that the company’s share of market-based activities is sufficiently limited and that it operates mainly for the benefit of the contracting authorities. In Finland, the thresholds laid down in the Directive have been further tightened in the national Procurement Act: the share of market-based activities may generally not exceed five per cent of turnover, and ten per cent in the waste management sector. In addition, under a pending reform of the Procurement Act, in-house status would require a minimum ownership share of ten per cent.

The Core of the Ruling

According to the CJEU, the turnover of an in-house company’s subsidiaries must also be taken into account when calculating the share of market-based activities. This means that the turnover of the entire group must be consolidated and the proportion of market-based activities assessed in relation to the group’s total business operations.

The Court highlighted that the Public Procurement Directive cannot be circumvented by artificially separating the in-house company’s market activities into subsidiary operations in situations where publicly owned companies operate both as in-house entities and carry out market-based activities through their subsidiaries. The ruling emphasizes that the consolidated turnover gives a true and fair view of the activities carried out by the in-house entity.

Why Is the Ruling Significant?

In Finland, the Public Procurement Directive has traditionally been interpreted in such a way that the turnover of subsidiaries has not been included when assessing the scope of market-based activities. This is no longer possible, as the CJEU’s judgment has direct effect.

In practical terms, this means that:

• An increasing number of in-house procurements will have to be subject to competitive tendering, as direct awards will no longer be permissible
• Contracting authorities using in-house entities must organise their operations so as to comply with the new requirements
• Opportunities for private companies to participate in public procurement procedures may increase

Broader Legal and Societal Significance

The CJEU’s ruling is not merely a technical issue of interpretation. It has a tangible impact on how the public sector and its affiliated corporate structures operate in the market. The new judgment underlines the EU objective of competitive neutrality and seeks to ensure that public-sector entities acting as market participants operate under conditions comparable to those faced by private competitors.

Related Services

◆ Public Procurement