Football’s world cup final was held in France in 1998, in a brand-new stadium being built in the St-Denis district of Paris. But the European Commission is taking infringement proceedings against France because, it says, the contract to build the stadium is in breach of EC public contract rules.

The French government awarded the contract to a consortium of three companies - Bouygues, Generale des Eaux, and Lyonnaise des Eaux. These are the three biggest construction companies in France (as well as the three biggest water companies), but chose to operate jointly on this project rather than compete.

The contract was awarded as a ‘concession’. That is, the consortium is expected not only to build the stadium, but also to run it afterwards... Concessions are not so strictly governed by EU tendering rules - the criteria for selecting the winners do not have to be set out in advance.

But the Commission does not believe that this contract is a concession at all. It says that the contract contains provisions which annul the concession-holder's operating risk. This leads the Commission to believe that the contract is in fact a simple public works contract - and should have been advertised and awarded as such.

The Commission has also objected to the fact that the consortium was allowed to modify the terms of the contract during the course of bidding - which was unfair to other bidders. And finally, it objected to the fact that the contract says that lots of other work will automatically be given to the consortium, instead of being advertised.

The Commission will take France to the European Court if it is not satisfied with their response. Although the contract has technically been ruled invalid, the work on the main stadium was completed in time for the world cup...

(extract from Privatisation News 44, February 1997)