When inter-municipal cooperation meets EU internal market law: the story of a troublesome relationship

This article deals with the Stadtreinigung Hamburg decision of the European Court of Justice (case C480/06) with an in-depth analysis of the of the consequences of the judgment on the regulation of inter-municipal cooperation under EU law. After giving an account of the facts of the case and of the ECJ main findings, the article focuses on the legal basis upon which the ECJ ruled out that the EU public procurement rules applied to the litigated contract. It is argued that the ECJ adopted a functional approach which directly pointed to the substance of the contract. Then, the article thoroughly reviews the conditions an inter-municipal cooperation agreement has to meet in order to be exempted from the EU public procurement rules according to Stadtreinigung Hamburg. Finally, before concluding, the article offers a prediction of the implications such rulings may have for the internal market. Whereas the judgment strengthens the freedom of public authorities to decide how to supply public services, it is feared that it may result in negative side effects, namely less market transparency.