Kingdom of Spain v European Commission (T-358/08)

Contents

Judgment of the General Court (Eighth Chamber)11 July 2013^note(Cohesion fund — Regulation (EC) No 1164/94 — Zaragoza waste-water treatment project — Partial withdrawal of financial assistance — Public procurement — Concept of work — Article 14(10) and (13) of Directive 93/38/EEC — Splitting of contracts — Legitimate expectation — Obligation to state reasons — Time limit for adoption of a decision — Fixing financial corrections — Article H, paragraph 2, of Annex II to Regulation No 1164/94 — Proportionality — Limitation period)In Case T-358/08,Kingdom of Spain, represented initially by J. Rodríguez Cárcamo, and subsequently by A. Rubio González, abogados del Estado,vEuropean Commission, represented by G. Valero Jordana and A. Steiblytė, acting as Agents,THE GENERAL COURT (Eighth Chamber),composed of L. Truchot, President, M.E. Martins Ribeiro and A. Popescu (Rapporteur), Judges,Registrar: J. Palacio González, Principal Administrator,having regard to the written procedure and further to the hearing on 28 November 2012,gives the following

JudgmentReproduced here are only those paragraphs of the judgment which the Court considers it expedient to publish.

Background of the case

1By decision C(96) 2095 of 26 July 1996 (‘the 1996 decision’), the Commission of the European Communities approved the grant of financial assistance of EUR 8 850 689 to project No 96/11/61/018 — ‘Saneamiento de Zaragoza’ (‘Zaragoza waste-water treatment project’) on the basis of the Cohesion Fund. The purpose of the project was to improve and to supplement the installations for treating and purifying the waste water of the city of Zaragoza (Spain) and it comprised two groups of operations. The first was named ‘The sewer replacement plan’ (‘FIMMA 96 phase’) and provided for the replacement of sewers in certain quarters of the city. The second group of operations, called ‘Waste-water treatment programme of the western zone of the agglomeration (basin of the Almozara treatment plant)’ (‘SPWS phase’) comprised the construction of sewers, a secondary network of sewers and a rain-water outfall. The municipality of Zaragoza was the end recipient of the financial assistance and was responsible for the management of the project which was planned to be implemented during the period between 1 May 1996 and 31 December 1998.

2At the request of the Kingdom of Spain, the 1996 decision was modified by Commission decision C(97) 2601 of 29 July 1997 (‘the 1997 decision’) so as to include eight additional operations (‘the FIMMA 97 phase’). Seven of those related to the replacement, conversion and construction of sewers and one consisted in the construction of a sludge treatment plant. The completion period for the works was extended to 31 December 1999.…

The contested decision

13In the contested decision the Commission found irregularities affecting eight contracts of the SPWS phase and, in particular, four contracts of the FIMMA 97 phase.

14The eight contracts of the SPWS phase were the following:— sewer outfall in the river Ebro;— Los Palos district sewer;— Martín Arpal area sewer;— Valles Verdes sewer;— San Lamberto — Vistabella sewer;— Madrid road sewer;— secondary network of sewers;— municipal territory boundary sewer.

15The four contracts of the FIMMA 97 phase were the following:— the river Huerva right bank sewer;— sludge treatment plant;— river Gállego sewers;— connecting sewer of the Almozara treatment plant.

16In recital 20 of the contested decision, the Commission found that, under Article 4(2) and Article 14(1), (10) and (13) of Directive 93/38, the disputed contracts constituted lots of a single work, the initiative for which was taken by a single contracting entity, and that they ought to have been subject to the provisions of the Directive. The Commission considered that the contracts had been split, which was an infringement of the provisions of the Directive, in particular those relating to the threshold, to publication and to equal treatment of tenderers.…

18In the first place, to establish the existence of an irregularity within the meaning of Article H of Annex II to Regulation No 1164/94, the Commission began by referring to the provisions of Article 1(4)(b), Article 4(2) and Article 14(1), (10) and (13) of Directive 93/38 (recitals 19, 21 to 23 to the contested decision).

19The Commission then observed, in recital 24 of the contested decision, that, in all the public contract notices published in the Boletín Oficial de Aragón and in the local media, the municipal council of Zaragoza was the contracting authority to which tenders had to be addressed. The Commission also noted the similarity of the description of the work to be carried out in the network of sewers and of waste-water treatment and took the view that the works should fulfil the same economic and technical function. The Commission found that there was, in the present case, a series of specific maintenance, enlargement and renovation works on the existing network of sewers and waste-water treatment the result of which, when finished, should be an overall improvement of the system for end-users. The Commission added that the works were connected to the waste-water sewers, rainwater spillway sewers, a sludge treatment plant and a waste-water sewer between the two treatment stations of La Almozara and La Cartuja. The Commission considered that the difference between the different types of works was functional and not technical or economic and that, consequently, no specific technical knowledge was required for carrying them out. Finally, the Commission observed that, from an economic viewpoint, the final users would have to pay the provider of the services according to their use.

20First, with regard to the eight projects of the SPWS phase, in recital 24(a) to the contested decision, the Commission considered that the works had a similar objective, the only difference being that they had been carried out in different geographical sectors. It considered that the main objective of the works was to provide or renew the sewer system for different sectors, including the installation of waste-water sewers and spillways.

21Secondly, with regard to the four projects of the FIMMA 97 phase, cited at paragraph 15 above, for which the derogation laid down in Article 14(10) of Directive 93/38 could not be used, the Commission considered, in recital 24(b) of the contested decision, that the works had a similar objective, the only difference being that they had been carried out in different geographical sectors. It considered that the main objective of the works was to install sewers along the rivers Huerva and Gállego so as to serve the zones which were still sending effluent directly into the rivers, and to repair the two waste-water treatment plants to which the waste water was carried.

22In recital 25 to the contested decision, the Commission stated that, regarding the infringement of Article 4(2) and Article 14(10) of Directive 93/38, the contracts should have been considered as intended for carrying out a single work when they are connected in such a way that, as in the present case, a Community undertaking can regard them as a single economic operation and submits a tender for the entire operation. The Commission added that that interpretation corresponded with the objective of Directive 93/38, which is to ensure that the undertakings of other Member States can respond to calls for tenders, if they are interested in doing so, for objective reasons relating to the value of the contracts. Such an undertaking might have wished to be informed of the value of all the lots constituting the work, even if it were not in a position to carry out all of them. The Commission added that it was only a matter of evaluating the exact scope of the contract and adjusting the prices according to the number of lots for which it was envisaged that bids would be submitted.

23The Commission concluded, in recital 26 of the contested decision, that the eight projects of the SPWS phase, taken together, and the four projects of the FIMMA 97 phase, taken together, fulfilled a single economic and technical function and that therefore the Spanish authorities had artificially divided the works for the maintenance, enlargement and renovation of the existing network of sewers and waste-water treatment plants. The Commission added that that conclusion was based on the similar character of the descriptions of the works and the similarities in the contract notices, the implementation of the procedure and the overall coordination by the same contracting entity in a single geographic zone and the fact that the works were carried out in a single geographical zone.…

Procedure and forms of order sought

28The Kingdom of Spain brought this action by application lodged at the Registry of the Court of First Instance on 3 September 2008.

29On 30 November 2010, the present case was reassigned to a new Judge-Rapporteur sitting in the Second Chamber. After a change in the composition of the Chambers of the Court, the Judge-Rapporteur was assigned to the Eighth Chamber, to which the present case was, consequently, assigned.

30Upon hearing the report of the Judge-Rapporteur, the Court (Eighth Chamber) decided to open the oral procedure. The parties presented oral argument and replied to questions put by the Court at the hearing on 28 November 2012.

31The Kingdom of Spain claims that the Court should:— annul the contested decision;— order the Commission to pay the costs.

32The Commission contends that the Court should:— dismiss the appeal in its entirety;— order the Kingdom of Spain to pay the costs.

Law

…

1.1.1.First plea in law, alleging errors in law and manifest errors of assessment in applying Article H of Annex II relating to financial corrections of Regulation No 1164/94, in conjunction with Article 14(13) of Directive 93/38

…

35First of all, it must be observed that, at the hearing, in reply to a question put by the Court, Spain stated that, with the first plea, it alleged infringement of Article 14(13) of Directive 93/38, that provision to be read in conjunction with Article 14(10) of Directive 93/38. That was officially noted in the minutes of the hearing.

36In addition, Spain submits that the Commission erred in law and made a serious error of assessment in the contested decision in asserting that there was an infringement of Directive 93/38. Spain claims that, although the Commission bears the burden of proof, it is helpful to examine briefly the contracts that are the subject of the present action by reference to the criteria laid down by the Court of Justice, in order to show that none of the requirements justifying a finding of the existence of a single work has been met. With the present action, Spain disputes not only the Commission’s definition of the conditions for applying the first subparagraph of Article 14(10) and Article 14(13) of Directive 93/38, but also their application to the contracts in issue in the contested decision. Therefore it will be necessary to determine whether the Commission erred in finding that the abovementioned provisions were infringed in the contested decision, which it is for Spain to demonstrate before the Court.…

First part: manifest error of assessment by the Commission in relation to the concept of work

38According to Spain, the Commission was mistaken in finding that the municipality of Zaragoza had infringed the provisions of Directive 93/38 by splitting the contracts in issue and not publishing notices in the Official Journal. Spain considers that the Commission’s assertions in the second paragraph of recital 8, in recital 23(b) and recital 24 of the contested decision are unfounded.

39First, Spain claims that, to determine whether a project may comprise more than one separate item of works, it is necessary, in the light of the wording of the provisions of Directive 93/38 and the case-law of the Court of Justice, to carry out an assessment from three viewpoints: the technico-economic viewpoint, the geographical viewpoint and the time factor.

40Secondly, Spain claims that those criteria were wrongly applied in the present case. It submits that the Commission did not carry out the slightest objective examination of the works in relation to that ‘triple perspective’, but it appears to have used some rather special criteria to establish the infringement by the Spanish authorities, such as the capacity of potential bidders or the advantage to them of carrying out some or all of the contracts at the same time (recital 9 of the contested decision). In addition, the technico-economic examination lacked technical rigour.

41In the contested decision the Commission considered that the Spanish authorities had infringed Article 14(13) of Directive 93/38, read in conjunction with Article 14(1) and (10), by splitting, first, eight contracts of the SPWS phase and, secondly, four contracts of the FIMMA 97 phase. After referring, in recital 23(b) of the contested decision, to the definition of ‘work’ within the meaning of the first subparagraph of Article 14(10) of Directive 93/38, the Commission applied it to the disputed contracts in recitals 24 to 26 to the contested decision.…

The definition of work within the meaning of the first subparagraph of Article 14(10), first subparagraph, of Directive 93/38

42According to Article 14(1)(c), Directive 93/38 applies to contracts the estimated value of which, excluding VAT, is not less than ECU 5000000 in the case of works contracts. According to Article 14(13), ‘contracting entities may not circumvent this Directive by splitting contracts or using special methods of calculating the value of contracts’.

44In addition, by virtue of Article 14(10), ‘the basis for calculating the value of a works contract for the purposes of paragraph 1 shall be the total value of the work’, ‘work’ being defined, in the first subparagraph, as ‘the result of building and civil engineering activities, taken as a whole, which are intended to fulfil an economic and technical function by themselves’.

45In the first place, the Court observes, as do Spain and the Commission, that the Court of Justice interpreted Article 14(10) and (13) of Directive 93/38 in Case C-16/98 Commission v France [2000] ECR I-8315. The Court considered that Article 14(13) ‘sets out clearly the specific obligations deriving for contracting entities from Article 14(10), first subparagraph, of the Directive and must, therefore, be taken into account together with that subparagraph in ruling as to whether a work was split’ (paragraph 31). In addition, according to the Court of Justice, ‘it is clear from the definition of work in Article 14(10), first subparagraph, of the Directive that the existence of a work must be assessed in the light of the economic and technical function of the result of the works concerned’ (paragraph 36).

46It is clear from that judgment that, in order to determine whether the works were connected among themselves in such a way that they had to be regarded as a single work within the meaning of Article 14(10), first subparagraph, the Court of Justice adopted a functional approach (see, to that effect, judgment of 15 March 2012 in Case C-574/10 Commission v Germany, not published in ECR, paragraph 37). The Court took two criteria, which are the criterion of the economic function and that of the technical function of the result of the works.

47In accordance with the judgment in Commission v France, the Commission stated in the contested decision that the criteria of the economic function and the technical function of the result of the works should be applied for the purpose of defining a work within the meaning of Article 14(10), first subparagraph, of Directive 93/38 (recitals 23 and 24). After referring to the terms of that provision in recital 23 to the contested decision, the Commission found, in recital 24, that ‘the description of the work to be carried out on the sewers and waste-water treatment system was similar and the works had to fulfil the same economic and technical function’, that ‘the present case refers to a series of specific maintenance, enlargement and renovation works on the existing sewers and waste-water treatment system, the result of which, when finished, should be an overall improvement of the network for end-users’ and that ‘the difference between the different types of works [is not] technical or economic’.

48Therefore, without any need to give a ruling on the Commission’s question as to whether the criteria of the economic function and the technical function of the result of the works should both be applied for the purpose of defining a work within the meaning of Article 14(10), first subparagraph, of Directive 93/38, it must be observed that, contrary to Spain’s allegations, the Commission did not err in the contested decision in identifying the criteria of the economic function and the technical function of the result of the works as having to be applied for the purpose of defining a work within the meaning of Article 14(10), first subparagraph, of Directive 93/38.

49Secondly, Spain submits that the disputed contracts should be examined by reference to the geographical and the time criteria also.

50On that point, in Commission v France, the Court of Justice used the criteria of the economic function and the technical function of the result of the works to define a single work (paragraphs 49 to 56). At paragraph 65 it added that ‘each case of procurement should have been assessed by reference to its context and its own specific features’. The Court added that, in the situation giving rise to that judgment, ‘there are important factors which militate in favour of those contracts being aggregated at that level, such as the fact that the invitations for tenders for the contested contracts were made at the same time, the similarities between the contract notices and the fact that Sydev, the body comprising the joint municipal groupings responsible for electrification within the département, initiated and coordinated the contracts within a single geographical area’.

51Therefore in Commission v France the Court took into account a geographical factor in order to determine whether the different local networks, that is to say, electricity supply (paragraphs 64 and 65) and street lighting (paragraphs 69 and 70), fulfilled a single technical and economic function in a wider geographical area and whether those networks could be grouped together in a single network on the basis that interconnection between them was possible.

52With regard to the time factor, in Commission v France, the Court mentioned ‘the fact that the invitations for tenders for the contested contracts were made at the same time’ (paragraph 65).

53It must be borne in mind that the geographical and time factors are not criteria for defining a work within the meaning of Article 14(10), first subparagraph, of Directive 93/38, but necessary elements for corroborating the existence of such a work because only works situated within a specific geographical and time framework may be regarded as a single work.

54In the contested decision the Commission referred to the geographical viewpoint (recitals 24 and 26) and the time factor because of the grouping together of the contracts relating to the same phase, namely the SPWS phase and the FIMMA 97 phase. Therefore the Commission was not mistaken in examining the disputed contracts by reference to geographical and time viewpoints without considering them as functional criteria in order to define the works in question.

55Third, according to Spain, the Commission appears to have used somewhat special criteria to establish an infringement on the part of the Spanish authorities, such as the capacity of potential bidders or the advantage to them of carrying out all or some of the works at the same time (recital 9 to the contested decision).

56In the contested decision the Commission actually mentioned certain factors concerning the potential bidders in the part relating to the initial evaluation (recital 9).

57In that connection, in Commission v France, the Court of Justice took the view that the definition of the term ‘work’ in the first subparagraph of Article 14(10) of Directive 93/38 does not make the existence of a work dependent on matters such as the number of contracting entities or whether the whole of the works can be carried out by a single undertaking (paragraph 43). The Court observed that, while the existence of a single contracting entity and the possibility of a Community undertaking’s carrying out the whole of the works described in the contracts concerned may, according to circumstances, constitute corroborative evidence of the existence of a work within the meaning of the Directive, they cannot, on the other hand, constitute decisive criteria on that point. The Court added that ‘if there is a number of contracting entities and the whole of the works concerned cannot be carried out by a single undertaking, this will not call into question the existence of a single work where that conclusion results from the application of the criteria concerning function set out in Article 14(10), first subparagraph, second sentence, of the Directive’ (paragraph 42).

58Therefore it is clear from Commission v France that the use of certain factors relating, in particular, to potential bidders, is possible, but those factors cannot be decisive or call into question the existence of a single work where that conclusion results from application of the criteria of the technical function and the economic function of the result of the works.

59Consequently it is necessary to examine the application of those criteria to the contracts in issue in the contested decision and to ascertain whether the Commission was right to regard them as being fulfilled so as to find that there were two works. It will then be necessary to consider on what basis other criteria were taken into account.

Application of the term work within the meaning of Article 14(10), first subparagraph, of Directive 93/38 to the disputed contracts in the contested decision

60Spain submits that there was no objective assessment of the works from the technico-economic, geographical and time viewpoints, that those criteria were misapplied in the present case and that unusual criteria were applied.

61In the contested decision the Commission took the view that there were two groups of works consisting, one, of eight projects of the SPWS phase [(recital 24(a))] and, the other, of four projects of the FIMMA 97 phase [(recital 24(b))]. It is therefore necessary to examine each group in turn.

–The eight disputed contracts of the SPWS phase

62Spain submits that the Commission was not rigorous in its technico-economic examination and carries out an analysis, in the technical and economic respects, of the eight contracts of the SPWS phase, referred to at paragraph 14 above, concerning six waste-water sewers, one rainwater outfall and a secondary network of sewers, which are said to be independent projects.

63First, concerning the technical function of the works, Spain submits that it is different for each of the projects in question.

64However, the Commission’s analysis did not consist in examining independently the different works referred to by the disputed contracts and in assessing their own technical function, as Spain suggests, but it considered whether the result of the works had one and the same technical function, as required by the case-law cited at paragraph 45 above.

65Accordingly the Commission found that the works resulted in an overall improvement in the waste-water treatment system and that they were to fulfil the same technical function (recital 24 of the contested decision).

66First, it must be observed that the six sewers and the secondary network of sewers collect all the waste water for management in the waste-water treatment system.

67Secondly, regarding the rain water outfall, Spain submits that it has a different technical function which does not consist in managing or treating waste-water, but in preventing floods in the event of excessive rainfall. However, it does not submit that, in the present case, the outfall does not play a part, with the sewers and the secondary network of sewers, in the technical function of the waste-water treatment system. As the Commission rightly submits, the outfall serves to prevent the pointless increase in the volume of water to be handled by one treatment plant and to limit the pollution of the receiving waters by the overloads resulting from abundant rainfall, contributing in that way to the better management of waste water. In addition, Spain claims that the outfall in question does not treat waste water, but it does not assert that it does not discharge waste-water. Spain adds that it is not possible to maintain a strict separation between the rain water that passes through the outfall in question and the waste water that passes through the sewers. It must be observed that the outfall concerned discharges rain water and waste water in order to relieve the sewers of waste water and to permit better operation of the waste-water treatment system.

68In response to the questionnaire in the request for assistance made in 1996, the Spanish authorities stated that the aim of the waste-water treatment project was to construct a series of sewers intended to complete the zone which carried waste water to the Almozara treatment plant. It is also stated that it was planned to construct an outfall for swollen waters which would discharge into the river Ebro the rain water that a sewer could not carry, only at times of heavy rainfall and with an adequate degree of dilution of waste water. Finally, it is stated that the main object of all the projects was ‘to reconstruct the existing obsolete structures and to remedy the system’s shortcomings by giving the municipality a waste-water network capable of carrying the waste water to the main sewers, thus avoiding floods, leaks into the ground water and the uncontrolled discharge of waste water’. The same description of the main object is given in the 1996 decision, in the annexed synoptic record summarising the project. It follows that, according to Spain itself, there is a connection, in the context of the waste-water treatment system, between the transport of waste water and the avoidance of flooding by means of the outfall.

69It must be concluded that the eight projects are not independent, as Spain submits, but that they all belong to the same project for the waste-water treatment system, which is, according to the questionnaire in the application for aid submitted in 1996 and the synoptic record annexed to the 1996 decision, the construction of a waste-water network capable of carrying the waste water to the main sewers, thus avoiding floods, leaks into the ground water and the uncontrolled discharge of waste-water. As the Commission rightly found, the work in question on the SPWS phase had a similar objective, which is to provide or to renovate the waste-water system for different sectors, including the installation of waste-water sewers and outfalls (recital 24(a) of the contested decision). Consequently they constitute a series of works the result of which is an overall improvement in the waste-water treatment system (recital 24 to the contested decision). According to Article 14(10), first subparagraph, of Directive 93/38 and the judgment in Commission v France, the result of that series of works is intended to fulfil by itself a technical function, which is the treatment of waste water.

70That conclusion is not called into question by Spain’s argument that Directive 93/38 is not applicable to outfalls in so far as they are not intended for the discharge of waste water. First, as already noted (paragraph 67 above), it is erroneous to argue that the outfall in question discharges only rain water. Secondly, as the Commission rightly observes, the scope of Article 6(2)(b) of the Directive is not confined to installations which discharge or treat waste water directly, but it also applies to contracts which ‘are connected with the disposal or treatment of waste water’, which includes outfalls.

71In addition, it is necessary to dismiss the argument, put forward by Spain to dispute the Commission’s argument, that treating a series of schemes relating to different types of urban sewers as a single work is supported by Council Directive 91/271/EEC of 21 May 1991 concerning urban waste water treatment (OJ 1991 L 135, p. 40). In particular, the Directive concerns the collection, treatment and discharge of urban waste water, which Article 2(1) defines as including run-off rain water. In addition, even assuming that the Directive distinguishes the rules applying to waste-water treatment plants, Spain does not explain the conclusion to be drawn regarding the projects in question, none of which involves a waste-water treatment plant.

72Secondly, Spain denies that the economic functions of the projects in question are identical. Rain water is not subject to the specific tax on waste-water treatment services which is levied by the municipality of Zaragoza. Therefore a specific tax or charge cannot be collected for the rain-water outfall. In addition, in reply to the Commission, Spain submits that, even if the specific tax is intended to finance the costs of operating the system, it is still insufficient and necessitates contributions from the municipal budget. This means that, if the management of waste water is in fact partly covered by the revenue from the tax, the network infrastructures intended for the collection and management of rain water would have to be financed by means of public funds. There is an essential difference between the tax for the treatment of waste water and the payment for a public service provided by the rain water outfalls, which shows they are not identical in the economic respect. The tax for the treatment of waste water is in fact set according to the waste-water disposal of each household, that is to say, an individual tax according to each taxpayer’s own consumption, whereas the payment for the public service provided by the rain water outfalls could be passed on to the population, but without an adjustment of the amounts required according to the benefit obtained by the persons concerned.

73In the contested decision the Commission found that, in the economic respect, ‘the end-users [had] to pay the service provider for what they use’ (recital 24).…

75First, at the hearing, in reply to a question from the Court, Spain confirmed that the specific treatment tax on waste-water treatment services, charged by the municipality of Zaragoza, to which it refers in the application, was laid down by Article 2 of Chapter 2, entitled ‘Waste water treatment service’, of Fiscal Ordinance No 24.25 of the municipality of Zaragoza concerning the tax on services for the supply of drinking water and the treatment of waste water, that Article being cited by the Commission in its pleadings. By virtue of that provision, ‘the taxable act for this tax is the provision of the waste water treatment service where it relates to rain water and/or waste water collected in the sewers and drains owned or maintained by the municipality, since it is then the municipality of Zaragoza which takes on the management of such water, including the costs inherent in its transport, treatment and discharge in natural water courses on the conditions provided for by discharge authorisations issued by the Ebro Hydrographic Confederation’. It is clear from that provision that no distinction is made between waste water and rain water.

76Secondly, Spain’s argument concerning the financing of the system infrastructures for the collection and treatment of rain water is not supported, as Spain merely submits that the infrastructures must be financed by means of public funds. In addition, Spain has adduced no evidence to show that the infrastructures are not financed, or partly financed, by the special treatment tax.

77Consequently it must be concluded that the works in question of the SPWS phase are elements of a whole the result of which is intended to fulfil an economic function by itself.

78Therefore Spain has not shown that the Commission erred in finding, in recital 26 to the contested decision, that the works in question of the SPWS phase had to fulfil the same technical and economic function within the meaning of Article 14(10), first subparagraph, of Directive 93/38.

–The four disputed contracts of the FIMMA 97 phase

79Spain complains of a lack of rigour on the Commission’s part in the technico-economic examination and goes on to assess in the technical and economic respects the four disputed contracts of the FIMMA 1997 phase, referred to at paragraph 15 above, concerning a sludge treatment plant, a connecting sewer and certain sewers, including those of the river Gállego. Spain then goes on to examine the contracts for that phase and concludes that each project must be regarded as independent of the others and that publication of the contract notices in the Official Journal was not required.

80First, regarding the technical function of the projects of the FIMMA 1997 phase, in the contested decision the Commission found that the four projects constituted a single work, which is denied by Spain.

81According to the questionnaire in the application for aid submitted in 1997, the FIMMA 1997 projects had three different objectives. However, as the Commission has observed, the four projects in issue belonged to one and the same group with the same objective, which was the ‘disposal of untreated waste water’.

82With regard to the connecting sewer, Spain submits that ‘its function is not, like that of the others, to collect and carry away waste water or rain water to the treatment plants or outfalls’, but states that the connecting sewer ‘attempts to compensate for the imbalances in the treatment structures due to the asymmetrical growth of the city of Zaragoza’. Therefore, contrary to Spain’s allegations, it is mistaken to submit that the connecting sewer between the two treatment plants is an ‘infrastructure totally independent of the other sewers’ in so far as it forms part of the treatment system of Zaragoza. Thus Spain distinguishes between the technical function of each of the projects, without taking account of the fact that what is involved is a group of works the result of which is the overall improvement of the treatment system for end-users (recital 24 of the contested decision) and is intended to fulfil a technical function by itself, which is the treatment of waste water.

83With regard to the sludge treatment plant, Spain submits that, unlike the sewers, it does not have the function of carrying away waste water or rain water, but of avoiding discharge into the river Huerva of the sludge arising from the process of making water drinkable for personal, commercial or industrial consumption in the whole of the city. However, it is a matter not of determining whether the sludge treatment plant has in itself a different technical function from that of a sewer, but of assessing whether, having regard to Article 14(10), first subparagraph, of Directive 93/38, the sewers and the sludge treatment plant belong to a series of works the result of which has a common technical function, which is the treatment of waste water. Spain does not deny that the sludge treatment plants contribute to the treatment of the waste water of the city of Zaragoza.

84In addition, Spain’s argument that the profile of a bidder for the contract for a sewer differs completely from that for a contract for the sludge treatment plant must be dismissed as that is not one of the criteria for assessing a work for the purpose of Article 14(10), first subparagraph, of Directive 93/38.

85Finally, Spain disputes the Commission’s argument that sewers and sludge treatment plants, which are accessory to the treatment of waste water, are technically equivalent. Spain claims that, in the present case the sludge treatment plant treats sludge from a unit for making water fit for drinking, not sludge from a purification plant. However, Spain does not explain why the fact that the sludge treatment plant is of that kind means that it plays no accessory part in the treatment of waste water in so far as the sludge treatment plant answers the objective of the disposal of discharges of non-purified waste water, as stated in the questionnaire of the application for finance submitted in 1997.…

87It must be concluded that the four projects are not independent, as Spain maintains, but that they all belong to the same project concerning the waste-water treatment system. As the Commission rightly found, the works in question of the FIMMA 1997 phase pursued a similar objective, which was to install sewers along the rivers Huerva and Gállego in order to serve the zones which were still discharging effluent directly into the rivers and to renovate the two installations for the treatment of waste water to which the waste water is carried [recital 24(b) of the contested decision]. Therefore they constitute a series of works the result of which is the overall improvement of the treatment system for end-users (recital 24 of the contested decision). In accordance with Article 14(10), first subparagraph, of Directive 93/38 and the judgment in Commission v France, the result of the series of works is intended by itself to fulfil a technical function, which is the treatment of waste water.…

89Consequently it must be found that the Kingdom of Spain has not shown that the Commission erred in finding, in recital 26 of the contested decision, that the works in question of the FIMMA 97 phase were to fulfil one and the same technical and economic function within the meaning of Article 14(10), first subparagraph, of Directive 93/38.

–Conclusions

90Therefore, regarding the projects in question of the SPWS and FIMMA 97 phases, Spain has not shown that the Commission was wrong in finding, in recital 26 of the contested decision, that the projects formed, for each of the two phases, a work which is split artificially within the meaning of Article 14(10), first subparagraph, and Article 14(13) of Directive 93/38. By analogy with the situation which gave rise to the judgment in Commission v France, the projects in question consist of two series of individual works relating to the existing waste water treatment system and the result of which, once the work is completed, forms an integral part of the function fulfilled by that system.

91That conclusion is not called into question by Spain’s arguments concerning the other criteria to which it refers, namely the geographical and time factors, and those which are said to have been erroneously used by the Commission in the contested decision.

92First, regarding the geographical and time factors, according to Article 14(10), first subparagraph, of Directive 93/38 and its interpretation by the Court of Justice in Commission v France, those are not in themselves criteria that appear from the wording or even from the case-law (sees paragraph 53 above).

93First, regarding the geographical viewpoint, in recital 24 of the contested decision the Commission stated that, ‘so far as the eight projects of [the] SPWS [phase] were concerned, the only difference [was] the fact that [the works] had been carried out in geographically different sectors’ and that ‘regarding the four projects of [the FIMMA 97 phase], the only difference was the fact that that [the works] had been carried out in geographically different sectors’. In recital 26 the Commission added that ‘the works [had] been carried out in a single geographical zone’.

94In that respect Spain claims that there is a contradiction in the contested decision in that the Commission paradoxically asserted that there was both geographical dispersion and a single geographical zone. However, it must be noted that Spain asserts the same thing when it submits that ‘in spite of the fact that [the works in question] related to one and the same area, [they] were at a considerable distance from each other and were disconnected from the geographical viewpoint’.

95Spain claims that there was in fact no physical connection between the works proposed in the context of the projects in question, which ought to have prevented the Commission from finding that two works existed. However, assuming that it was established that no physical connection existed, the various works still form an integral part of the function fulfilled by the waste-water treatment system of the city of Zaragoza, which justifies the view that they form part of one and the same work. Therefore it is of no consequence that the works are dispersed over the system and are not directly connected physically in so far as, as the Commission claims, without being contradicted by Spain, they are situated within the zone covered by the network of drains and sewers managed by the municipality of Zaragoza. Consequently, as the Commission stated in the contested decision, even if they are ‘carried out in geographically different sectors’, they are ‘in a single geographical zone’. Therefore Spain’s argument concerning an alleged contradiction on that point in the contested decision cannot succeed.

96Spain’s argument establishing a parallel with the situation examined in Commission v France must therefore be dismissed. Spain has adduced no evidence to show that the disputed contracts concerned waste-water treatment systems different from those for which it was necessary to determine whether they could be grouped together.

97Finally, in reply to the Commission’s argument that Directive 91/271 uses the agglomeration as the geographical reference framework, Spain submits that such reference is irrelevant for defining a work within the meaning of the legislation relating to public contracts. The fact that the Directive uses the agglomeration as the geographical reference framework would be meaningful with regard to the treatment of waste water and the protection of public health. On that point, it must be observed that, as the result of the different works forms an integral part of the function fulfilled by the waste-water treatment system of the city of Zaragoza, the area covered by that system constitutes the relevant geographical zone, whether it is connected to the urban agglomeration or to the municipal territory.

98It must therefore be concluded that Spain cannot succeed in its argument regarding the application of an alleged geographical criterion which would have been bound to lead the Commission to find, in the contested decision, that the projects in question did not form two works within the meaning of Article 14(10), first subparagraph, of Directive 93/38.

99Secondly, regarding the time factor, in the contested decision the Commission distinguished two groups of projects, one for the SPWS phase and one for the FIMMA 97 phase.

100On that point, assuming that Spain has an interest in contesting the division into two decisions, its argument that it was not possible to define two groups merely in view of the fact that the projects had been approved in two different decisions must be dismissed. As the Commission points out, the fact that it distinguished two groups of projects arises from the application of the time factor as the grouping of the works was connected with the fact that they belonged to two phases, which were separate in time, of the waste water treatment plan for Zaragoza.

101In addition, Spain questions whether the projects at issue can be regarded as falling within the same unit of time, within each of the two phases. Spain disputes the Commission’s ex post facto conclusion, which did not refute, during the administrative procedure, Spain’s argument that the contracts had been concluded over a period of 14 months for the SPWS phase and 20 months for the FIMMA 97 phase.

102As already mentioned (paragraphs 50, 52 and 53 above), in Commission v France the Court of Justice did not specify a time criterion, but took the time factor into account as a relevant matter. It must be observed that the Court does not mention the existence of a unit of time, but does mention the ‘fact that the invitations for tenders for the contested contracts were made at the same time’, while, as the Commission submits, the opinion of Advocate General Jacobs in that case ([2000] ECR I-8341, I-8318) refers to a ‘specified period’ (paragraph 72).

103In the present case, as the Commission rightly observes, the calls for tenders were published in the course of the same period of time for each group of projects in question. Thus, of the eight contracts of the SPWS phase, seven were published in less than five months, between 29 July 1997 and 17 December 1997, five being published on two dates, and one published on 24 July 1998, but with a four-month period for completion. Regarding the four contracts of the FIMMA 97 phase, the calls for tenders were published in less than seven months, between 13 November 1998 and 9 June 1999.…

107In conclusion, Spain’s argument concerning the existence of an alleged time factor which, if applied in the present case, would justify a finding that the Commission was mistaken in finding that two works were in existence cannot succeed.

108Secondly, Spain claims that in the contested decision the Commission relied on somewhat special criteria to find the infringement by the Spanish authorities, such as the capacity of potential bidders or the advantage to them of carrying out some or all of the contracts at the same time (recital 9 of the contested decision).

109The Commission did indeed mention in the contested decision certain matters relating to potential bidders in the part concerning the initial assessment (recital 9). It also mentioned them in the final assessment (recital 25) with different wording.

110However, it is clear from recitals 24 and 26 of the contested decision that the Commission found that there were two works within the meaning of Article 14(10), first subparagraph, of Directive 93/38 by reason of compliance with both the technical and the economic criteria. Therefore the matters mentioned in recital 25 of the contested decision merely confirm a finding based on the functional criteria. Consequently the reference to those matters is not such as to call into question the legality of the contested decision.

111Although the point need not be made, regarding the references to potential bidders in recital 25 of the contested decision, the Court of Justice stated in Commission v France, paragraph 42, that ‘the possibility of a Community undertaking’s carrying out the whole of the works described in the contracts concerned’ may constitute corroborative evidence of the existence of a work within the meaning of Directive 93/38.

112In addition, in recital 25 of the contested decision the Commission referred to Article 4(2) of Directive 93/38. That provision prohibits discrimination between tenderers by protecting also those who are discouraged from tendering because they have been placed at a disadvantage by the procedure followed by a contracting entity (Commission v France, paragraph 109). The matters relating to potential bidders in recital 25 of the contested decision are therefore mentioned also with regard to Article (4)(2) of Directive 93/38.

113Consequently it must be found that Spain has not shown that the Commission erred in the contested decision with regard to the criteria for defining a work within the meaning of Article 14(10), first subparagraph, of Directive 93/38 and with regard to applying them to the present case. The works in question form two series of individual works concerning the waste-water treatment system of Zaragoza, the result of which, after the completion of the works, forms an integral part of the function fulfilled by that system. Therefore Spain has not shown that the Commission erroneously found that two works were in existence, one for the SPWS phase and one for the FIMMA 97 phase.

114Consequently the first part of the first plea must be dismissed.

Second part: manifest error of assessment by the Commission in relation to the existence of an intention

115Spain submits, in essence, that infringement of Article 14(10) of Directive 93/38 presupposes an intention that must be proved by the Commission. In that connection, according to Spain, only the legislation relating to public contracts should be taken into account, and not Regulation No 1164/94. However, the Commission had not proved such intention. In any case, Spain asserts that it acted transparently, in good faith and in full cooperation with the Commission throughout the procedure.

116In the present case, the Commission found in the contested decision that the Spanish authorities had infringed Article 14(13) of Directive 93/38 and imposed a financial correction on Spain in accordance with Article H of Annex II to Regulation No 1164/94.

117As Spain rightly claims, in his opinion in Commission v France Advocate General Jacobs had submitted that the wording of Article 14(13) implied a degree of intent in the conduct adopted (paragraphs 37 to 39).

118However, in the judgment in that case (paragraph 31) the Court of Justice took the view that Article 14(13) of Directive 93/38 sets out clearly the specific obligations deriving for contracting entities from Article 14(10), first subparagraph, of the Directive and must, therefore, be taken into account together with that subparagraph in ruling as to whether a work was split. The Court did not consider whether the awarding entities had intentionally split a single work within the meaning of Article 14(10), first subparagraph, of Directive 93/38.

119It must therefore be found that, in the present case, the Commission was not required to show, for the purpose of Article 14(13) of Directive 93/38, that there was an intention on the part of the Spanish authorities to split into different contracts a single work within the meaning of Article 14(10), first subparagraph, of Directive 93/38. Consequently the Commission had no burden of proof in that respect and it cannot be complained that the Commission failed to show such intention.

120That finding is not called into question by Spain’s argument that the Spanish authorities cooperated sincerely with the Commission and acted transparently and in good faith. As no element of intention on the part of the Spanish authorities was required in order to find an infringement of Article 14(13) of Directive 93/38, the considerations concerning the conduct of the Spanish authorities in the present case are not relevant for the purpose of showing that the Commission erred in finding that that provision had been infringed.…

Operative part

On those grounds,THE GENERAL COURT (Eighth Chamber)hereby:

1.Dismisses the action;

2.Orders the Kingdom of Spain to pay the costs.

Delivered in open court in Luxembourg on 11 July 2013.