Abnormally low tenders of public providers: a cross-subsidisation issue?

This article analyses whether the European public procurement legal framework provides adequate mechanisms to prevent the violation of State aid rules when public undertakings take part in procurement procedures as economic operators. It is argued that one of the main risks when public undertakings bid in a tendering procedure is the cross-subsidisation of their activities. Thus, the paper first analyses the measures provided under State aid law to prevent cross-subsidisation of activities, in particular the Transparency Directive. Then, it focuses on Article 69(4) of Directive 2014/24/EU, which regulates the exclusion of abnormally low tenders tainted by State aid. Specific attention is given to the ratio of the provision, to the type of incompatible aids covered by it, as well as to the relationship between the duties and powers of the contracting authorities and the controlling role of the European Commission. The last section investigates the transposition and application of such provision at national level, in Italy. This article reaches the conclusion that Article 69(4) of the Directive, as currently formulated and applied, is not useful to detect the cross-subsidisation between competitive and reserved activities of public undertakings and make some proposals to improve the overall effectiveness of the system and to guarantee competition on a level playing field between public and private operators.