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Concession contracts - partnerships between the public sector and a private company

Concession contracts - partnerships between the public sector and a private company

Concession contracts are used by public authorities to deliver services or construct infrastructure. Concessions involve a contractual arrangement between a public authority and an economic operator (the concession holder). The latter provides services or carries out works and is remunerated by being permitted to exploit the work or service.

Concessions are a particularly attractive way of carrying out projects in the public interest when state or local authorities need to mobilise private capital and know-how to supplement scarce public resources. They underpin a significant share of EU economic activity and are especially common in network industries and for the delivery of services of general economic interest. Concession holders may, for example, build and manage motorways, provide airport services, or operate water distribution networks.

The 2004 Public Procurement Directives only partially covered concessions and the absence of clear EU rules led to legal uncertainty and obstacles to the free provision of services. It also caused distortions to the functioning of the internal market, such as the direct award of contracts without transparency or competition. This process risked national favouritism, fraud and corruption. This absence of proper regulation generated economic inefficiency and had a negative impact on getting the best value for public money. In response, Directive 2014/23/EU on the award of concession contracts was adopted in 2012. EU countries had to transpose this directive into their national legislation by 18 April 2016.

The new directive creates a stable legal framework for public authorities and economic operators to ensure non-discrimination and fair access to markets and EU-wide competition for high-value concessions. It gives the most efficient providers a fair chance of winning contracts by proposing the best offers. The Directive:

  • facilitates new investments
  • promotes a quicker return to sustainable economic growth
  • contributes to innovation and the long-term development of infrastructure and services

More information:

Preparatory documents for the Concessions Directive

Factsheets on concession legislation

Directive on concession contracts:

See also: