European Court of Justice confirms strict interpretation of in-house procurement

Brussels, 19 January 2026 – Last week, the European Court of Justice passed a sentence clarifying the application of public contracts between entities within the public sector, so-called ‘in-house procurement’ (Case C‑692/23)[1], in a case concerning public contracts for the management of household waste.

The European public procurement framework foresees that in-house procurement is exempted from applying the general procedures provided a number of conditions are fulfilled. The conditions to apply the in-house procurement exception include the exercise of control over the legal entity in question by the contracting authority; but also requires the legal entity to carry out more than 80% of its activities for the controlling contracting authority, considering the average total turnover. In that regard, two different interpretations are possible when the legal entity is part of a group.

On the one hand, the concept of ‘turnover’ could be assessed solely on the basis of the turnover of the legal person concerned, and not that of the group to which it belongs. On the other hand, it can also be considered that the turnover of the entire group is to be taken as reference. This second interpretation has been confirmed by the European Court of Justice on 15 January, which understands that the relevant criterion is not limited to the activities of the controlled legal person itself, but also extends to those which may be more broadly linked to it. 

The case in question concerned public contracts for the collection and processing of residual household waste which were directly awarded under the ‘in-house’ exception, without an open tender. The claim was submitted by the waste management company, AVR-Afvalverwerking BV (‘AVR’), which argued that it is the turnover of the group that should be accounted for, since it is the only way to factor in the economic reality. Otherwise, following AVR´s argument, the in-house requirements can be circumvented by artificially separating activities, so that legal person itself carries out within the group more than 80% of those activities for the benefit of the contracting authorities, while having one or more undertakings in that group operate on the free market.

Jasper de Jong, Director for Marketing & Sales at AVR, is delighted the European Court of Justice clearly confirms AVR’s longstanding view that public operators must adhere to the 20% limit on commercial activities based on group turnover. ‘Given their privileged position to service municipalities without market scrutiny, public operators should strictly refrain from exceeding this 20% threshold in the commercial market’. De Jong expresses confidence that, where necessary, the Dutch courts will follow the European Court of Justice’s lead to address what he described as the unjustified position currently held by the public operators in the Dutch waste market. De Jong concludes that ‘this court ruling is the best possible input for the European Commission in the process of the EU Procurement Directive revision to foster the position of the private waste management operators, so they can take their role in the significant long-term investments needed to deliver on the climate goals’. This would thereby free up EU public funds for other areas of public spending that are much needed, such as strategic autonomy.

This case reflects FEAD´s long-standing concerns over an ongoing remunicipalisation trend of waste management services, which is closing the market to private operators.[2] ‘FEAD is a resolute advocate for stronger competition in public procurement’, stated Paolo Campanella, Secretary General of FEAD. ‘Preferential treatment of public entities—including state-owned enterprises—over private companies should be limited to exceptional cases. Such practices distort free market competition and discourage private investment’, Campanella added.

Herwart Wilms, FEAD President reminds that ‘the Clean Industrial Deal aims to position the EU as the global leader in the circular economy by 2030—a goal that demands significant investments’. He regrets, however, that ‘this ambition is undermined by increasing dominance of waste management markets by public entities. The absence of competitive tendering shuts out private operators, depriving them of the market visibility and stability needed to justify long-term investments’. Wilms concludes that ‘to unlock the full potential of the circular economy, procurement rules must be reformed. Waste management contracts should be awarded based on quality, efficiency, and innovation’. The European Commission is currently revising the EU Procurement Directives following the evaluation that took place last year. FEAD will continue its advocacy efforts to ensure fair competition and market access to private waste management companies to achieve its circular economy ambitions.

[1] InfoCuria – Cour de justice de l’Union européenne

[2] https://fead.be/wp-content/uploads/2025/03/FEAD-position-paper-evaluation-of-procurement-directives-7-March-2025.pdf

FEAD is the European Waste Management Association, representing the private waste and resource management industry across Europe, including 21 national waste management federations and 3,000 waste management companies. Private waste management companies operate in 60% of municipal waste markets in Europe and in 75% of industrial and commercial waste. This means more than 500,000 local jobs, fuelling €5 billion of investments into the economy every year. For more information, please contact: info@fead.be