Article 1(2)(a) of Parliament and Council Directive 2004/18/EC of 31 March 2004 on the co-ordination of procedures for the award of public works contracts, public supply contracts and public service contracts meant that a contract for the supply of products concluded between (i) a university which was a contracting authority and whose purchases of products and services were controlled by a German Land, and (ii) an undertaking under private law, owned by the Federal State and by German Länder, including that Land, constituted a public contract for the purposes of that provision, and must therefore be subject to the public procurement rules laid down in the Directive.

The Court of Justice of the European Union (Fifth Chamber) so held on a reference for a preliminary ruling from the Hanseatic Higher Regional Court, Germany in proceedings between the applicants, Technische Universität Hamburg-Harburg and Hochschul-Informations-System GmbH, and the defendant, Datenlotsen Informationssysteme GmbH, concerning the lawfulness of the award of a contract by the University directly to HIS without applying the award procedures under Directive 2004/18.

THE COURT (FIFTH CHAMBER) said that in accordance with the case law of the Court of Justice, the principal objective of the EU rules in the field of public procurement was the opening-up to undistorted competition in all the member states with regard to the execution of works, the supply of products or the provision of services; that entailed an obligation on all contracting authorities to apply the relevant rules of EU law where the conditions for such application were satisfied and any exception to the application of that obligation had to be interpreted strictly. The reason which justified recognition of the exception for in-house awards, that was to say, the existence a specific internal link between the contracting authority and the contractor, was absent in a situation such as that in the main proceedings. Therefore, such a situation could not be covered by that exception otherwise the limits of its application, which had been clearly defined by the case-law of the court, would be extended in such a way as to reduce significantly the scope of the principle.