Competition and State Aid Implications of ‘Public’ Minimum Wage Clauses in EU Public Procurement after the RegioPost Judgment

Abstract

This chapter assesses the use of public procurement to enforce labour standards from a competition and State aid perspective, and concentrates on the establishment of contract compliance clauses under the rules of Article 26 of Directive 2004/18/EC and Article 70 of Directive 2014/24/EU and in relation with the Posted Workers Directive. In particular, it assesses the case law of the European Court of Justice in Rüffert, Bundesdruckerei and RegioPost from an economic perspective. This highlights the potential negative competitive implications that derive from the asymmetrical rules the case law creates for the cross-border and the inter-regional provision of services to the public sector. It also underlines the risk of (regional) economic protectionism that they create. The chapter then assesses these issues from the perspective the EU public procurement, competition and State aid rules. It concludes that, given the current ineffectiveness of the checks and balances theoretically oriented towards the prevention of these undesirable effects, contracting authorities and policy makers would be well advised to abandon their efforts of setting partial, incomplete and difficult to monitor minimum/living wage requirements for public contracts only.

Keywords: Public procurement, contract performance, contract compliance, performance clauses, minimum wage, living wage, labour standard, competition, State aid, Rüffert, RegioPost, Bundesdruckerei

JEL Classification: H57, J38, J48, J58, J68, J78, K21, K23, K31, K42