Is a contracting authority’s affiliated company also a contracting authority?

Hi!
If a company owned by an entity within the swedish public sector are regulated by the public tender laws, does that also mean that there affiliated companies (both domestic and foreign) also fall under the swedish tender laws?

Hi,

Not by default, the affiliated company is assessed independently of its parent company. Although the fact that the parent company itself is a contracting authority is a factor to be considered in that assessment.

To fall within the scope of the Swedish Public Procurement Act, the affiliated company has to constitute a contracting authority. For the purpose of the Swedish Public Procurement Act a contracting authority means a State or municipal authority. Additionally, a so-called body governed by public law, in the meaning of Chapter 1 Section 18 of the Swedish Public Procurement Act, is to be equated with a contracting authority.

A body governed by public law must have a legal personality (that is capable of having legal rights and duties, for example a limited company), be established for the specific purpose of meeting needs in the general interest while not having an industrial or commercial character.

It must also meet at least one of the following requisites:

• be financed, for the most part, by the State, regional or local authorities, or by other bodies governed by public law,
• be subject to management supervision by those authorities or bodies, or
• have an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law.

If the affiliated company meets the criterions listed above it is equated to a contracting authority and falls under the scope of the Swedish Public Procurement Act.

We cannot answer your question whether a foreign affiliated company falls within the scope of the Swedish Public Procurement Act. This must be assessed on a case-by-case basis. Please note that Swedish laws only applies to Swedish conditions. For example, if a company is established abroad and does not have any connection to Sweden, except that it is owned and/or controlled by a contracting authority in Sweden, we assume that the company does not fall within the scope of the Swedish Public Procurement Act.

References

• Chapter 1 Section 22 Swedish Public Procurement Act – definition of contracting authority
• Chapter 1 Section 18 Swedish Public Procurement Act – definition of body governed by public law
• Article 2.1 (4) in the EU Directive on public procurement (2014/24/EU) – definition of bodies governed by public law in the EU Directive on public procurement.

Kind regards,