AG Quidnet Hounslow LLP v London Borough of Hounslow

A proposed agreement under which a public authority grants a long lease of land does not engage Article 56 TFEU merely because the lessee may later develop the site. The court must identify services provided by the contracting party to the public authority and any restriction imposed on the provision of those services. Services supplied to the lessee by contractors are too remote. Article 56 is not confined to concessions or other recognised categories, but, where it applies, it requires advertising sufficient to open the market to competition. A wholly internal situation does not engage the provision. A declaration remains discretionary; hypothetical proceedings and the adequacy of damages may justify refusing relief.

The claimant, owner of a shopping centre in Hounslow, challenged the defendant local authority’s decision in principle to negotiate exclusively with Legal and General Assurance Society Limited for a long lease of land known as Key Site 1, Phase 2. The primary procurement claim under the Public Contracts Regulations 2006 was stayed. The expedited trial concerned the alternative claim that the proposed agreement infringed Article 56 TFEU.

The claimant argued that the arrangement concerned development services or a concession and required transparency and competition. The central questions were whether the proposed agreement involved services within Article 56, whether it imposed a relevant restriction, whether the matter was wholly internal to the United Kingdom, and what relief would be available if Article 56 applied.

1. Nature of the agreement. The proposed arrangement was, in substance, an agreement to grant a long lease. Its heads of terms imposed no express, legally enforceable obligation on L&G to develop the site or provide services. Any later development would depend on future commercial decisions and events. The agreement therefore did not concern services within Article 56. Services which might later be supplied to L&G by contractors or consultants were services provided to L&G, not by L&G to the Council, and were too uncertain and remote.
2. No concession or restriction. L&G was not placed in the Council’s position or authorised to provide public services for remuneration. The agreement conferred an interest in land. It also imposed no restriction on downstream contractors, suppliers or consultants. The court rejected the proposed analogy with a concession.
3. Scope of Article 56. The reported cases identifying concessions, excluded procurement contracts and controlled service markets were useful guides, but Article 56 was not confined to those categories. If Article 56 applied, the Council would have had to provide advertising sufficient to open the market to competition and allow undertakings in other Member States to express an interest before the award. The Vision Report, Masterplan and information given privately to Quidnet would not have satisfied that obligation.
4. Internal situation. The parties, the authority and the land were all in the United Kingdom. There was no evidence of interest from an undertaking in another Member State. Applying the RI.SAN approach, the matter was wholly internal and Article 56 was not engaged.
5. Relief. If Article 56 had applied, delay and reliance would not have defeated relief. However, the hypothetical nature of the claim and the adequacy of damages would probably have led the court to refuse the requested declaration, subject to ensuring that damages remained available. The claimant’s alternative claim therefore failed. The judgment did not decide the injunction or costs issues.