On 18 June 2025, the European Commission formally referred Germany to the European Court of Justice (ECJ), commencing an infringement action over German laws implementing EU public procurement rules. This dispute is poised to test how far Member States may exercise discretion in procurement matters while preserving transparency, equal treatment, and effective judicial remedy.
Background: EU Procurement Directives and German Transposition
At the heart of this case are two key EU instruments:
- Directive 2014/24/EU on public procurement of works, supplies and services;
- Directive 2014/23/EU on the award of concession contracts.
These directives set minimum standards for transparency, competition, non-discrimination, and remedy for bidders across the EU internal market. Germany has transposed these via national legislation, principally through:
- the Act Against Restraints of Competition (GWB),
- the Regulation on the Award of Public Contracts (VgV),
- the Concession Award Regulation (KonzVgV),
- and sectoral rules such as SektVO (water, energy, transport).
While Germany has addressed several prior Commission concerns, three main points of contention remain.
The Commission’s Complaints
The European Commission identifies three unresolved deficiencies:
- Insufficient transparency in contract award decisions: Under EU law, contracting authorities must furnish bidders with meaningful reasons after a contract is awarded, enabling them to assess whether grounds for legal challenge exist. In Germany, the Commission contends that the information provided is often too vague: bidders may receive only minimal explanations, making it difficult to verify whether the award was lawful or whether a timely challenge is possible. Because the timeframe for legal review may begin before a bidder has adequate information, the de facto ability to challenge is weakened.
- Unclear definition of “public contracting authority:” The German law’s ambiguity over which entities qualify as contracting authorities gives room for inconsistent application. Such uncertainty may allow entities to mis-classify themselves and avoid the full rigour of procurement rules or adopt unsuitable procedures, thus undermining equality and the proper functioning of the internal market.
- Exclusion of the postal sector from procurement rules: While sectors such as water, transport, and energy fall under EU procurement law, Germany has excluded postal services from its rules. The Commission argues this distorts competition, postal operators can award contracts without obligations of transparency or fair treatment, placing competitors at a disadvantage.
Because Germany has not fully remedied these issues, the Commission has advanced the case under Article 258 of the Treaty on the Functioning of the European Union (TFEU).
Germany’s Efforts and Legislative Landscape
Germany has not remained inactive. Since being first alerted in 2019, it addressed five out of eight points raised by the Commission via amendments and regulatory updates. In late 2024, a draft Public Procurement Transformation Act was tabled, which proposed bringing postal services within the scope of the Act Against Restraints of Competition (GWB). However, the bill stalled and lapsed with the end of the previous parliamentary term. Then, in August 2025, the new government enacted a law to accelerate procurement procedures. But critics argue it focused heavily on speed and efficiency, largely bypassing the Commission’s core concerns about transparency, clarity, and breadth.
One prominent element of the draft Public Procurement Acceleration Act (still pending) is a proposal to allow direct awarding of supply or service contracts up to €50,000 (excluding VAT) without formal tendering. This could reduce procedural burdens for smaller contracts but also raise transparency questions in lower-value procurements.
Another controversial change: the draft would remove the automatic suspensive effect of immediate appeals in procurement review. In effect, the awarding authority could proceed with contract signing before a court’s ruling, undermining the principle of effective legal protection. The draft also seeks to tighten definitions around entities from third (non-EU) countries, potentially excluding bidders from states lacking reciprocal access. If adopted, the new law might enter into force in early 2026, possibly on 1 January or 1 April.
Legal Procedure & Potential Consequences
Procedure under Article 258 TFEU
The infringement process begins with a formal notice, then a reasoned opinion, and culminates (if unresolved) in a referral to the ECJ. Here, the Commission issued the formal notice in 2019, proceeded to a reasoned opinion, and now refers Germany to the Court.
If the ECJ finds non-compliance, Germany must amend its laws to conform. In persistent cases, it could face financial penalties under Article 260 TFEU.
Risks and Wider Implications
Judicial protection: If legal remedies are weakened (e.g. removal of suspensive effect), the practical enforceability of procurement rules may suffer.
National sovereignty vs EU harmonisation: The case underscores the tension between national legislative preferences and the demand for harmonised procedural standards across the EU.
Business certainty & access: Weak transparency or unclear scope discourages cross-border participation, raises compliance costs, and disadvantages smaller firms.
Distorted competition: If postal services remain exempt, domestic operators may have unfair advantages versus foreign competitors.
Broader Context and Recent Developments
Beyond Germany, the ECJ has on multiple occasions emphasised that procurement rules must not be mere formalities, but effective guarantees of fairness and openness. In a 2022 decision, for example, the Court held that exclusion grounds under Article 57(4)(d) of the Procurement Directive should not be narrowly limited to classical competition law infractions, but can also address bids submitted in coordination (e.g. by group entities) that distort equal treatment.
In Germany’s own legal framework, reform proposals are underway to tweak below-threshold rules, streamline documentation, emphasise digital procedures, and embed sustainability criteria. But the fundamental tension remains: how to accelerate procurement without undermining the procedural safeguards dictated by EU law.
This ECJ referral represents more than a bilateral dispute between Brussels and Berlin. It is a test case for how far Member States may push flexibility in public procurement before infringing the EU’s guarantee of fair competition and effective legal protection.
Germany must now decide whether to concede and reform, or defend its stance, and European courts will ultimately decide whether Berlin’s approach oversteps acceptable bounds. For public authorities, lawyers, and companies across the EU, the outcome could redefine the balance between national autonomy and the uniform standards of the internal market.
Sources:
Latest press releases – European Commission https://europa.eu/newsroom/ecpc-failover/index-pr_en.htm
European Commission publishes June 2025 infringements package
Germany Faces ECJ Over Procurement Rules: Transparency, Competition, and the Future of Public Contracts
