OPINION OF ADVOCATE GENERAL
CAMPOS SÁNCHEZ-BORDONA
delivered on 14 September 2023 (1)
Case C‑421/22
SIA Dobeles autobusu parks,
AS CATA,
SIA VTU Valmiera,
SIA Jelgavas autobusu parks,
SIA Jēkabpils autobusu parks
interveners:
Iepirkumu uzraudzības birojs,
VSIA Autotransporta direkcija
(Request for a preliminary ruling
from the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia))
(Reference for a preliminary ruling – Regulation (EC) No 1370/2007 – Public passenger transport service by bus – 10-year contract – Public service obligation – Compensation parameters – Competitive tendering procedure)
1. In the dispute giving rise to this request for a preliminary ruling, a number of economic operators are challenging the specifications of an open invitation to tender for the award of a contract for the provision of public passenger transport services by bus. They claim that the tender specifications do not afford them proper protection against any potential increase in certain costs (fuel, wages and social security contributions) over the course of the contract’s 10-year term.
2. The referring court wishes to ascertain whether Regulation (EC) No 1370/2007 (2) permits a ‘compensation scheme’ under which the competent authority does not periodically index-link the price payable for the service under the contract to increases in costs inherent in providing the service which are beyond the control of the contractor.
3. The Court of Justice has ruled on compensation for public service obligations in the transport sector, (3) but it has not expressly addressed the question put to it now.
I. Legal framework
A. European Union law. Regulation No 1370/2007
4. Recitals 27 and 34 are relevant.
5. In accordance with Article 1(1) (‘Purpose and scope’):
‘The purpose of this Regulation is to define how, in accordance with the rules of Community law, competent authorities may act in the field of public passenger transport to guarantee the provision of services of general interest which are among other things more numerous, safer, of a higher quality or provided at lower cost than those that market forces alone would have allowed.
To this end, this Regulation lays down the conditions under which competent authorities, when imposing or contracting for public service obligations, compensate public service operators for costs incurred and/or grant exclusive rights in return for the discharge of public service obligations.’
6. Article 2a(2) (‘Specification of public service obligations’) states:
‘The specifications of the public service obligations and the related compensation of the net financial effect of public service obligations shall:
(a) achieve the objectives of the public transport policy in a cost-effective manner; and
(b) financially sustain the provision of public passenger transport, in accordance with the requirements laid down in the public transport policy in the long term.’
7. According to Article 3(1) (‘Public service contracts and general rules’):
‘Where a competent authority decides to grant the operator of its choice an exclusive right and/or compensation, of whatever nature, in return for the discharge of public service obligations, it shall do so within the framework of a public service contract.’
8. Article 4(1) (‘Mandatory content of public service contracts and general rules’) reads:
‘Public service contracts and general rules shall:
(a) clearly set out the public service obligations, defined in this Regulation and specified in accordance with Article 2a thereof, with which the public service operator is to comply, and the geographical areas concerned;
(b) establish in advance, in an objective and transparent manner:
(i) the parameters on the basis of which the compensation payment, if any, is to be calculated; and
(ii) the nature and extent of any exclusive rights granted, in a way that prevents overcompensation.
…’
9. According to Article 6(1) (‘Public service compensation’):
‘All compensation connected with a general rule or a public service contract shall comply with Article 4 …’.
B. National law
10. The applicable provisions are Article 10(1) and (3) and Article 11(1) of the Sabiedriskā transporta pakalpojumu likums; (4) and Article 2(1) and Article 56 of the Ministru kabineta 2015.gada 28.jūlija noteikumi Nr. 435 ‘Kārtība, kādā nosaka un kompensē ar sabiedriskā transporta pakalpojumu sniegšanu saistītos zaudējumus un izdevumus un nosaka sabiedriskā transporta pakalpojuma tarifu’. (5)
II. Facts, dispute and questions referred for a preliminary ruling
11. Valsts SIA Autotransporta direkcija (‘the contracting authority’) launched an open invitation to tender ‘for the award of the right to provide public transport services by bus on the network of routes of regional significance’. This gave notice of the conclusion of a 10-year public contract with public transport service providers. (6)
12. SIA Dobeles autobusu parks (‘Dobeles’) and other economic operators (7) challenged the tender specifications on the ground that they established a mechanism for compensating the provision of public transport services which is unlawful. (8) They argued in particular that:
– in their tenders, tenderers have to predict the price payable for the services offered for the following 10 years, even though the (future) contract does not contain an appropriate procedure for reviewing that price;
– the only price review provided for is, inadequately in their view, index-linked to only three elements (fuel, wage bill and compulsory national social security contributions, if amended by legislation) and is triggered when those costs change by more than 5% (in the case of fuel) or 8% (in the case of wage costs) – any increases in such costs which do not exceed those thresholds have to be borne by the service provider;
– the index-linking mechanism does not cover the first four years of provision of the service and no provision is made for the possibility of obtaining compensation for cost increases during the last three years.
13. On 11 November 2019, the Iepirkumu uzraudzības biroja Iesniegumu izskatīšanas komisija (Complaints Review Commission of the Office of Public Procurement Oversight, Latvia) dismissed the applicants’ challenge.
14. Each of the applicants brought administrative legal proceedings before the Administratīvā rajona tiesa (District Administrative Court, Latvia), which dismissed those actions by judgment of 29 May 2019. That court held that, in accordance with Regulation No 1370/2007 and the Commission’s guidelines on its interpretation, (9) the State is not under an obligation to cover in full all of the costs incurred by public transport service providers.
15. Some of the applicants appealed the judgment at first instance before the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia), relying, in essence, on the same arguments they had deployed in the previous administrative and judicial proceedings.
16. That court, in the light of the submissions of the parties to the dispute, has made a reference to the Court of Justice for a preliminary ruling on the following question:
‘Do the second subparagraph of Article 1(1), Article 2a(2) and Article 3(2) of Regulation No 1370/2007 … permit a compensation scheme which does not impose on the competent authority an obligation to compensate a public transport service provider in full, by periodically index-linking the [price payable for the service] under the contract (the compensation sum), for any increase in the costs connected with providing the service which fall outside the service provider’s control, and which, therefore, does not entirely eliminate the risk that the service provider will incur non-compensable losses?’
III. Procedure before the Court
17. The request for a preliminary ruling was registered at the Court on 22 June 2022.
18. Written observations have been submitted by the applicants, the Cypriot and Latvian Governments and the European Commission.
19. A hearing, attended by Dobeles, the contracting authority, the Cypriot and Latvian Governments and the Commission, was held on 8 June 2023.
IV. Assessment
A. Preliminary remarks
1. Applicable legislation
20. The referring court considers Regulation No 1370/2007 to be applicable to the dispute in the main proceedings, and seeks an interpretation of three of its provisions:
– the second subparagraph of Article 1(1), which states that the regulation itself ‘lays down the conditions under which competent authorities, when imposing or contracting for public service obligations, compensate public service operators for costs incurred and/or grant exclusive rights in return for the discharge of public service obligations’;
– Article 2a(2), which sets out the objectives pursued by the ‘specifications of the public service obligations and the related compensation of the net financial effect of public service obligations’;
– Article 3(2), which refers to the tariff obligations laid down by way of general rules, ‘notwithstanding the right of competent authorities to integrate public service obligations establishing maximum tariffs in public service contracts’. (10)
21. The application of Regulation No 1370/2007 will, however, depend on the characteristics of the contract the tender specifications relating to which are in dispute. That regulation:
– in referring to public passenger transport services by rail and road, provides for methods of intervention in general schemes for public contracts, such as those governed by Directive 2014/24/EU (11) or Directive 2014/25/EU; (12)
– contains special provisions intended to take the place of or to be added to the general rules of Directive 2014/24 or Directive 2014/25, depending on whether or not the applicable directive lays down rules in the fields governed by that regulation. (13)
22. Article 5(1) of Regulation No 1370/2007 states that public service contracts are to be awarded, in principle, in accordance with the rules laid down in that regulation.
23. Nonetheless, service contracts or public service contracts, as defined in Directives 2014/24 and 2014/25, for public passenger transport services by bus or tram are to be awarded in accordance with the procedures established in those directives in the case where such contracts do not take the form of service concessions contracts.
2. Public service obligation and nature of the contract
24. In the absence of any clarity in this regard, those attending the hearing discussed the nature of the contract at issue. Dobeles, the contracting authority and the Latvian Government agreed that it was a public service contract in which the successful tenderer assumed only certain risks, rather than a concession contract. (14)
25. It is for the referring court to determine whether that opinion is correct. To do that, it will have to take into account in particular the transfer of the risk of operating the services being contracted out.
26. All the parties also agree on the existence of a genuine public service obligation which the contract at issue is intended to discharge.
27. Once those points of uncertainty have been dealt with, I shall focus my analysis on the legal framework provided by Regulation No 1370/2007.
B. Public service compensation in return for the discharge of a public service obligation
28. Regulation No 1370/2007 defines ‘public service obligation’ as a ‘requirement defined or determined by a competent authority in order to ensure public passenger transport services in the general interest that an operator, if it were considering its own commercial interests, would not assume or would not assume to the same extent or under the same conditions without reward’. (15)
29. I have explained elsewhere (16) that Regulation No 1370/2007 makes consideration payable for the discharge of public service obligations which are onerous to the undertakings concerned. That consideration takes the form of compensation, or the grant of an exclusive right. (17)
30. The concept of ‘public service compensation’ attaches an advantage, more specifically a financial one, to the execution of a public service obligation entailing the performance of services lacking any commercial interest.
31. This ensures that public service obligations, when onerous, do not work to the economic detriment of the operators required to discharge them and, ultimately, to the detriment of the provision of services itself. In such cases, compensation in return for a public service obligation ‘must be granted to ensure the provision of services which are services of general interest within the meaning of the Treaty’. (18)
32. In short, Regulation No 1370/2007 does not provide that the costs connected with public service obligations must be borne by the transport operators alone: if that were the case, it is unlikely that anyone would agree to provide such a service, which is of no commercial interest in itself.
1. Amount of the compensation
33. When calculating the compensation (or establishing the mechanisms and parameters for doing so), (19) the competent authority must ensure that it both ‘achieve[s] the objectives of the public transport policy in a cost-effective manner’, (20) and ‘financially sustain[s] the provision of public passenger transport, in accordance with the requirements laid down in the public transport policy in the long term’. (21)
34. Regulation No 1370/2007 does not require the compensation to cover the entire net cost of the public service obligation. Through the reference made in recital 33 thereof to the judgment in Altmark, that regulation recalls that, in order to rule out public service compensation being an advantage for the purposes of Article 92(1) of the EC Treaty (now Article 107(1) TFEU), that compensation ‘cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations’. (22)
35. In the same vein, Article 4(1)(c) of Regulation No 1370/2007 requires that both public service contracts and general rules determine the arrangements for allocating the costs connected with providing the service. That requirement presumes that the competent authority does not have a duty to compensate all of the costs incurred by the operator as a result of taking on the public service obligation in question.
36. The compensation of only some of the costs connected with the public service obligation represents a risk for the operator. Where such compensation is linked to a general rule or a directly awarded contract, the competent authority must take that risk into account when calculating a reasonable profit for discharging the public service obligation. (23)
37. Furthermore, compensation linked to a public service obligation in the land transport sector must not be excessive. Preventing overcompensation has a twofold rationale: first, it avoids any subsidies that may constitute State aid; secondly, it makes for improvements in the quality and efficiency of the service.
38. The latter objective is referred to in recital 27 and point 7 of the annex (24)and, in a looser form of words, in the aforementioned Article 2a(2)(a) of Regulation No 1370/2007, introduced by Regulation 2016/2338.
39. Regulation No 1370/2007 does not provide any guidance on how to promote the efficient management of the transport service through compensation: (25) the competent authorities have some discretion in this regard. (26)
40. In its guidelines, the Commission advises against compensation schemes which ‘simply cover actual costs as they occur’ (that is to say, retrospectively), inasmuch as these ‘provide few incentives for the transport company to contain costs or to become more efficient over time’. (27)
41. From that point of view, providing compensation in an amount that falls below the net costs of discharging a public service obligation may serve to incentivise the public service operator to manage the service efficiently by encouraging it to reduce the costs over which it has control.
42. During the travaux préparatoires on Regulation 2016/2338, amendments were tabled to prohibit ‘undercompensation’ or compensation that falls ‘below the amount required to cover the net financial effect on costs incurred and revenues generated in discharging the public service obligations’. (28) The Council explicitly opposed such amendments, since they ran counter to the general approach, (29) in that they offloaded all of the risk onto the contracting authorities and did not allow for any efficiency incentives to be incorporated into management of the service. (30)
2. Appropriate compensation?
43. None of the articles in Regulation No 1370/2007 specifically refers to ‘appropriate’ or ‘sufficient’ compensation. (31) The reference to those terms appears in the preamble and, indirectly, in the annex.
44. In the text adopted in 2007, recital 27, after recalling that overcompensation must be avoided, states that, ‘where a competent authority plans to award a public service contract without putting it out to competitive tender, it should also respect detailed rules ensuring that the amount of compensation is appropriate’.
45. The concern with overcompensation exists in the operative part of the text too, notwithstanding that this manifests itself as such in only one reference in the annex to the impact which compliance with the public service obligation may have on other activities carried on by the operator, or on its networks. (32)
46. The Commission’s guidelines recall that ‘appropriate’ compensation is necessary so that the own funds of an operator under a public service obligation are not eroded in the long run, preventing the efficient fulfilment of its obligations under the contract and the maintenance of the provision of passenger transport services of a high standard. (33)
47. The Commission goes on to say that inappropriate compensation brings with it the risk of reducing the number of bids submitted in response to a competitive tendering procedure for the award of a public service contract. (34)
48. In its proposal for the amendment of Regulation No 1370/2007, the Commission made explicit the need to ensure the financial sustainability of public transport. (35)
49. That concern is manifest in the text amended by Regulation 2016/2338. Article 2a(2)(b) of Regulation No 1370/2007 stresses the need for the compensation, inter alia, to ‘financially sustain the provision of public passenger transport, in accordance with the requirements laid down in the public transport policy in the long term’.
50. Recital 11 of Regulation 2016/2338 links financial sustainability to the duty to compensate ‘appropriately’ the fulfilment of public service obligations by the public service operators.
51. Assessing whether the compensation is appropriate within the meaning indicated forms part of the proportionality test (36) that must be passed by specifications for public service obligations relating to the provision of public passenger transport services as defined in Article 2a(1) of Regulation No 1370/2007.
52. The compensation must therefore enable the operator entrusted with the public service obligation to deliver the service in question. For the reasons I have given above, this does not mean that the amount of that compensation must be equal to the net financial cost of discharging that obligation.
3. (Heads of) compensable costs
53. In accordance with Article 4(1) of Regulation No 1370/2007, public service contracts must determine the arrangements for the allocation of costs connected with the provision of transport services. (37)
54. According to that provision, those costs include, but are not limited to, the costs of staff, energy, infrastructure, maintenance and repair of public transport vehicles, rolling stock and installations necessary for operating the passenger transport services, fixed costs and a suitable return on capital.
55. The first proposals for the regulation required the operator to assume responsibility, at least, for ‘the cost of supplying the services to which a public service contract relates, including in particular the costs of staffing; energy; and the maintenance and repair of vehicles and rolling stock’. (38)
56. Regulation No 1370/2007, on the other hand, does not require specific costs to be allocated to one party or the other; it does not therefore require compensation to be paid for specific costs. (39) The competent authority enjoys some flexibility in this regard. (40)
4. Intermediate conclusion
57. Public service compensation under Regulation No 1370/2007 is that which does not by virtue of its amount confer a financial advantage classifiable as State aid. In addition, that amount must reflect a balance between the objectives of managing the transport service efficiently and the financial sustainability of providing that service in the long term.
58. Compensation that falls below the net cost of discharging the public service obligation does not infringe Regulation No 1370/2007. Transferring risks to the service provider is not in itself contrary to that regulation.
59. The competent authority enjoys a broad margin of discretion in deciding which items will or will not attract compensation, and, therefore, which particular risks will be borne by the service operator.
C. Compensation and competitive tendering procedures
60. Those attending the hearing considered how the compensation might be impacted by the fact that the award of the contract was preceded by a competitive tendering procedure (as it was in the present case).
61. Regulation No 1370/2007 considers two types of legal tool for establishing a public service obligation: public service contracts and general rules. (41) In principle, the former must be selected where compensation is provided for. (42) Exceptionally, obligations relating to maximum tariffs may be unilaterally imposed by way of general rules. (43)
62. In accordance with Article 5 of Regulation No 1370/2007, contracting authorities may award a public service contract by direct award (to an internal operator or, subject to conditions, to a third party) or by a competitive tendering procedure. The level of detail of the provisions of Regulation No 1370/2007 relating to the method of calculating the consideration payable varies according to the form in which the contract is awarded.
63. The text contains certain common guidelines. Article 6, which deals with ‘public service compensation’, provides in the first sentence of paragraph 1 that such compensation must comply with Article 4 of Regulation No 1370/2007. (44)
64. So far as concerns the method for calculating the compensation linked to a public service obligation, Regulation No 1370/2007 makes provision only where such an obligation is imposed by way of a general rule or under a directly awarded contract.
65. In other words, Regulation No 1370/2007 does not contain any specific provisions applicable to the method for calculating compensation where the contract is awarded by a competitive tendering procedure. To my mind, that lacuna is due to the fact that the legislature put its faith in the greater ability of competitive procedures to strike by themselves a balance between the opposing interests.
66. In the case of this type of tendering procedure, the contracting authorities are at liberty to include or not to include in the tender specifications price review systems based on index-linking or similar formulae. As the Court held (45) in connection with national rules which did not provide for a periodic review of prices under contracts after those contracts had been awarded, EU law (46) does not preclude those rules.
67. The Commission’s guidelines highlight, in point 2.4.1, the fact that ‘an open, transparent and non-discriminatory competitive tendering procedure within the meaning of Article 5(3) [of Regulation No 1370/2007] will minimise the public compensation that the competent authorities will need to pay to the service provider to obtain the level of public service imposed in the tender, thus preventing overcompensation. In such a case, there is no need to apply the detailed rules on compensation set out in the annex’.
68. Competitive procedures for awarding contracts thus emerge as appropriate systems for entrusting a public service to a qualified economic operator on the best quality and price terms. In that context, there is less need for the regulator to intervene.
69. The Commission’s guidelines bear out that notion: the interaction of competitive market forces determines the minimum level of compensation required, (47) thus enabling the contracting authority or entity to select the bid representing the least cost to the community (or the bid representing the most efficient option in terms of price and quality). (48)
70. In Regulation No 1370/2007, the conviction that a competitive procedure allows for an automatic calibration of the consideration payable has to do not only with the requirement that there should be no overcompensation. A competitive tendering procedure is also presented as being suitable for arriving at compensation that is appropriate for ensuring the long-term financial sustainability of public passenger transport services, in accordance with the requirements laid down in public transport policy. (49)
71. However, the foregoing rests on the assumption that the tendering procedure is configured in such a way as to allow genuine and effective competition, in terms of both the procedure and the content of the contract:
– As regards the competitive tendering procedure, Regulation No 1370/2007 contains few details. (50) The Commission’s guidelines advocate the application of the specific rules contained in the public procurement directives. (51)
– As regards the content of the public service contract, Article 4 of Regulation No 1370/2007 lists the minimum particulars which the contract must include. It is my view that, in the interests of transparency, those particulars must appear in the tender specifications.
72. Given that information, operators will choose whether or not to bid for the contract award; if they do, they will be able, when preparing their bid, to include in it the prices for all relevant factors. (52)
73. The amount of the compensation – or the mechanism and the parameters for determining it – is of course one of those relevant factors. A calculation of that amount which is excessively low may deter or limit the number of potential tenderers, undermining Article 5(3) of Regulation No 1370/2007. (53)
74. The contracting authority must therefore avoid including in the tender specifications parameters for compensation which, in making the public service obligation too onerous for potential tenderers, without objective justification, deters them from taking part in the tendering procedure. Where this is the case, the procedure does not serve its essential objective of enabling the selection of the most advantageous bid (to discharge the public service obligation).
75. Determining whether or not there is an imbalance in contractual obligations, and whether or not this is justified, calls for a case-by-case examination in the light of the objectives which Regulation No 1370/2007 pursues through the compensation.
D. Application to the dispute
76. In the order for reference, the national court reflects arguments for and against the applicants’ claim. Among the former, it sets out the following:
– The model selected and the instruments for its implementation compel tenderers to take on an excessively high risk when setting the price for the service, to the extent that the State could be considered to be effectively evading the obligation to provide adequate compensation for the costs connected with providing the public transport service.
– It is not possible to predict with any precision what the prices of energy sources (fuels) will be, what average wages in the sector will be, or what national security contributions will be payable, in 10 years’ time. In a compensation scheme under which prices can be properly recalculated only every several years, and even then only under certain heads, there is a risk that cost increases due to inaccurate forecasting will result in losses for the operator, even if it is running its business efficiently.
77. The arguments against, according once again to the referring court, include the following:
– The Commission’s guidelines lay emphasis on the notions of quality and efficiency in the provision of services. The competent authorities must find a model which guarantees a quality service and at the same time motivates the service providers to improve the delivery of their services. The rules on compensation laid down in Regulation No 1370/2007 leave a margin of discretion to the competent authorities.
– The launch of an open tendering procedure forms part of the implementation of a programme for the development of national public transport services in Latvia. The State has decided that, as part of the design of a single network of routes subject to uniform quality requirements, from 2021, the compensation payable for providing those services is to be founded on a contractual model based on the difference between the price proposed by the carrier in the open tendering procedure and the revenue generated by the public transport service. (54)
– Tenderers are not prohibited from including in the calculation of the price offered the cost of the risk which they take on in setting a specific price for a given period. They are not therefore being required to predict precisely the costs that will form part of the price offered for the next 10 years, but are encouraged to consider what the price offered would be in changing economic and business conditions.
– Even so, it is not inconceivable that such considerations in relation to risk will not entirely rule out the possibility that the proposed compensation scheme will not cover all of the losses sustained by the operator in performing the contract. In the context of an invitation to tender, it is possible that tenderers, in the hope of winning the contract, will be reluctant to offer a price payable for services under the contract that is capable of averting that risk. There is a real prospect that this would have the effect of reducing the availability or quality of the service.
78. My own view, in keeping with the foregoing, is that the competent authority is under no obligation to establish in favour of the public transport service provider mechanisms for the full index-linking of the costs that go into making up the price payable for services under the contract.
79. After all, Regulation No 1370/2007 does not require contracts for the supply of services to include clauses providing for full index-linking that will operate as a form of ‘insurance’ against increases in the costs of fuel, wages or social security contributions. The contracting authority may, at its discretion, provide for index-linking on a partial basis, which is to say only for certain periods and in the event that cost increases exceed a certain ceiling. (55)
80. There is, as I have already said, no obligation to compensate in full any increases in the costs connected with providing the service. Consequently, national rules on public transport service contracts awarded by open tendering procedure which, unlike those previously in force in Latvia, (56) do not entirely eliminate the risk that the service provider will sustain losses are compatible with Regulation No 1370/2007.
81. It is not inconceivable that, under that model, situations will arise in which risks are imputed to the operator. Nonetheless, when considered in the abstract, the model is consistent with Regulation No 1370/2007, which allows compensation that is not total, provided that this operates to incentivise efficiency.
82. The answer to the question whether such a model compels tenderers to take on too high a risk when setting the price payable for the service might be, first of all, that participation in the tendering procedure is not compulsory and bidders have to consider whether or not they have an interest in taking part in it. (57)
83. Secondly, as I have explained before, given the appropriate information, tenderers put together their bids in the light of all relevant factors, including any future increases in the costs affecting the service and the related risk premium. It will be for them to forecast for a particular period the costs that impact on the price payable for the service, including those over whose trends (upwards or downwards) they have no influence.
84. Inevitably, that assessment of future costs will also cover costs increases in which are not dependent on operators, that is to say, costs not directly linked to the ‘operational (in)efficiency of the carrier’. (58) As I have said, however, Regulation No 1370/2007 does not lay down an obligation to compensate specific costs. If, as a result of those increases, the compensation falls below the costs calculated by the operator, the operator must find savings on other items over which it does have an influence.
85. The foregoing considerations do not preclude the referring court, in the light of the terms of the tender specifications (and of the economic calculations on which they are based), from assessing the potentially deterrent effects of those terms within the overall context of the tender. (59) It may find on the basis of that analysis that the compensation for the public service obligation, because manifestly insufficient, reduces the availability or quality of the service to an unreasonable extent, or artificially limits the number of tenderers.
86. It is not for the Court of Justice to take the place of the referring court in the assessment of whether the content of the tender specifications at issue was flawed in this way and, for that reason, did not make it possible to select the most advantageous bid. While everything appears to indicate that this was not the case here (in fact, several tenderers participated in the procedure and submitted their bids of their own free will), the fact remains, as I have said, that this is something which the referring court alone is in a position to determine.
V. Conclusion
87. In the light of the foregoing, I propose that the answer to be given to the Augstākā tiesa (Senāts) (Supreme Court (Senate), Latvia) should be as follows:
‘Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulation (EEC) Nos 1191/69 and 1107/70, as amended by Regulation (EU) 2016/2338 of the European Parliament and of the Council of 14 December 2016,
must be interpreted as meaning that it allows tender specifications for the award by open competitive procedure of a contract for passenger transport by bus not to include a clause providing for the periodic index-linking of all costs, including those which fall outside the control of that service provider, in return for the public service obligation forming the subject of that contract.’