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REMONDIS has been doing business in the Netherlands for a while now. The company has enjoyed significant growth there which can be put down to its long-term planning and stability. Since entering the market as a minority shareholder of ARN in Nijmegen in 2007, REMONDIS Nederland has strengthened its position in the country by acquiring strategic shareholdings and investing in local recycling businesses. Today, it has become a reliable business partner for both local authorities and industrial firms in the regions it operates in. ROVA, a municipal association based in Zwolle responsible for managing waste, public spaces and energy for a total of 20 districts in the Provinces of Overijssel, Gelderland, Utrecht, Drenthe and Flevoland, recently benefited from REMONDIS’ expertise. This year, ROVA handed over its commercial waste recycling activities to REMONDIS. A ground-breaking step.
There must be a very good reason why Zwolle-based ROVA, one of the largest municipal associations in the Netherlands – responsible for managing waste, developing public spaces, generating sustainable energy and serving almost one million of the 16.8 million people living in Holland – should have decided to sell its commercial activities to REMONDIS. REMONDIS spoke to Hans Groenhuis, chief executive of N.V. ROVA.
Hans Groenhuis: We made the conscious decision to be a municipal company. Working for private sector customers clashes with the tasks of a public sector company and the legal situation is problematic, too. We felt, therefore, that we had to act here. Now we can concentrate fully on our public sector work.
Hans Groenhuis: It’s all to do with the so-called in-house contracts i.e. when a public contract or public service concession agreement is awarded by a public contracting authority to a third party which is legally independent but still under the control of the contracting authority. According to EU law, there are two main criteria which must be met here. Firstly, the public authority must exercise a level of control over the entity similar to that which it exercises over its own departments and there may be no private participation in the controlled in-house entity. Secondly, the controlled in-house entity must carry out the essential part of its activities for the controlling authority. The EU Commission has ruled that no more than 10% of a municipal company’s total turnover may come from private sector business.
ROVA managing director, Hans Groenhuis, is ensuring the company has the right to be awarded in-house contracts in the future
Hans Groenhuis: Then the municipal company automatically loses its right to be awarded in-house contracts and all activities must be put out to tender across Europe. This is precisely what we were looking to avoid and so we searched for a reliable partner to take over our commercial activities. REMONDIS has been operating in the Netherlands for years now and we know it is committed to the Dutch market. This is very important for our customers.
Hans Groenhuis: When ROVA sold its activities to REMONDIS, it had been recycling around 25,000 tonnes of commercial waste. This was putting our right to in-house contracts at risk.
The term “in-house procurement” refers to the awarding of public contracts, building contracts or service concession agreements by a public contracting authority to a third party which is legally independent but still under the control of the contracting authority.
EU public procurement law states that, when it comes to in-house procurement and public-public cooperation work, 90% of all activities of the in-house entity must be carried out for the public authority or cooperation partner and only 10% carried out within the private sector market. According to a ruling of the ECJ on 19 April 2007, public contractors lose their status as an “in-house entity” if more than 10% of their business is commercial. It is, therefore, recommended that they sell their commercial business to their private sector partners to ensure they fulfil the criteria for in-house contracts.