Public Undertaking in Public Procurement Law 2026

Public undertaking: state-controlled undertakings in procurement law – delimitation, sector relevance and transparency obligations.

Definition: A public undertaking is an undertaking over which public contracting authorities may exercise, directly or indirectly, a dominant influence by virtue of ownership, financial participation or applicable rules.

Last updated: January 2026 · Legal basis: Art. 2 para. 1 no. 4 Directive 2014/25/EU (Sector Directive); Transparency Directive 2006/111/EC

What is a public undertaking?

The concept of "public undertaking" plays a central role in procurement law, above all in the context of sector procurement. Public undertakings active in certain sectors (energy, water, transport, postal services) are subject as sector contracting authorities to Directive 2014/25/EU.

A dominant influence is presumed where the public contracting authority:

holds the majority of the subscribed capital,
has the majority of the voting rights attached to the shares, or
can appoint more than half of the members of the administrative, management or supervisory body.

Significance under procurement law

Public undertakings are relevant under procurement law in two respects:

As sector contracting authorities

Public undertakings that carry out sector activities (e.g. energy supply, drinking water supply, public transport) are obliged as sector contracting authorities under Directive 2014/25/EU to conduct award procedures in accordance with sector procurement law.

As bidders

Public undertakings may themselves participate as bidders in award procedures. They may not be favoured in doing so; the principle of equal treatment applies without restriction.

Transparency obligations

The EU Transparency Directive 2006/111/EC obliges public undertakings to provide transparency about financial relations with the state. This is intended to make cross-subsidisation and distortions of competition recognisable.

Distinction from bodies governed by public law

Public undertakings differ from "bodies governed by public law" (classic public contracting authorities) in that they typically carry out commercial activities and are in competition with private companies. Bodies governed by public law, by contrast, pursue non-commercial general interests.

Related terms

FAQ

Is a public undertaking always subject to procurement law? Not necessarily as a classic public contracting authority. Procurement obligations arise if the undertaking acts as a sector contracting authority or meets the criteria of a body governed by public law.

Can a public undertaking award to its parent company without a tender? Only if the conditions for an in-house award or a public-public cooperation are met.

Last updated: January 2026 All information without guarantee. For legally binding information, please consult a law firm specialising in procurement law.