Task Not of a Commercial Character in Public Procurement Law 2026

Definition: A task not of a commercial character exists where a legal entity meets needs in the general interest that are neither profit-oriented nor provided in competition with private suppliers, and whose loss risk is not covered by the market but by the public sector.

Last updated: January 2026 · Legal status: Directive 2014/24/EU Art. 2(1)(4), BVergG 2018 § 3, GWB § 99

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What is a task not of a commercial character?

The feature of a "task not of a commercial character" is a central element of the test for determining whether a legal entity under private or public law qualifies as a contracting authority subject to procurement law. Under EU Directive 2014/24/EU, a body is a contracting authority if it has been established for the specific purpose of meeting needs in the general interest that are not of an industrial or commercial character.

The concept is negatively defined: an activity is not commercial if the provider is not oriented towards profitability in a normal market environment and ultimately losses are borne by the public sector. The Court of Justice of the European Union (CJEU) has in settled case law identified three cumulative criteria:

1. The activity serves the general interest.
2. The activity is not of a commercial character (no pursuit of profit, no competition under market conditions).
3. The body is closely linked to the State (State supervision, State financing, or State appointment of the governing body).

Distinction from Commercial Activity

Whether a task is of a commercial or non-commercial character is determined by economic reality, not by the legal form of the entity. The CJEU clarified in Case C-360/96 (BFI Holding) that the mere existence of private competition in the same field does not automatically lead to the assumption of a commercial activity. The decisive factor is whether the entity itself bears the economic risk of its activity.

Typical examples of entities with tasks not of a commercial character are public-law broadcasters, State universities, municipal wastewater undertakings, and services-of-general-interest entities that continue to be State-funded even with permanent loss-making operations.

Significance for the Procurement Obligation

The existence of a task not of a commercial character is one of three features that, together, qualify a legal entity as a "body governed by public law" and thus as a contracting authority. Where this feature is affirmed, procurements by this entity above the EU thresholds are subject to the full procedural requirements of procurement law.

FAQ

When is a GmbH to be treated as a contracting authority? A GmbH is a contracting authority if it has been established for the specific purpose of meeting tasks not of a commercial character and the State exercises decisive influence over it – for example through majority ownership, supervision, or appointment of the governing bodies.

Is it sufficient that a State-owned undertaking generates profits? No, the generation of profits does not automatically exclude qualification as a body governed by public law. The decisive question is whether the entity, in the event of losses, depends on State support.

Which authority decides on the classification? In Austria, the Federal Administrative Court (BVwG) is responsible for review proceedings. In Germany, the public procurement tribunals (Vergabekammern) decide. The final interpretation rests with the CJEU.

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