Public Procurement: Municipally Owned Hospital Stock Corporation as a Body Governed by Public Law, No Commercial Activity

Facts

GZO AG is a stock corporation based in Wetzikon, which was created in 2009 through the conversion of the Zweckverband Gesundheitsversorgung Zürcher Oberland. All shares are held by the former association municipalities. Its main purpose is to ensure the acute inpatient service mandate of the Canton of Zurich in Zürcher Oberland; it operates the Wetzikon Hospital as well as the rescue and inter-hospital patient transport service, and is listed for various acute somatic services on the hospital list of the Canton of Zurich under Art. 39 para. 1 lit. e HIA.

By decision of 8 July 2015, the Government Council of the Canton of Zurich obliged GZO AG and the members of its governing bodies to tender publicly all contracts above the thresholds of the ICAPP, unless an exception under § 10 of the Procurement Ordinance applies; for violations, it threatened the disobedience penalty under Art. 292 SCC.

GZO AG and its Chairman of the Board of Directors filed an appeal with the Administrative Court of the Canton of Zurich. The court fully upheld the appeal of the Chairman of the Board and partially upheld that of GZO AG: the order was limited to GZO AG and the penalty threat was annulled; otherwise, the appeal was dismissed.

By public law appeal and subsidiary constitutional complaint of 16 February 2017, GZO AG brought the matter before the Federal Supreme Court and requested a declaration that it is not bound by the provisions of procurement law. It is disputed whether GZO AG is a body governed by public law under Art. 8 para. 1 lit. a ICAPP and whether it carries out a commercial activity in doing so.

Considerations

The interpretation of Art. 8 para. 1 lit. a ICAPP must be oriented toward the law of international treaties, namely the GPA (Annex I Annex 2 No. 3, Annex 3 footnote 1) and the BAöB. A body governed by public law must cumulatively be dedicated to a purpose in the general interest, be legally independent and state-bound, and must not carry out an industrial or commercial activity. As a stock corporation, GZO AG fulfils legal independence, since the private-law constitution does not preclude such a qualification, and it is state-bound, since the governing body is predominantly appointed by the public authorities. Its purpose (ensuring acute inpatient care) lies in the general interest and corresponds to the constitutional mandate under Art. 117 and 117a Cst.

Decisive is therefore whether GZO AG acts commercially, i.e. whether it operates like a private economic actor under functioning competition. A comprehensive assessment of all legal and factual circumstances is decisive, in light of the objectives of procurement law (avoiding uneconomic or discriminatory awards), following the case law of the ECJ on 'tasks of a non-commercial nature' (BGE 141 II 113, BGE 142 II 369).

Hospital planning and the list procedure under Art. 39 HIA do not offer an equivalent substitute for the tender procedure: although they partly pursue economic objectives, they contain no protection against discrimination like procurement law and remain shaped by planned economy principles. Competitive pressure from hospitals without a list place is limited, since these are only partially reimbursed (at most 45% under Art. 49a para. 2 HIA). Competition with outpatient providers concerns only part of the range of services and not acute inpatient treatment.

Pricing for acute inpatient services follows state-defined criteria (case-based flat rates, uniform tariff structure, base rate, approval by the…