The organisation of municipal waste management by a local authority outside the scope of competition law

In its judgment of 10 September 2026, in the context of a reference for a preliminary ruling by the Supreme Court of Latvia, the Court of Justice of the European Union (“CJEU”) confirmed that competition law does not apply to a municipality’s organisation of municipal waste management, as such a decision does not in itself constitute an economic activity within the meaning of Article 102 of the Treaty on the Functioning of the European Union (“TFEU”).

The facts

The Latvian municipality of Jelgava, mandated by law to organise the management of municipal waste within its territory, entrusted this service to Jelgava SIA, a company in which it held a 51% stake, with the remaining 49% held by a private shareholder. The contract, concluded through an internal procedure without a competitive tender, was due to run until 2029.

The Latvian competition authority (Konkurences padome) considered that the municipality and the company held a dominant position in the local market for the collection and transport of municipal waste. In its view, granting an exclusive right to Jelgava SIA had the effect of excluding potential competitors and constituted an abuse of a dominant position under national competition law. It therefore imposed a fine on the municipality.

Following an unsuccessful appeal before the administrative courts, the municipality brought the case before the Latvian Supreme Court, which referred a question to the CJEU for a preliminary ruling as to whether such a decision concerning the organisation of municipal waste management related to an economic activity within the meaning of Article 102 of the TFEU.

The question that was referred to the CJEU for a preliminary ruling was as follows: “Must Article 102 [TFEU] be interpreted as meaning that, in view of the circumstances of the case, the scope of that provision includes a decision made by a subsidiary legal person under public law about how waste management in a municipal area is organised, which, in the present case, consisted of the decision to organise the provision of services through an in-house procedure, awarding the right to provide those services to a company partially owned by a [municipality]?

In particular, can a [municipality] be considered as acting as a market operator or undertaking within the meaning of Article 102 [TFEU] when it takes a decision to organise the provision of municipal waste management services by awarding, through an in-house procedure, the right to provide those services to a company that is partially owned by that [municipality] ?”

The position adopted by the CJEU

In its judgment of 10 September 2026, the CJEU reiterated that a public entity may only be regarded as an undertaking within the meaning of competition law where it carries out an economic activity; in other words, where it offers goods or services in a market. Conversely, activities relating to the exercise of public authority fall outside the scope of competition rules. The CJEU reiterated its established case law that activities relating to the exercise of public authority include the airspace control and policing tasks entrusted to Eurocontrol, pollution control monitoring which a private-law entity has been tasked with carrying out by the public authorities in an oil port  and activities involving the collection of data relating to undertakings on the basis of a statutory reporting obligation and the powers of enforcement related thereto.

However, in the present case, the local authority was not operating in the municipal waste management market as a service provider. It was carrying out a task expressly entrusted to it by law: to organise a public service for municipal waste management in accordance with the obligations arising from national and EU law on environmental protection.

The fact that the award beneficiary is a company partly owned by the local authority does not alter this analysis. According to the CJEU, the decision to organise the service and to determine its arrangements falls within the exercise of public authority and not within the scope of an economic activity.

Key takeaways

The judgment confirms that decisions by which a public authority organises a public service legally entrusted to it do not fall within the scope of Article 102 of the TFEU. The concept of ‘undertaking’ cannot be extended to public authorities when they act in the exercise of their regulatory or administrative powers.

The CJEU also emphasised that any failure to comply with public procurement rules is irrelevant to the question of whether such a decision might constitute an abuse of a dominant position. These issues must be examined within the framework of the mechanisms specific to public procurement law and not from the perspective of the law on abuses of a dominant position. This judgment thus provides a further interesting illustration of the boundary between competition law and the exercise of public authority powers.