Councils are making use of a loophole in the new law covering government contracts to continue undercutting private firms in the bidding process, the Financieele Dagblad said on Tuesday.

The new law, which came into force on July 1, is designed to create a level playing field on which councils and private companies compete for government contracts.

However, the paper says councils are now putting all sorts of economic activities under the heading ‘general interest’, giving them back their advantage in the bidding process.

Sports canteens

The paper quotes the example of sport club canteens and canteen services which some councils have labeled as ‘general interest’. By doing so, they can avoid the rules designed to prevent unfair competition with cafe owners and companies which run canteens on behalf of clubs.

The new law covers economic activities that do not have a direct link to public services carried out by local and provincial councils. It does not, however, apply where an economic activity is in the general interest.

The Dutch consumer authority ACM told the FD that despite a two-year introductory period, many councils were not ready for the full introduction of the new law.

However, an ACM spokesman told the paper that private firms must be alert. If a council decides an economic activity is of ‘general interest’, they have six weeks in which to question that decision. Once that period lapses, the unfair competition is an ‘irreversible fact’.