The Norwegian government’s rejection of a European official opinion that municipal pensions business should have been put out to tender risks muddying the waters around all public procurement rules, said Norwegian financial group Storebrand.
Storebrand, which has been actively competing in the last few years for municipal pensions contracts – primarily aiming to win business from the dominant provider KLP — made the complaint to the European Free Trade Association’s (EFTA) supervisory authority (ESA), in turn prompting ESA’s opinion.
The opinion, that there may have been widespread breaches of European Economic Area (EEA) public procurement law by Norwegian municipalities failing to put their pension provision out to tender, was delivered in ESA’s long 29 February 2024 letter to the Norwegian Ministry of Local Government and Regional Development.
The ministry responded to the Brussels-based authority’s preliminary assessments in the complaint against Norway concerning breaches of public procurement law in relation to contracts for pension services by letter on 14 June.
In that letter, it countered ESA’s arguments as to whether procurement rules applied in the cases in question, and – even if the procurement of occupational pension was covered by the public procurement rules – it argued that changes to pension contracts, for example, when Norwegian municipalities had merged, had not been significant.
A key issue in the case is whether KLP can be considered an in-house supplier of pension services to Norwegian local authorities, when the NOK1trn (€85bn) group sells numerous financial services on the open market.
In the ministry’s response to ESA, signed by the Department of Local Government’s director general Cathrin Sætre and its research coordinator Tonje Areng Skaara, the government argued that under Norwegian corporate law, KLP and its subsidiaries are all legally separate.
Jon Hippe, head of public sector at Storebrand, told IPE that to him, the response from Norway seemed to be a political decision “picking a fight with Brussels”.
“The political problem is of course that the government risks creating uncertainty on the whole public procurement regulation and policies,” Hippe said.
“If you substitute the word ‘pensions’ with other services bought by public institutions this becomes clearer, I think,” he said.
“Can one argue that the procurement of IT systems is complicated, long-term investment and that changes to contracts are small and so forth?” asked Hippe, questioning whether in that hypothetical case one could choose whether or not to follow procurement regulations.
Hippe said he could not really see anything new in the arguments Norway was using in the 14 June letter.
“The interesting question is what ESA does next, and if they decide to send an opening letter in line with what they already have said,” he noted.
IPE has contacted the Ministry of Local Government and Regional Development for comment.
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