The Swedish city of Gothenburg tried to ensure decent work and collective bargaining for the city’s public contractors. But the Swedish Competition Authority – in line with the EU’s public procurement directives – judged this is in breach of competition law. As the EU is currently revising its procurement rules, the Gothenburg case shows clearly how the current rules are not fit for purpose.
What happened exactly?
Back in 2023, Gothenburg City Council decided that contracts from its annual budget for public construction should only be awarded to companies that signed a centrally collective agreement. The purpose of this requirement was that individual construction projects should not lead to wage or condition dumping. The 2023 budget also stated that the municipality must set far-reaching social requirements in procurements to contribute to social sustainability.
In February 2024, Gothenburg City Property Board launched a public tender for a construction contract worth more than 180.000€ (SEK 2 million). According to the terms of the contract, centrally negotiated collective agreements had to be signed and applied to all workers when performing work under the contract, regardless of their professional category. The requirement for collective agreements also extended to the subcontractors used by the contractor.
After receiving a tip, the Swedish Competition Authority conducted an investigation. In February 2025, it declared the policy illegal. According to the Swedish Competition Authority the requirement violates the principle of proportionality given that the city could reach the same objectives in ways that were “less intrusive”, for example by specifying the minimum conditions or the wages to be paid.
Moreover, the body said that the requirement also violated the principles of non-discrimination and equal treatment, as suppliers that did not agree to sign collective agreements could not meet the requirements of the procurement.
According to Swedish procurement law, which follows EU procurement rules, contracting authorities should take into account social, environmental and labor law considerations if the nature of the procurement justifies it. But even this soft obligation is not enough for such clauses to be admissible according to the competition authority.
This story underlines the negative consequences of legal uncertainty under the EU’s current public procurement directives, a situation repeatedly criticised by UNI Europa, experts, MEPs and public authorities. In theory, these directives aim to promote social public procurement. In practice, they create major obstacles that prevent any effective implementation.
Oliver Roethig, UNI Europa Regional Secretary, said: “The Gothenburg case is a particularly striking example of why the current public procurement rules are not fit for purpose. The legal vacuum they created leads to lawsuits against public authorities that use the power of the public purse to improve pay and working conditions. EU policymakers working on the revision of procurement rules should make sure to create legal certainty that enables, yes encourages, public authorities to promote fair wages and conditions through collective bargaining.”
Tom Deleu, General Secretary of EFBWW, the European union federation representing workers in the construction sector, added: “To avoid these cases and to create the much-needed legal certainty, the EFBWW supports UNI Europa’s campaign. Besides calling for the mandatory application of collective agreements, the EFBWW demands the EU authorities to limit subcontracting, to introduce grounds for excluding companies involved in social dumping from public procurement, to apply a prequalification of companies and legally and sound mandatory social criteria.”