KHO: 0.27% stake is no joint control; Pori ICT direct award unlawful

The Supreme Administrative Court (KHO) has overturned the Market CourtFinlex and held that a municipality holding a 0.27 per cent stake in a jointly owned ICT company cannot buy a land-use information system from that company without a competitive tender. The City of Pori's direct award of the Tiera City system, worth about two million euro excluding VAT, therefore breached the procurement rulesFinlex, although the resulting contract stands because it was signed before the appeal reached the KHOFinlex.

Pori's city board decided on 14 April 2025 to procure the system directly from Tiera Oy (formerly Kuntien Tiera Oy), a nationwide ICT service centre owned by nearly 400 municipalities, joint municipal authorities, wellbeing services counties and other entities. The board took the view that Tiera was Pori's in-house unit (sidosyksikkö) and that Pori exercised joint control over it within the meaning of section 15 of the Act on Public Procurement and Concession Contracts (hankintalaki) and the Market Court's earlier decision MAO:154/2024. The service contract was signed on 31 October 2025Finlex. Competitor Trimble Finland Oy challenged the award, but the Market Court dismissed the appeal and ordered Trimble to pay Pori's costs of 2,280 euro.

The KHO granted leave to appeal, annulled the Market Court's decision and held that Tiera was not Pori's in-house unitFinlex. Joint control requires that the contracting authority, together with the other contracting authorities, can exercise decisive power over the unit's strategic objectives and significant decisions, and that the unit acts in the interests of the controlling authorities. Pori's 8,506 shares amount to about 0.27 per cent of Tiera's stockFinlex. While many co-owners do not per se bar joint control, the KHO found the dispersed ownership makes forming a common will harder, and the holding alone confers no decisive influence.

Nor did Pori exercise control through Tiera's boardFinlex. Board members are elected by the general meeting for one year at a time on the nomination committee's proposal; under the Companies Act and Tiera's articles of association, membership cannot rest on authorisations. Pori had no member or joint representative on the nomination committee, and no representative or joint representative elected to the board at the general meeting. The authorisation Pori granted on 17 December 2024 to a sitting board member under a joint-representation model adopted at an extraordinary general meeting on 12 December 2024 did not make that person Pori's representative: the articles contain no provisions on joint board representatives, and a 12 December 2024 articles entry reserving a joint representative for each of seven customer groups required every shareholder's consent, a process still incomplete when the procurement decision was taken.

Participation in five of Tiera's six steering groups did not save the arrangement eitherFinlex. Steering group members are appointed by the general meeting, not by the articles, and although the regulations require the board to follow steering-group instructions unless they conflict with its company-law duties, the KHO held that ultimate decision-making power over strategic objectives and significant decisions remained with the boardFinlex. Representation was therefore realised only at the general meeting, which is not enough.

On costs, the KHO ordered Pori to pay Trimble's costs of 8,491.75 euro plus default interest running one month after the ruling, and released Trimble from the duty to pay Pori's Market Court costs. Because the service contract predates the KHO proceedings, annulment of the procurement decision was unavailable as a remedy, and no other sanctions had been claimed.

Legal basis: section 15 of the Act on Public Procurement and Concession Contracts (hankintalaki 1397/2016) and Article 12 of the Procurement Directive (2014/24/EU), as interpreted in the case law cited in the ruling.