HOAI minimum fees according to ECJ inadmissible

Current ruling from the CJEU and related article from today’s press:

Unsuitable for ensuring quality and consumer protection: The CJEU has struck down minimum fees for architects and engineers in Germany. The relevant regulation was found to violate EU law, the Luxembourg judges ruled on Thursday (Case C-377/17). According to a corresponding EU directive, minimum and maximum prices may be prescribed under certain conditions. However, the rates fixed in the German Fee Structure for Architects and Engineers did not fulfill the principle of proportionality, the judges explained.

Their reasoning: The minimum rates apply only to architects and engineers. However, corresponding services can also be provided by other service providers who are not required to demonstrate their professional qualifications. Therefore, the minimum rates are unsuitable for securing high quality standards and consumer protection.

More choice and lower prices

The Fee Structure for Architects and Engineers (HOAI) sets the minimum and maximum prices for the planning work of architects and engineers. The EU Commission sued Germany over the Fee Structure at the end of 2016. The offering of services should be facilitated so that consumers get more choice and lower prices, demanded Internal Market Commissioner Elzbieta Bienkowska.

The Federal Republic impaired companies' ability to compete on price with the Fee Structure, EU rapporteur Maciej Szpunar had stated in February. The German regulation could only be justified by consumer protection and ensuring high quality. However, Germany had not demonstrated that a minimum price was necessary for this, Szpunar said. Rather, competition, particularly with regard to price, is generally considered a necessary, desirable, and effective mechanism of the market economy.

The Federal Chamber of Architects warned of the consequences of the current CJEU decision. "The HOAI in its previous form prevents ruinous price competition to ensure clients the best possible services, whose quality can hardly be assessed in advance and that simultaneously have particularly great influence on people’s lives," the Chamber said.

They will continue the "intensive talks" with the Federal Ministry for Economic Affairs in order to maintain the HOAI fee rates with the consent of the federal states, at least in a weakened form.

Well, annoying thing.. There have already been other countries where a HOAI equivalent was overturned, prices quickly fell sharply, which drove many offices into the ground, after which prices quickly rose again above the former HOAI fees. Therefore, the ruling as it was made is quite nonsense. For the home builders, however, all of this is irrelevant..

For self-builders, however, all of this is irrelevant..

Why?

Example: A flat rate has already been agreed upon that deviates from the HOAI and is below the minimum rate. Then both parties end up with stress and the architect refers to the fact that the minimum rates of the HOAI must not be undercut. Until yesterday, he could do that, but from today on, he no longer has a chance.

Otherwise, at least contractual freedom is now guaranteed. What will come of it, the market must show.

The HOAI does not apply to private homeowners; there have already been so many rulings that there should be no architect or engineer who still tries to reach into their client's pockets in this regard. The ruling also does not apply to existing contracts.

I think it is good

Larger house manufacturers have long outsourced planning abroad, as this allows them to avoid the costs of chamber fees and social security contributions, reporting only minimum contributions, which no lone fighter can afford in the long run.

Now, foreign providers based abroad can also enter the German market without being forced into subcontractor positions anymore. They can also offer cheaper prices to establish themselves in the German market, which is also part of the ruling.

Only small offices and lone fighters, who may now have to keep up with the minimum wage abroad, will be affected.

But also the builders, because very few know that through the simplified building permit process they become almost fully liable, as the building authority hardly checks anything anymore and only assumes liability for that.
Depending on where a contracting party is based, a builder can almost save themselves from a lawsuit.

The criticism of the quality of non-architects and non-engineers is more than justified, because everything handled by masters and technicians under the "kleine Bauvorlageberechtigung" is not checked, not even whether such a qualification even exists, which is the responsibility of the builder. And thus the ones who already may have suffered damage end up being the last ones to suffer again.

There will hardly be any changes to the state building regulations to protect consumers. However, the lawsuit was not filed in the interest of the consumer, but for the free movement of companies within the EU market.