In its Judgment in case Generali-Providencia Biztosító, C-470/13, EU:C:2014:2469, the CJEU has adopted the very welcome position that sanctioned infringers of competition law can be excluded from public procurement procedures, even if those procedures are not covered by the EU Directives on procurement. More specifically, the CJEU has declared that arts 49 and 56 TFEU do not preclude the application of national legislation excluding the participation in a tendering procedure of an economic operator who has committed an infringement of competition law, established by a judicial decision having the force of res judicata, for which a fine was imposed.
In the case at hand, Generali was excluded from a procurement procedure for insurance services on the basis of a Hungarian domestic provision whereby contracting
authorities "may provide in the contract notice that no one may take part
in the procedure, as a tenderer, subcontractor or ancillary supplier
seeking to take on more that 10% of the value of the public contract, or
as a subcontractor ... who: a) has
committed an infringement connected with his commercial or professional
activity, established by court judgment having the force of res judicata given not more than five years ago" [Paragraph 61(1) of Law CXXIX of 2003 on public procurement]. Indeed, Generali was excluded as a result of its
infringement of national competition law, which was confirmed by a court
ruling having the force of res judicata, and for which a fine was imposed on it.
In my view, the issue should be uncontroversial and there is no reason to see any (unjustified) restriction of free movement rights in the debarment of competition law infringers, whether under the rules of the procurement Directives or otherwise [see A Sánchez Graells, "Prevention and Deterrence of Bid Rigging: A Look from the New EU Directive on Public Procurement" in G Racca & C Yukins (eds), Integrity and Efficiency in
Sustainable Public Contracts (Brussles, Bruylant, 2014)]. However, the CJEU has felt the need to engage in a detailed reasoning that is worth looking at closely:
34 In relation to
the exclusion of economic operators from a public contract in the
context of freedom of establishment and the freedom to provide services
under Articles 49 TFEU and 56 TFEU, it must be observed that
Article 45(2)(d) of Directive 2004/18 makes it possible to exclude any
operator who ‘has been guilty of grave professional misconduct proven by
any means which the contracting authorities can demonstrate’.[This is now regulated in even clearer terms in art 57 dir 2014/24, see A Sánchez Graells, Albert, "Exclusion, Qualitative Selection and Short-listing in the New Public Sector Procurement Directive 2014/24" in F Lichere, R Caranta and S Treumer (ed) Novelties in
the 2014 Directive on Public Procurement, vol. 6 European Procurement
Law Series, (Copenhagen, Djøf Publishing, 2014)].
must be observed that the concept of ‘professional misconduct’, for the
purposes of that provision, covers all wrongful conduct which has an
impact on the professional credibility of the operator at issue and not
only the infringements of ethical standards in the strict sense of the
profession to which that operator belongs (see, to that effect, judgment
in Forposta and ABC Direct Contact, EU:C:2012:801,
paragraph 27). In those circumstances, the commission of an infringement
of the competition rules, in particular where that infringement was
penalised by a fine, constitutes a cause for exclusion under
Article 45(2)(d) of Directive 2004/18.
36 If such a cause for exclusion is possible under Directive 2004/18, it must a fortiori
be regarded as justified in relation to public contracts which fall
short of the threshold defined in Article 7 of that directive and which
are consequently not subject to the strict special procedures laid down
in that directive (see, to that effects, judgment in Consorzio Stabile Libor Lavori Pubblici, EU:C:2014:2063, paragraph 37).
recital 101 in the preamble to Directive 2014/24, adopted after the
material time, which states that contracting authorities should be able
to exclude economic operators, inter alia, for serious professional
misconduct, such as infringement of the competition rules, as such
misconduct may render an economic operator’s integrity questionable,
shows that the cause for exclusion referred to in paragraph 35 above is
considered to be justified in the light of EU law. Moreover,
Article 57(4)(d) of that directive makes clear and precise provision for
that cause for exclusion. [...]
the light of the foregoing, the answer to the questions referred is
that Articles 49 TFEU and 56 TFEU do not preclude the application of
national legislation excluding the participation in a tendering
procedure of an economic operator which has committed an infringement of
competition law, established by a judicial decision having the force of
res judicata, for which a fine was imposed (C-470/13, at paras. 34-39, emphasis added).
In my view this is a very clear cut Judgment and the CJEU's position should be welcome.