Non ci facciano perdere tempo... CJEU axes barriers to effective judicial review or procurement challenges and stresses 'obligation' to follow preliminary rulings (C-689/13)

Blogging from Turin, this case seems a bit too rightly timed

In its Judgment of 5 April 2016 in PFE, C-689/13, EU:C:2015:693, the Court of Justice of the European Union (CJEU) has confirmed the jurisprudential line started with Fastweb , C-100/12, EU:C:2013:448 (see comment here), and adopted a very clear position against procedural barriers that could prevent the effective review of public procurement challenges. It has also stressed the 'obligation' incumbent upon last instance courts to  ensure respect for (ie application of) the interpretation of EU law derived from the CJEU's answer to a reference for a preliminary ruling, or the previous case-law of the CJEU that already provides a clear answer to that question.

The case at hand concerned several procedural rules and practices applicable to the review of public procurement challenges in Italy and their compatibility with the Remedies Directive [Art 1(3)], as well as Art 267 TFEU and of the principles of effectiveness and the primacy of EU law.

The factual situation was different, but the technical setting was identical to Fastweb in that the challenger of the procurement decision (PFE) was confronted with a counterclaim by the would-be awardee of the contract (GSA) on the basis that PFE 'had no legal interest in bringing the proceedings as it did not fulfil the eligibility requirements for the tendering procedure and should therefore have been excluded from the procedure' (C-689/13, para 14). The first review court assessed GSA's counterclaim first and, finding in GSA's favour, dismissed PFE's main claim without a full review. 

Thus, the case once more concerns the Italian rule that 'if a counterclaim has been brought challenging the main action on the ground that it is inadmissible, the counterclaim must be given precedence and examined before the main action. Under the national legal system, such a counterclaim is classified as ‘exclusive’ or ‘paralysing’ on the basis that, where the counterclaim is deemed well founded, the court seised is required to dismiss the main action as inadmissible without assessing its merits' (C-689/13, para 15).

Despite the existence of the Fastweb Judgment, which explicitly opposes such procedural path, the Consiglio di Stato felt compelled to send the request for a preliminary reference because while 'in the case which gave rise to that judgment, only two undertakings submitted tenders and both of them had conflicting interests in the main action for annulment brought by the undertaking whose bid had been unsuccessful and in the counterclaim brought by the successful tenderer, ... in the [PFE] case, more than two undertakings submitted bids, even though only two of them have brought proceedings' (C-689/13, para 17).

It is not clear whether the Consiglio di Stato was attempting to prompt the CJEU to reconsider its Fastweb case law. Or maybe the case was just an 'excuse' to seize the CJEU en passant for a clarification of a different (arguably internal) matter about the Independence with which different chambers and divisions within the Consiglio di Stato operate for the purposes of sending references for preliminary rulings t the CJEU. In particular, and in the simplified terms adopted by the CJEU, the core of the second question was whether 'where a question concerning the interpretation or validity of EU law arises, a chamber of a court of final instance must, if it does not concur with the position adopted by decision of that court sitting in plenary session, refer the question to the plenary session and is thus precluded from itself making a request to the Court of Justice for a preliminary ruling' (C-689/13, para 31).

On the 'generality' of Fastweb

Unsurprisingly, the CJEU very clearly reaffirmed the position and clarified that Fastweb is a general ruling or, in more detailed terms:

28 The interpretation given by the Court in Fastweb ... is applicable in a context such as that of the main proceedings. First, each of the parties to the proceedings has a legitimate interest in the exclusion of the bids submitted by the other competitors. Second ... it cannot be ruled out that one of the irregularities justifying the exclusion of both the successful tenderer’s bid and that of the tenderer challenging the contracting authority’s decision may also vitiate the other bids submitted in the tendering procedure, which may result in that authority having to launch a new procedure.

29      The number of participants in the public procurement procedure concerned as well as the number of participants who have instigated review procedures and the differing legal grounds relied on by those participants are irrelevant to the question of the applicability of the principle established by the Fastweb (C‑100/12, EU:C:2013:448) case-law.

30      In the light of the foregoing considerations, the answer to the first question is that the third subparagraph of Article 1(1) and Article 1(3) of Directive 89/665 are to be interpreted as meaning that a main action for review brought by a tenderer with an interest in obtaining a particular contract who has been or may be adversely affected by an alleged breach of EU public procurement law or rules transposing that law, with a view to excluding another tenderer, cannot be dismissed as inadmissible under national procedural rules which provide that the counterclaim lodged by the other tenderer must be examined first (C-689/13, paras 28-30, emphasis added).

On the bounless access to the CJEU

Further to that, and in relation with the second question, the CJEU also unsuprisingly was unwilling to recognise any limitation of the possibility or duty for domestic courts to send cases for a preliminary ruling (see here). In clear terms, the CJEU confirmed that

32 ... national courts have the widest discretion in referring questions to the Court involving interpretation of relevant provisions of EU law ..., that discretion being replaced by an obligation for courts of final instance, subject to certain exceptions recognised by the Court’s case-law ... A rule of national law cannot prevent a national court, where appropriate, from using that discretion, ... or complying with that obligation.

33      Both that discretion and that obligation are an inherent part of the system of cooperation between the national courts and the Court of Justice established by Article 267 TFEU and of the functions of the court responsible for the application of EU law entrusted by that provision to the national courts.

34      As a consequence, where a national court before which a case is pending considers that a question concerning the interpretation or validity of EU law has arisen in that case, it has the discretion, or is under an obligation, to request a preliminary ruling from the Court of Justice, and national rules imposed by legislation or case-law cannot interfere with that discretion or that obligation.

35      In the present case, a provision of national law cannot prevent a chamber of a court of final instance faced with a question concerning the interpretation of Directive 89/665 from referring the matter to the Court of Justice for a preliminary ruling (C-689/13, paras 32-35, references omitted and emphasis added).

On the need to follow-up and 'ask responsibly'

Maybe to compensate for the boundless access to the preliminary ruling procedure, the CJEU also sent a 'friendly' warning to (all, but mainly the Italian) national courts of last instance in what could be considered a reenactment of the boundaries of the acte claire doctrine (see here).

 38 ... a judgment in which the Court gives a preliminary ruling is binding on the national court, as regards the interpretation or the validity of the acts of the EU institutions in question, for the purposes of the decision to be given in the main proceedings ... Accordingly, the national court which, adjudicating as court of final instance, has complied with its obligation to make a reference to the Court for a preliminary ruling under the third paragraph of Article 267 TFEU, is bound, for the purposes of the decision to be given in the main proceedings, by the interpretation of the provisions at issue given by the Court and must, if necessary, disregard any national case-law which it considers inconsistent with EU law ...

39      It should also be noted that the effectiveness of Article 267 TFEU would be impaired if the national court were prevented from forthwith applying EU law in accordance with the decision or the case-law of the Court.

40      A national court which is called upon, within the exercise of its jurisdiction, to apply provisions of EU law is under a duty to give full effect to those provisions, if necessary refusing of its own motion to apply any conflicting provision of national legislation, even if adopted subsequently, and it is not necessary for the court to request or await the prior setting aside of such provision by legislative or other constitutional means.

41      Any provision of a national legal system and any legislative, administrative or judicial practice that might impair the effectiveness of EU law by withholding from the national court with jurisdiction to apply such law the power to do everything necessary at the moment of its application to set aside national legislative provisions that might prevent EU rules from having full force and effect are incompatible with those requirements, which are the very essence of EU law (C-689/13, paras 38-41, references omitted and emphasis added).

Difficulties derived from the asymmetrical economic integration in the EU: some reflections on the way forward? – re Bieling, Jäger & Ryner (2016)

In their recent paper ‘Regulation Theory and the Political Economy of the European Union’ (2016) 54(1) Journal of Common Market Studies 53-69, Bieling, Jäger & Ryner critically assess ‘how regulation theory has interpreted the single market, financial liberalization and EMU as a suppression of alternatives to neoliberal post-Fordism, or finance-led accumulation, in Europe’.

Their paper focuses on a high-level discussion of two selected economic crises (the 1970s and the ongoing crisis started in 2008) and uses it to situate the EU’s regulatory responses within a Gramscian analytical framework, thus arguing that ‘understanding the EU’s current conjecture of Eurozone crisis management requires a neo-Gramscian extension of regulatory theory, stressing transnational patterns of capitalist accumulation and power relations’.

The paper is interesting because they claim that the ‘implemented institutional and regulatory reforms can be interpreted as the manifestation of what Gramsci [Selections from the prison notebooks of Antonio Gramsci (Int’l Pub, 1971) 104] called a “passive revolution”, i.e. of power-preserving piecemeal changes “from above” without active mass politics … the passive revolution within the EU is, however, unlikely to become successful. At least for the time being, it is in trouble because central contradictions of accumulation and the latent overaccumulation crisis remain unsolved. The rift between the core and the periphery is deepening and uneven development in the European Union is very likely to remain a severe threat for the future of European integration’ (Bieling, Jäger & Ryner, 2016: 65).

Their observation of the overall trend and current weakness of the European integration strategy can hardly be contested and it seems clear that more fundamental changes are necessary for the European (but not only) economic crisis to be cured at its roots. Their paper clearly puts the European financial capitalism model at such root position – which is relatively uncontroversial. One of the passages of their analysis I find particularly relevant is that they stress that part of the causes that fuelled the ‘financialization’ of the (European) economy was a change in economic structural conditions three decades ago.

As they point out. ‘[s]ince the 1990s, European integration has … been characterized not only by intensified – institutional and regulatory – competition and a rather restrictive monetary and financial policy setting, but also by the transition towards a European financial capitalism … This transition took place against the background of structural over-accumulation of capital, so that, in view of missing fields of productive investment, increasing amounts of profits and savings were absorbed by banks and institutional investors, both trying to exploit prospected yields offered by deregulated financial markets … some other processes stimulated finance-dominated accumulation as well, such as rising public debt; the privatization of public enterprises such as industrial conglomerates, banks, insurance companies or providers of other public services and infrastructure; and, most importantly, the introduction and promotion of (private) capital market-based pension schemes’ (Bieling, Jäger & Ryner, 2016: 62).

Their paper is clear in stopping at the level of identifying the issues that support the insufficiency of the (current version) of the European financial capitalism model to offer a solution for the future, and laying out a research agenda for the future. However, in my view, their approach already seems to clearly suggest a need for a reversal of some of the trends that led to the (current version) of the European financial capitalism model. If that is the case, then I would disagree with that path of development, at least at the regulatory level.

The difficulties derived from liberalisation and competition-based reliance in the market cannot only be overcome by abandoning the path of development of the European (financial) capitalism model, which is not constrained to neoliberal post-Fordism. An alternative view of Bieling, Jäger & Ryner’s account is that the difficulties derived from the asymmetrical economic integration in the EU result not from too much centralisation of economic decision-making and regulation-based liberalisation, but from too little economic integration and solid regulatory and oversight mechanisms.

Thus, the alternative system for the future need not lie too far from neoliberal post-Fordism, and can well be developed on the basis of a properly understood liberal economic model based on sound public policy (and, possibly, a further federalisation of the European Union) – or what has been termed a (neo)-ordoliberal approach to European economic integration and regulation [for background discussion, see I Herrera Anchustegui, 'Competition law through an Ordoliberal Lens' (2015) 2 Oslo Law Review 139-174].

Doing otherwise would presume that the State can be a better manager of economic growth, technological development and social wealth than it (has been) a monitor of private arrangements building up to social preferences. I do not think this to be a solid point of departure and could hardly see the public sector directly developing the activities needed to overcome current challenges when it is hardly able to react and reconduct their spillovers.

Looming security issues aside for the purposes of this discussion, there are areas where the State clearly needs to revisit its role and policy – and taxation and social welfare are the two obvious priorities in my view, together with a reconstruction of the system of independent regulatory agencies and a clear push for an effective use of information technologies to improve all of these roles. Other than that, the issue of the de-financialization of the European economy seems beyond the reach of the State, exception made of the use of taxation to create incentives in that direction.

In this day and age, it is hard to see how claims of the existence of ‘a “passive revolution”, i.e. of power-preserving piecemeal changes “from above” without active mass politics’ talk to reality. Mass politics have not disappeared, they have simply morphed into mass apathy (or wilful ignorance), and the politics of the day are of social media window-dressing activism, coupled with non-acknowledged consumerist hypocrisy. The real challenge is for each of us to really start putting our money where our mouth is or, conversely, to be honest and put our mouths where our money is. But, quite simply, the State cannot do it for us and should not substitute our liberty for its discretion. All it can do is create mechanisms that constrain our choices, both directly (taxation) and indirectly (market regulation, including the imposition of desirable environmental and social standard throughout the economy).

More specifically from the perspective of my pet topic of public procurement law, the State needs to stop pretending to act as a ‘good citizen’ by buying green and social, or coming up with any new wave of ‘smart’ procurement policies that only apply to 20% of GDP  – thus allowing it to resort to the same window-dressing strategy to cover its broader regulatory failures (the bulk of the economy, 80% cannot be reoriented or changed merely ‘by example’) that we enjoy in covering our poor consumerist choices with social media activist stunts – and start focusing on the proper use of public procurement as a tool to channel the ever scarcer public funds in the most effective way possible.

In my view, this is the progressive approach that is required in order to overcome the difficulties derived from the asymmetrical economic integration in the EU and the (current version) of the European financial capitalism model. Aborting the project of transformation of the European state from a 19th century model towards a true 21st century model half way through would be unwise. I will not be surprised if this triggers more criticism as a neoliberal scholar, though ....

Happy Easter break

I am taking a few days off from blogging to finish an edited collection and then take a few energising walks in Wales.
I will resume normal activity on 4 April 2016. In the meantime, I wish you all a Happy Easter break!

Interesting paper on International Trade and Regulatory Cooperation in Public Procurement (Hoekman, 2015)

I have just read the recent paper by Prof B Hoekman, 'International Cooperation on Public Procurement Regulation' (November 1, 2015). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2015/88. I found his insights into how to move the development of trade policies through public procurement very suggestive. As his abstract explains,

Most governments have yet to agree to binding disciplines on government procurement regulation, whether in the WTO or a preferential trade agreement. Empirical research suggests that reciprocally-negotiated market access commitments have not been effective in inducing governments to buy more from foreign suppliers. Foreign sourcing by governments has been rising for most countries, however, independent of whether States have made international commitments to this effect – although there is some evidence that this trend was reversed post-2008 in several countries that had the freedom to do so. The stylized facts suggest a reconsideration of the design of international cooperation on procurement regulation, with less emphasis on specific market access reciprocity and greater focus on good procurement practice and principles, efforts to boost transparency, and pursuit of pro-competitive policies more generally (emphasis added).

Hoekman's discussion of the reasons why the current focus on bilateral market access reciprocity 'is unlikely to have much of an effect' is particularly interesting:

One reason why market access reciprocity arguably has limited returns is that many contracts that are issued by procuring entities concern products that are difficult to supply on a cross-border basis. Construction and services of many kinds will generally have to be supplied locally and there may be good reasons for procuring locally even if a good is tradable. If the products procured are intangible (services) or there are problems in monitoring and enforcing contract compliance, discrimination can increase the likelihood of performance by suppliers. The best (economic) case for discrimination revolves around situations where there is asymmetric information, e.g., difficulties in monitoring the performance of a contractor if buyer and provider are located far from each other, or there is a need to offer a firm quasi-rents in order to increase the probability of contract compliance through the threat of losing repeat business (Evenett and Hoekman, 2013). Moreover, geographic proximity may be a precondition for effectively contesting procurement markets—making some products, in particular services, in essence non-tradable. Problems of asymmetric information and contract compliance may imply that entities can economize on monitoring costs by choosing suppliers that are located within their jurisdictions. In turn, this will make it more difficult for foreign firms to successfully bid for contracts, even if the goods or services involved are tradable and in the absence of formal discrimination. Such rationales have been explored extensively by Laffont and Tirole (1993); many of the underlying technical arguments are summarized and synthesized in Breton and Salmon (1995). The policy issue that arises in such situations is whether there are barriers against establishment (FDI) by foreign suppliers, as this is a precondition for them to bid for/supply contracts (Evenett and Hoekman, 2005) (pp. 16-17, emphasis added, for complete references, see bibliography in his paper).

This passage is particularly relevant in the context of EU public procurement, not least because it spells out in very clear economic terms the reasons why an 'obsession' with cross-border trade as a metric of good procurement is highly unlikely to actually result in better (economic) procurement results [for discussion of the current policy, see here, A Sanchez-Graells, 'Are the Procurement Rules a Barrier for Cross-Border Trade within the European Market? — A View on Proposals to Lower that Barrier and Spur Growth', in C Tvarnø, GS Ølykke & C Risvig Hansen, EU Public Procurement: Modernisation, Growth and Innovation (Copenhagen, DJØF, 2012) 107-133.; and ibid, 'Collaborative Cross-Border Procurement in the EU: Future or Utopia?' (2016) Upphandlingsrättslig Tidskrift (Procurement Law Journal),  forthcoming].

I also found very interesting that Hoekman presents in very straightforward terms the economic view that, put simply, procurement is not a 'magic wand' with which to implement all sort of secondary policies. In his clear exposition:

The pursuit of non-economic objectives by governments can have very different implications for economic efficiency. In principle, policy should target directly the source of problem at hand: lack of economic opportunities for minority groups; regional economic wealth differentials; market failures, and so forth. For example, take the case where a government awards a tender to an SME instead of a large company that submitted a lower cost bid because of an SME preference policy. It may be more effective and efficient if instead the government were to address the factors that impede the ability of SMEs to compete with larger firms. This can of course be due to different factors, ranging from financial market imperfections to excessively burdensome administrative requirements that are too costly for SMEs to meet. Dealing with these constraints directly as opposed to using a SME preference policy will be more efficient (Evenett and Hoekman, 2013) (p. 17, emphasis added, full references in his paper).

In the end, Hoekman recommends that the best way of ensuring good procurement outcomes is to 'promote a pro-competitive environment' (p. 21). I could not agree more and, once again, turning to the situation in the EU, this is what I have suggested is the best way forward in order to achieve the Europe2020 goals [see A 'Truly competitive public procurement as a Europe 2020 lever: what role for the principle of competition in moderating horizontal policies?' (2016) 22(2) European Public Law Journal, forthcoming]. I hope policy makers will start taking economic insight into account, particularly when it is presented in such clear and persuasive terms as Prof Hoekman does.

A more commercial approach to procurement? Reply to Uddalak Datta

The extent to which English universities are bound to comply with EU public procurement rules is an issue of growing practical relevance and increasing attention in public debates. 

In his recent blog piece 'A more commercial approach to procurement?',  Uddalak Datta (Senior Associate at Shakespeare Martineau) argues that

'The big procurement news story for the [higher education] sector in 2016 is likely to be the increasing boldness of universities to consider themselves outside of the regulated procurement regime. Following changes to the funding of higher education, outlined in the 2011 White Paper: Students at the Heart of the System, the funding model for universities shifted from a system of grants to repayable fees which are allocated on the basis of student choice. This was heavily trailed in the White Paper as reducing the regulatory burden on universities: “because, in the future, most funding will follow students in the form of loans and direct grant funding from the Government will decrease, fewer institutions may be subject to EU public procurement rules”. This position was met with some scepticism amongst the procurement community. 
 
However, this year we have had sourced expert advice from a leading procurement Queen’s Counsel who takes the view that the funds provided to universities by the Student Loans Company and repayable by students on generous terms should be treated as “private funding”. As a result, this opens the way for those universities to adopt a more commercial approach to procurement. This allows universities the ability to move more quickly than the procurement legislation requires. My university clients all adopt a sensible commercial approach, so are likely to continue to adopt a procurement strategy involving widely advertised competitive tenders. The real business case lies in reducing the potential costs and delay of dealing with challenges by aggrieved bidders' (emphasis added).

So, in short and on the basis of the legal opinion of J Coppel QC (as reported by Datta in a different blog post, which unfortunately requires subscription), Datta suggests that English universities can free themselves from the strictures of EU public procurement law.

I strongly disagree with this legal assessment, principally because under the applicable EU public procurement and State aid rules, the fees that the Student Loans Companies pays English universities on behalf of designated students remains "public funding" for the purposes of EU law. This is one of the main conclusions that Dr Andrea Gideon and myself reached in our paper 'When are Universities Bound by EU Public Procurement Rules as Buyers and Providers? - English Universities as a Case Study' (2016) 1 Ius Publicum, art 4.

Andrea and I very much look forward to any opportunity to further explain our position and to contribute to this important debate on the economic governance of English universities. If you are interested, please be in touch (a.sanchez-graells@bristol.ac.uk).

Should evaluation committees Be Banned From Using 'soft quality metrics' when they assess Public tenders? (C-6/15)

In his Opinion of 10 March 2016 in TNS Dimarso, C-6/15, EU:C:2016:160, Advocate General Mengozzi has addressed the general question whether EU public procurement rules 'read in the light of the principles of equal treatment and transparency, [require] that a contracting authority should always, or, if not, in certain circumstances, make known in advance, in the contract notice or the contract documents, the method of evaluation or weighting rules used to assess tenderers’ bids'. The case is to be decided by the Court of Justice of the European Union (CJEU) on the basis of the phasing-out rules in Art 53(2) of Directive 2004/18, but the interpretation will be relevant for the future application of Art 67(5) of Directive 2014/24.

In my view, the case is interesting, not primarily because of the discussion on whether evaluation methods need to be disclosed together with award criteria and their weightings, but more importantly because it brings to light the simple fact that some evaluation methods are unable to meet the requirements of the EU rules--to the effect that the award phase needs to enable the contracting authority to actually determine which is the most economically advantageous tender with a sufficient degree of precision and certainty. Thus, I critically assess AG Mengozzi's excellent opinion from this perspective.

The Dimarso case

In this case, a Belgian contracting authority issued a call for tenders for the provision of services and indicated that the award criteria would be as follows:

1 Quality of the tender (50/100)
Quality of the preparation, organisation and execution of the work on the ground, and of the encryption and initial data processing. The services proposed must be described in as much detail as possible. It must be clear from the tender that the tenderer is capable of taking on the whole contract (minimum 7 000 samples / maximum 10 000 samples) within the prescribed 12-month delivery deadline.

2 Price (50/100)
Cost of delivering the contract in relation to the basic sample (7 000 samples) and cost per additional batch of 500 addresses supplied (amounts inclusive of VAT).

There was no further indication of how these criteria would be applied. When it came to evaluation of the tenders received, the evaluation team 'evaluated and compared with each other on the basis of the criteria set out above. First, the tenders were examined and evaluated on the basis of the “quality” criterion. For this, each tender was unanimously assigned a given score (high — satisfactory — low). Then, the price criterion was applied. On the basis of those scores, a final ranking was established' (Opinion in C-6/15, para 5, emphasis added).

Dimarso submitted a bid that scored high on quality grounds and was the highest on price. The contract was awarded to a competing tenderer which offer also scored high on quality and was lower in price. Dimarso challenges the way the evaluation team applied the award criteria on the following grounds:

the evaluation committee appears to have evaluated the tenders on the basis of the ‘high — satisfactory — low’ scale, not referred to in the contract documents, in relation to the tender quality criterion, whereas, according to Dimarso, it is clear from the contract documents that a score of 0 to 50 points should have been allocated to each tender. As regards the price criterion, the evaluation committee also failed to carry out an adequate examination, comparison and final assessment of the tenders taking into account the award criteria as set out in the contract documents, including the “50/100” weighting given to each of the award criteria in the call for tenders (Opinion in C-6/15, para 8, emphasis added).

This question raises then two issues: (1) whether the evaluation committee could rely on 'soft metrics' in order to apply the quality award criterion; and (2) whether such 'soft metrics' could be combined with straightforward price comparisons. I find these two questions of great practical relevance, so it is worth looking closely at AG Mengozzi's reasoning on these issues.

Assessment under Art 53(2) Dir 2004/18

It is worth reminding that Art 53(2) Dir 2004/18 established that

[when the award is made to the tender most economically advantageous from the point of view of the contracting authority], the contracting authority shall specify in the contract notice or in the contract documents ... the relative weighting which it gives to each of the criteria chosen to determine the most economically advantageous tender.
Those weightings can be expressed by providing for a range with an appropriate maximum spread.
Where, in the opinion of the contracting authority, weighting is not possible for demonstrable reasons, the contracting authority shall indicate in the contract notice or contract documents or, in the case of a competitive dialogue, in the descriptive document, the criteria in descending order of importance.

At this point, it is worth stressing that the only difference between Art 53(2) Dir 2004/18 and Art 67(5) Dir 2014/24 is that, in relation to the third paragraph, the seemingly permissive drafting of Art 53(2)III Dir 2004/18 ('Where, in the opinion of the contracting authority, weighting is not possible for demonstrable reasons') is tightened up in Art 67(5)III Dir 2014/24 ('Where weighting is not possible for objective reasons'). Given the strict interpretation that AG Mengozzi proposes for Art 53(2) Dir 2004/18 (which is to be shared), his Opinion will be equally relevant for the future interpretation of Art 67(5) Dir 2014/24 [along the same lines, see A Sanchez-Graells, Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 384-385].

Going back to the Dimarso case, AG Mengozzi starts by summing up the content of this provision by stressing that

the obligation to indicate not only the award criteria but also ... the relative weighting given to each of those criteria, except where there are good reasons why weighting is not possible, at the time of publication of the contract notice or contract documents ... serves to fulfil the requirement of compliance with the principle of equal treatment and the associated obligation of transparency (Opinion in C-6/15, para 20).

And that

contracting authorities have an obligation to indicate the weightings of the award criteria in the contract notice or the contract documents. It is only in the event that this proves impossible, for demonstrable reasons, that those entities may opt to prioritise those criteria, which prioritisation must in any event be adequately disclosed in the contract notice or the contract documents (Opinion in C-6/15, para 23, emphasis added).

The AG clarifies (paras 24-28) that the dispute in the case at hand is not whether having indicated that Quality (50/100) and Price (50/100) meant that both award criteria had equal weight or how they had to be combined amongst themselves to reach a final ranking of tenders, but that it is rather

in essence, [whether] the method of evaluation used (‘low — medium — high’) was so vague that it prompted the contracting authority to downgrade the assessment of the ‘quality’ criterion relative to that of the ‘price’ criterion, since the second criterion alone was actually capable of eliminating three of the four tenders submitted. In reality, therefore, Dimarso contends, the price criterion benefited from a higher relative weighting than the 50% previously announced in the contract documents. In other words, Dimarso submits that, if the method of evaluation had been made known to tenderers in advance, at the stage when the contract documents were published, it would inevitably have had an effect on the preparation of the tenders (Opinion in C-6/15, para 29, emphasis added).

AG Mengozzi then approaches this argument in stages. His reasoning heavily rests on two aspects. First, that it is clear that Art 53(2) Dir 2004/18 does not explicitly impose an obligation to disclose the evaluation method in addition to disclosure of award criteria and their weightings (para 32). Second, and notwithstanding that literal interpretation of Art 53(2) Dir 2004/18, that the CJEU has been clear in the imposition of restrictions on the way the evaluation team carries out its tasks (paras 37 ff). In my reading, the bone of his argument is as follows.

In relation to the setting of sub-weightings (or weighting factors for award sub-criteria), the CJEU has indicated that this is not a breach of EU procurement rules provided three conditions are met: ie '[1] that it does not alter the criteria for the award of the contract set out in the contract documents or the contract notice, [2] that it does not contain elements which, if they had been known at the time the tenders were prepared, could have affected that preparation, and [3] that it was not adopted taking into account matters likely to give rise to discrimination against one of the tenderers' [with reference to judgments in ATI EAC e Viaggi di Maio and Others (C‑331/04, EU:C:2005:718, paragraph 32); Lianakis and Others (C‑532/06, EU:C:2008:40, paragraph 43); and Evropaïki Dynamiki v EMSA (C‑252/10 P, EU:C:2011:512, paragraph 33); Opinion in C-6/15, para 40, emphasis added].

The same restrictions should be applicable to the adoption of an evaluation method because it can create the same effects as the adoption of sub-weightings--or, in his words, 'it is not inconceivable that a method of evaluation may have an effect not so much on the award criteria themselves as on the weighting of those criteria and, as such, may contain elements which would have been capable of influencing the preparation of tenders if that method had been made known to tenderers in advance... In that event, the ex post determination of such a method for evaluating tenders by a contracting authority would be unlawful and should, therefore, have been disclosed in advance in the contract notice or the contract documents' (Opinion in C-6/15, para 46). Therefore, 'the lawfulness of a method for evaluating tenders which is determined by a contracting authority ex post depends on whether the three conditions established by the Court’s case-law ... are met' (Opinion in C-6/15, para 47).

© iStockphoto.com/RichVintage

Opportunity for further clarification

Having disposed of the core of the case, AG Mengozzi goes on to suggest that the CJEU take this opportunity to clarify its case law and to stress that the adoption of evaluation methods need to be subjected to tighter requirements. His arguments are based on the use of 'soft quality metrics'--and, more specifically, on the distrust in their ability to actually enable the contracting authority to identify the most economically advantageous tender (MEAT)--as it emerges from his explanation of his main concern:

let us imagine that, of the tenders submitted, one was far superior, in terms of quality, to the other three, including those that were rated ‘high’. In other words, one of those tenders could have been ranked ‘excellent’ in the assessment of the ‘quality’ criterion. The price proposed by that tenderer would then have reflected the excellence of the quality of the services proposed by it and would therefore in all probability have been higher than the prices offered by the other tenderers. However, since ‘excellent’ did not feature on the range of scores (low — satisfactory — high) chosen by the evaluation committee, that tender of excellent quality could not but be rated ‘high’, at the very most, in relation to the ‘quality’ criterion. Since the price proposed by the tenderer of that bid was higher than those proposed by the others, possibly even by some tens or hundreds of euros, that bid had to be rejected... in that situation, ... the contracting authority might have been deprived of the tender representing the best value for money, contrary to the spirit in which the selection of tenderers on the basis of the most economically advantageous tender takes place (Opinion in C-6/15, paras 56-57, emphasis added).

AG Mengozzi considers that this is an unsatisfactory state of affairs and, in my reading, proposes that the existing case law of the CJEU is clarified so that contracting authorities do not create a situation where tenderers submit offers which positive attributes are not captured by the evaluation method. His proposal thus focuses on the need to disclose the evaluation method to be used from the start of the procurement process. In his view, 'the likelihood is ... that, if the method for evaluating tenders in the light of the ‘quality’ criterion, as established by the contracting authority, had been known in advance by the potential tenderers, it would have been capable of affecting the preparation of their tenders' (Opinion in C-6/15, para 60). Therefore,

the contracting authority (to which it will fall to ensure that the tendering procedure benefits from maximum legal certainty and to protect itself against actions for the annulment of that procedure) must determine the method or methods to be used to evaluate tenders in the light of the award criteria as early as possible. It would be reasonable to suggest, then, that, if that is the case, there does not appear to be any overriding reason such as to justify a refusal by the contracting authority to make known to potential tenderers the methods of evaluation in question, which it will in any event already have had to determine before the call for tenders (Opinion in C-6/15, para 63, emphasis added).

AG Mengozzi then goes on to discuss whether the condition should be to only require upfront disclosure of evaluation methods which have the potential to create a substantial impact effect on the preparation of the tenders, which he dismisses (paras 70 ff), on the basis that the system would be properly balanced 'by the obligation incumbent on the unsuccessful tenderer, which bears the burden of proof, to demonstrate, by reference to specific examples in its legal action, the differences (substantive as well as purely formal) which its tender would have exhibited if the elements of the method of evaluation in question or the method itself, which the contracting authority neglected to communicate, had been adequately disclosed before the tenders were prepared' (Opinion in C-6/15, para 73). 

personal critique

I share AG Mengozzi's views and concern, but I think that his proposal simply to disclose evaluation methods upfront would only carry us half way in sorting out the unresolved issue of the use of of 'soft quality metrics' in the evaluation of tenders. Regardless of upfront disclosure, which needs to take place, a method for the evaluation of quality aspects of procurement tenders that classifies tenders in pre-determined, tight 'quality levels' is bound to offer sub-optimal results. In the extreme,

a binary approach—ie, an approach based on meeting or not meeting a criterion, or an ‘all-or-nothing’ (or zero/one) approach—seems less desirable than a gradual approach or the adoption of sliding-scale-based evaluation rules ... whenever possible, it seems preferable that contracting authorities evaluate the degree to which tenders comply with each of the specified award criteria on a sliding scale (such as granting them points from 0 to 10, or 1 to 5, or any other scale). In this regard, the weighting of criteria will become less harsh and the appraisal of the tenders will arguably reflect with greater accuracy their relative strengths and weaknesses according to the overall set of award criteria' [A Sanchez-Graells, Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 391; Along the same lines, but opting for a monetary equivalent approach, see MA Bergman and S Lundberg, ‘Tender Evaluation and Supplier Selection Methods in Public Procurement’ (2013) 19(2) Journal of Purchasing and Supply Management 73]. 

More importantly, the assessment of quality elements needs to take place in a manner that does result in a loss of information of the relative quality of the offers. It has been the settled case law of the CJEU that 

although [the EU rules do] not set out an exhaustive list of the criteria which may be chosen by the contracting authorities, and therefore leaves it open to the authorities awarding contracts to select the criteria on which they propose to base their award of the contract, their choice is nevertheless limited to criteria aimed at identifying the tender which is economically the most advantageous (Case C-532/06 Lianakis [2008] ECR I-251 29 (emphasis added); Case 31/87 Beentjes [1988] ECR 4635 19; Case C-19/00 SIAC Construction [2001] ECR I-7725 35–36; Case C-513/99 Concordia Bus Finland [2002] ECR I-7213 54 and 59; and Case C-315/01 GAT [2003] ECR I-6351 63–64. See also Case C-448/01 EVN and
Wienstrom [2003] ECR I-14527 37).

In my view, it is particularly relevant 'to stress the need for award criteria (i) to be linked to the subject matter of the contract (ie, to be ‘relevant’), and (ii) to allow the contracting authority actually to determine which tender is economically the most advantageous (ie, to be ‘enabling’)' [A Sanchez-Graells, Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 380]. The same reasoning must apply (functionally) to the selection of evaluation methods (for the reasons explained by AG Mengozzi, ie that they create the same effects). 

Quite frankly, in view of the clear example AG Mengozzi has given us (para 56), I would have no doubt that the use of 'soft quality metrics' is not enabling because it does not allow the contracting authority to identify, with an adequate level of precision and certainty, the most economically advantageous offer. Ultimately, thus, they should be banned as a matter of EU law--and, more generally, of good procurement practice. I do not expect the CJEU to go as far as to agree with this, but I think it would be the only consistent solution, and one that would do away with the problem, rather than trying to fix it simply with the remedy of more transparency--which seems to be the token fix-all solution in procurement law.

CJEU rules on Greek Support to The Agricultural Sector under the 2008 and 2009 State Aid Frameworks: A Blow to the Commission's Waiver of Discretion? (C-431/14 P)

In its Judgment of 8 March 2016 in Greece v Commission (ELGA), C-431/14 P, EU:C:2016:145, the Court of Justice of the European Union (CJEU) ruled on the compatibility of certain measures of financial support to the Greek agricultural sector in the aftermath of the 2008 financial crisis with the EU rules on State aid--ie mainly, Art 107 TFEU and the Temporary Community Framework for State aid measures adopted by the Commission in 2008 (the 2008 TCF), as amended in 2009 (the 2009 amended TCF).

The Judgment is interesting because it assesses the boundaries of the temporary discretionary measures adopted by the Commission in order to flexibilise the enforcement of EU rules in times of economic and financial distress, on the basis that they aim 'to remedy a serious disturbance in the economy of a Member State', ex Art 107(3)(b) TFEU. In particular, the ELGA Judgment assesses whether Member States can validly raise arguments based on Art 107(3)(b) TFEU directly, regardless of the Commission's delineation of its State aid policy based on that same legal basis. Or, in simple terms, whether a valid Art 107(3)(b) TFEU can exist outside of the (temporary) scope of the 2008 TCF and the 2009 amended TCF. The case may seem very specific because of its link to the economic crisis. However, the CJEU makes some broader points about the Commission's discretion that are worth taking into careful consideration.

This discussion is relevant from a legal perspective, due to the clarification of the so far unknown exemption of the State aid prohibition of Art 107(1) TFEU on the basis of Art 107(3)(b) TFEU regarding aid aimed to remedy a serious disturbance in the economy of a Member State' [see P Nicolaides & IE Rusu, 'The Financial Crisis and State Aid' (2010) 55(4) The Antitrust Bulletin 759-782]. It is also relevant for the policy implications of the CJEU's support for the Commission's intervention [for discussion of a general framework, see H Kassim & B Lyons, 'The New Political Economy of EU State Aid Policy' (2013) 13(1) Journal of Industry, Competition and Trade 1-21; and TJ Doleys, 'Managing the Dilemma of Discretion: The European Commission and the Development of EU State Aid Policy' (2013) 13(1) Journal of Industry, Competition and Trade 23-38].

The case of the Greek support to the agricultural sector through ELGA

The specific case concerns a long-running action of the Greek State for the annulment of a 2011 Commission Decision concerning compensation payments made by the Greek Agricultural Insurance Organisation (ELGA) in 2008 and 2009, which the General Court (GC) upheld on appeal (T‑52/12, EU:T:2014:677). One of the difficulties with this case is the sequence of events. From the regulatory perspective, it is worth stressing that the 2008 TCF, which entered into force in 17 December 2008, did not cover aid to the agricultural sector. This was eventually made clear in the 2009 amended TCF, according to which

The possibility under [the TCF] to grant a compatible limited amount of aid does not apply to undertakings active in the primary production of agricultural products. Farmers, however, encounter increased difficulties to obtain credit as a consequence of the financial crisis ... it is appropriate to introduce a separate compatible limited amount of aid for undertakings active in the primary production of agricultural products.

Specifically, the 2009 amended TCF provided that

The Commission will consider such State aid compatible with the common market on the basis of Article [107(3)(b) TFEU], provided all the following conditions are met: ... (h) … Where the aid is granted to undertakings active in the primary production of agricultural products ..., the cash grant (or gross grant equivalent) does not exceed EUR 15,000 per undertaking ...

This took effect on 28 October 2009, which raises a practical temporary difficulty because, '[f]ollowing protests in January 2009 by a large number of Greek agricultural producers about the losses suffered by them in 2008 as a result of adverse weather conditions..., the Hellenic Republic provided that compensation aid of EUR 425 million would be paid to producers on an exceptional basis by ELGA' (C-431/14 P, para 11). Upon investigation, the Commission found that most of that aid was incompatible with the internal market and, in particular, that '[t]he compensation aid of EUR [387.4 million] granted to producers on dates before 28 October 2009 is incompatible with the internal market' (C-431/14 P, para 14, emphasis added).

The issue is that, in plain terms, the Commission rejected Greece's claims that the exemption foreseen in Art 107(3)(b) TFEU could be directly applied in the case because of the economic difficulties that Greece had been experiencing. The Commission rejected such claim on the basis that Art 107(3)(b) TFEU had to be applied within the boundaries of the policy documents developed to that effect, ie the 2008 TCF and the 2009 amended TCF, which could only apply for the future--that is, only from their respective dates of entry into force--which, as the agricultural sector is concerned, was that of the 2009 amended TCF: 28 October 2009. The GC upheld the Commission's approach in the following terms

185 ... it is clear that, contrary to what the Hellenic Republic claims, the Commission had to base its decision on the [TCF] and not directly apply Article 107(3)(b) TFEU in order to assess the compatibility of the payments made by ELGA in 2009 on account of the economic crisis experienced in Greece.

186 It is clear from the case-law that, in adopting rules of conduct and announcing by publishing them that they will henceforth apply to the cases to which they relate, the Commission imposes a limit on the exercise of its aforementioned discretion and cannot depart from those rules without being found, where appropriate, to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations (see judgment[s] in Germany and Others v Kronofrance, [C‑75/05 P and C‑80/05 P, EU:C:2008:482], paragraph 60 and the case-law cited, and … Holland Malt v Commission, C‑464/09 P, [EU:C:2010:733], paragraph 46).

187 ... in the specific area of State aid, the Commission is bound by the guidelines and notices that it issues, to the extent that they do not depart from the rules in the Treaty (see judgment in Holland Malt v Commission, [C‑464/09 P, EU:C:2010:733], paragraph 47 and the case-law cited).

188 Therefore, it is necessary to reject the arguments of the Hellenic Republic to the effect that, on account of the serious disturbance in the Greek economy due to the economic crisis experienced in Greece since the end of 2008 and in 2009, the Commission should have declared the payments made by ELGA in 2009 compatible directly on the basis of Article 107(3)(b) TFEU (T-52/12, paras 185-188, emphasis added).

The CJEU has now taken the same line of argument, but has introduced important nuances in determining that

69 ... as the General Court stated in paragraphs 186 and 187 of the judgment under appeal, the Court has also consistently held that, in adopting rules of conduct and announcing by publishing them that they will henceforth apply to the cases to which they relate, the Commission imposes a limit on the exercise of its aforementioned discretion and, in principle, cannot depart from those rules without being found, where appropriate, to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations (judgments in Holland Malt v Commission, C‑464/09 P, EU:C:2010:733, paragraph 46, and Banco Privado Português and Massa Insolvente do Banco Privado Português, C‑667/13, EU:C:2015:151, paragraph 69).

70 However, in the specific area of State aid, the Commission is bound by the guidelines that it issues, to the extent that they do not depart from the rules in the TFEU, including, in particular, Article 107(3)(b) TFEU (see, to that effect, judgment in Holland Malt v Commission, C‑464/09 P, EU:C:2010:733, paragraph 47), and to the extent that their application is not in breach of general principles of law, such as equal treatment, in particular where exceptional circumstances, different from those envisaged in those guidelines, distinguish a given sector of the economy of a Member State.

71      Consequently, first, the Commission may not fail to have regard to Article 107(3) TFEU by adopting guidelines vitiated by an error of law or a manifest error of assessment, nor may it waive, by the adoption of guidelines, the exercise of the discretion that that provision confers on it. Further, when, in the exercise of that discretion, it adopts guidelines of that nature, these must be kept under continuous review for the purposes of anticipating any major developments not covered by those measures.

72      Secondly, the adoption of such guidelines does not relieve the Commission of its obligation to examine the specific exceptional circumstances relied on by a Member State, in a particular case, for the purpose of requesting the direct application of Article 107(3)(b) TFEU, and to provide reasons for its refusal to grant such a request, should the case arise.

73      In the present case, it is not in dispute that, precisely because of the effect of the economic crisis experienced by the Member States, and in particular, the Hellenic Republic, on the primary agricultural sector of the European Union, the Commission exercised the discretion conferred on it by Article 107(3)(b) TFEU by adopting the TCF and then the amended TCF, since both the former and the latter expressly mention that sector.

74      However, the fact remains that although the Hellenic Republic claimed before the General Court that Article 107(3)(b) TFEU ought to be applied directly to the facts of the case, notwithstanding the existence of the rules of conduct set out in the TCF and the amended TCF, it did not argue, in support of that claim, that there were, in the present case, specific exceptional circumstances in the primary agricultural sector concerned ...

75      Indeed, it is apparent from the documents in the file that the material that the Hellenic Republic put before the General Court was intended to establish the existence of a very serious disturbance affecting the Greek economy from the end of 2008 and in 2009, but it was not such as to prove to the requisite legal standard that that economy was faced with specific exceptional circumstances that ought, in this case, to have led the Commission to assess the aid at issue directly in the light of Article 107(3)(b) TFEU (C-431/14 P, paras 69-75, emphasis added).

implications of the cjeu elga judgement

In my view, the implications of the case are two-fold, and they concern, first, the relationship between the Commission's disclosed State aid policy and the discretion that Art 107(3) TFEU gives it; and, second, the interpretation of Art 107(3)(b) TFEU in particular.

Regarding the issue of the extent to which the Commission can deviate from adopted and publicised State aid policy, the CJEU has now made it clear that 'in adopting rules of conduct and announcing by publishing them that they will henceforth apply to the cases to which they relate, the Commission imposes a limit on the exercise of its aforementioned discretion and, in principle, cannot depart from those rules without being found, where appropriate, to be in breach of general principles of law, such as equal treatment or the protection of legitimate expectations' (para 69, emphasis added); and that 'the Commission is bound by the guidelines that it issues, to the extent that they do not depart from the rules in the TFEU ... and to the extent that their application is not in breach of general principles of law, such as equal treatment, in particular where exceptional circumstances, different from those envisaged in those guidelines, distinguish a given sector of the economy of a Member State' (para 70, emphasis added). It is thus plain that 'the Commission may not fail to have regard to Article 107(3) TFEU ... nor may it waive, by the adoption of guidelines, the exercise of the discretion that that provision confers on it' (para 71, emphasis added).

Somehow, the CJEU has made it clear that the Commission cannot hide behind its disclosed State aid policy if there are relevant circumstances that require a specific discretionary decision. This can be far reaching because the CJEU ELGA Judgment clearly opens the door to Member States' claims beyond the boundaries set by the Commission in its disclosed State aid policy, and may be the end of an era of increasing push for box-ticking exercises and for the Commission's reliance on its predetermined conditions for State aid exemption under block exemption regulations. This may well lead to an increase in litigation by Member States, which may be more willing to challenge the Commission's 'self-enforcement' approach in its recently adopted State aid 2.0 strategy [for discussion, see A Sanchez-Graells, “Digging itself out of the hole? A critical assessment of the Commission’s attempt to revitalise State aid enforcement after the crisis” (2016) Journal of Antitrust Enforcement, forthcoming].

The bit that puzzles me is that, in the specific circumstances of Art 107(3)(b) TFEU and its use in the aftermath of the economic and financial crisis, the Commission had not disclosed any policy documents prior to the 2008 TCF and the 2009 amended TCF. Thus, the issue whether the Commission could block any claims prior to the entry into force of those instruments could also have triggered an argument of retroactive application of beneficial discretionary measures, which I would have expected to read in a case like this. Somehow, the issue of the inter-temporal validity of policy and legal instruments in EU economic law continues to raise unresolved issues.

Regarding the specific interpretation of Art 107(3)(b) TFEU, the implications of the ELGA Judgment are mixed. On the one hand, it seems clear that the CJEU recognises that Member States can claim the existence of specific circumstances in its economy, and this would tail up with the drafting of Art 107(3)(b) TFEU, which indicates that the exemption is available for aid aimed to remedy a serious disturbance in the economy of a Member State. On the other hand, though, the CJEU seems to require Member States to demonstrate that those circumstances 'distinguish a given sector of the economy of a Member State' (para 70) and, in the specific case, 'specific exceptional circumstances in the primary agricultural sector concerned' (para 74). This seems problematic on two fronts.

First, it clearly goes beyond the wording of Art 107(3)(b) TFEU, which has no reference to specific sectors of the economy and seems to accept the possibility of exceptional rules aimed at a distressed economy as a whole. One is left with the doubt whether this requirement to have demonstrated specific exceptional circumstances in the agricultural sector derives from the CJEU's unwillingness to quash the Commission's decision--reading the case, it seems clear that the controversy about the existence of sufficient evidence in the file could have been a driver for this outcome--or, on the contrary, it is a purposeful interpretation of Art 107(3)(b) TFEU in a way that reduces its scope. If the latter is the real reason, then the CJEU could have been more explicit in determining the parameters of such narrow interpreation, not least because of the absence of a sufficient volume of case law that interprets this provision.

And, second, it seems to create a significant limitation in the Member States' design of their macroeconomic (emergency) policies in a way that some could argue falls foul of the principle of subsidiarity. In that regard, the CJEU could have been more explicit as to the reasons for the imposition of a requirement of economic intervention in the specific sectors affected by the serious economic disturbance--which, in my view, would be relatively easy to support on the basis of the general requirements of suitability and proportionality applicable to State measures that aim to benefit from exemptions of Treaty prohibitions under EU economic law, generally.

How far can Member States push formal requirements in self-certifications? Will the CJEU give Member States a wake up call? (a propos AG Wathelet in C-46/15 )

In his Opinion of 3 March 2016 in Ambisig, C-46/15, EU:C:2016:137, Advocate General Wathelet explored the limits of the formal requirements that Member States can impose on self-certifications provided by tenderers in public procurement procedures. The case discusses the limits under the 2004 rules of EU public procurement, where the use of self-certification was certainly exceptional. However, it is interesting to consider this case as an opportunity for the Court of Justice of the European Union (CJEU) to give Member States a wake up call in the roll-out of the 2014 EU public procurement rules, where self-certification has pretty much become the rule rather than the exception. Not least, because AG Wathelet has invited the CJEU by engaging in arguments regarding the future rules.

Why will this ruling be relevant in the future?

Under the 2004 rules [specifically, Art 48(2)(a) of Dir 2004/18], economic operators taking part in public procurement procedures were allowed to furnish evidence of their technical abilities by one or more specified means of proof, which included a list of the principal deliveries effected or the main services provided in the past three years. If the contracting authority indicated that it wishes to receive such a list [Art 48(6) Dir 2004/18], evidence of delivery and services provided had to be be given in the form of certificates issued or countersigned by the competent authority that received the services or deliveries or, 'where the recipient was a private purchaser, by the purchaser’s certification or, failing this, simply by a declaration by the economic operator' [Art 48(2)(a)(ii) of Dir 2004/18, emphasis added]. Thus, the use of such self-declaration of private sector experience was foreseen as a mechanism of last resort or escape clause.  This has now been significantly amended in the 2014 rules.

On the one hand, the system now relies in the self-declarations underlying the European Single Procurement Document [ESPD, Art 59 Dir 2014/24 and , see Part IV, Section B, para (1a), fn 40], which allows economic operators to simply declare that they meet the the relevant selection criteria that have been set out by the contracting authority. Only at the request of the contracting authority, and ideally only if they are chosen for the award of the contract, must economic operators furnish certificates and means of proof backing up their self-declaration [Art 59(4) Dir 2014/24]. There is no doubt, then, that the system is one where self-declarations are now the norm.

Moreover, on the other hand, it should be taken into account that '[c]ontracting authorities shall indicate the required conditions of participation ... together with the appropriate means of proof, in the contract notice or in the invitation to confirm interest' [Art 58(5) Dir 2014/24]. Their choice of means of proof is however limited. Contracting authorities shall not require means of proof other than those referred to in Article 60 Dir 2014/24. For our purposes, according to the relevant provision, the requirement remains that evidence of the economic operators’ technical abilities may be provided by one or more of several specified means of proof, which include a list of the principal deliveries effected or the main services provided over at the most the past three years (Part II of Annex XII Dir 2014/24). However, there is no specific reference of the way in which these lists need to be backed up by economic operators. Thus, the rule disputed in Ambisig that where the recipient was a private purchaser, the economic operator must back-up the relevant entry in its experience list 'by the purchaser’s certification or, failing this, simply by a declaration by the economic operator ' is gone.

The question remains, though, how will Member States (or contracting authorities) deal with self-certifications of experience under the new rules at a practical level. It does not seem too far-fetched to assume that they will carry on as usual and require the same types of supporting (self)certifications that they are used to handle under the 2004 rules. Thus, an analysis of the Opinion of AG Wathelet in Ambisig is relevant, not only in relation to the already phasing out 2004 rules, but also for the proper roll-out of the 2014 rules.

The issues surrounding formalities in Ambisig under the 2004 rules

The dispute in Ambisig was multi-dimensional, particularly because the Portuguese interpretation of Art 48(2)(a)(ii) of Dir 2004/18 was rather complex (or rather, exceedingly formalistic) when it came to the possibility of accepting certifications from private purchasers, which was expressed in the following stylised terms in the contract notice of the procurement in dispute: In order to be selected, the candidates must submit the following application documents: ... a declaration by the client on headed, stamped paper confirming ... in accordance with the model declaration in Annex ... to this contract notice. The declaration must bear a signature certified by a notary, lawyer or other competent entity, specifying the capacity of the person signing.

This raises many issues, particularly in relation with the impossibility to provide a mere self-declaration by the economic operator itself (which is no longer a legal issue under the 2014 rules). However, for the purposes of assessing the relevance of this case for the future, the relevant question before the CJEU, and towards which AG Wathelet's Opinion provides an interesting answer is as follows:

Must Article 48(2)(a)(ii), second indent, of Directive 2004/18 be interpreted to the effect that it precludes the application of rules laid down by the contracting authority, which, on pain of exclusion, require the private purchaser’s certification to contain authentication of the signature by a notary, lawyer or other competent entity?

In my view, for the reasons explained above, this will apply mutatis mutandi to any requirements applicable to certificates to be provided as back of an ESPD self-declaration of experience under the 2014 rules.

Interestingly, after engaging in another tripping exercise of law and language where a literal analysis of several language versions of the contested provision are compared and contrasted without reaching any firm position on its proper interpretation (for a recent previous case of such analysis, on that occasion by the General Court, see here), AG Wathelet considers the following:

62. First of all, the Court has consistently held that Article 48 of Directive 2004/18 establishes a closed system which limits the methods of assessment and verification available to contracting authorities and, therefore, limits their opportunities to lay down requirements.

63. The Court has also stated that even within the framework of an open system ... contracting authorities’ freedom is not unlimited and the aspects chosen must be ‘objectively such as to provide information on such standing … without, however, going beyond what is reasonably necessary for that purpose’.

64. The same considerations apply, a fortiori, to the requirements laid down in the closed evidential system under Article 48 of Directive 2004/18. In my opinion, requiring authentication of the signature of a private purchaser attesting to a delivery effected or a service provided by an economic operator who has applied for a contract goes beyond what is necessary to prove the technical ability of the operator in question and is excessively formalistic when compared to the straightforward declaration by the economic operator, which is the subsidiary form of evidence permitted under the second indent of Article 48(2)(a)(ii) of Directive 2004/18.

65. If the contracting authority has concerns about the veracity of the document submitted to it, it may also, in my view, request additional information to demonstrate the authenticity of the certification provided. Indeed, as part of the contextual analysis, it must be recalled that Article 45(2)(g) of Directive 2004/18 makes it possible to exclude from the contract any operator who ‘is guilty of serious misrepresentation in supplying the information required’ (Opinion in C-46/15, paras 62-65, references omitted, emphasis in italics in the original, emphasis in bold added).

AG Watheler's glimpse into the future

Remarkably, after carrying out a historical analysis of the way in which the 2004 rules came to have their wording, AG Wathelet uses the 2014 rules as an interpretation tool. Beyond the time-consistency (or not) of such an approach to statutory interpretation, his analysis includes policy arguments around the following considerations:

73. ... Directive 2014/24 ... goes even further in the sense of reducing evidential formalities by removing all references to certification by the purchaser.

74. From now on, Article 60(4) of that directive — which replaces Article 48(2) of Directive 2004/18 — simply provides that ‘evidence of the economic operators’ technical abilities may be provided by one or more of the means listed in Annex XII Part II, in accordance with the nature, quantity or importance, and use of the works, supplies or services’.

75. Under Annex XII Part II(a)(ii) of Directive 2014/24, the means of evidence attesting to economic operators’ technical abilities are ‘a list of the principal deliveries effected or the main services provided over at the most the past three years, with the sums, dates and recipients, whether public or private, involved. Where necessary in order to ensure an adequate level of competition, contracting authorities may indicate that evidence of relevant supplies or services delivered or performed more than three years before will be taken into account’. The need for this list to be accompanied by a certification from the purchaser has therefore disappeared.

76. Even though Directive 2014/24 does not apply to the dispute in the main proceedings, this new directive, which repeals Directive 2004/18, is relevant in that it expresses the current intention of the EU legislature. It may therefore be of assistance in ascertaining the current meaning of an earlier, similar provision, provided, however, that such interpretation is not contra legem.

77.  In the present case, it seems to me that Directives 92/50 and 2014/24 confirm the EU legislature’s continuing intention not to make evidence of the technical ability of an economic operator subject to any specific formality and do so in a way that does not conflict with the wording of the applicable provision.

78. In other words, viewed in its context and from a historical perspective, the second indent of Article 48(2)(a)(ii) of Directive 2004/18 imposes no other requirement than the assurance or confirmation, by the purchaser, that the service on which the economic operator relies with a view to securing the contract was actually provided (Opinion in C-46/15, paras 73-78, references omitted, emphasis added).

I am not sure that AG Wathelet's consideration in para 75 would necessarily be the natural interpretation of Annex XII Part II(a)(ii) of Directive 2014/24, because contracting authorities may well be tempted to consider that the Directive does not actually exclude any mechanisms of certification from the purchaser (it simply just not foresees them) and, in any case, they could be tempted to exercise their prerogative to 'invite economic operators to supplement or clarify the certificates received' [Art 59(4) in fine Dir 2014/24] by requesting similarly formalised (private) purchaser certifications. Thus, his interpretation, which I personally very much share, runs against that possibility and an explicit endorsement by the CJEU would be most welcome.

In any case, what is clear is that, in AG Wathelet (and my) opinion, the 2004 and ad maiorem the 2014 EU public procurement rules preclude 'the application of rules laid down by a contracting authority which, on pain of exclusion, require the private purchaser’s certification to bear a signature certified by a notary, lawyer or other competent entity'. We can just hope that the CJEU will endorse this approach.

State aid in rescue of firms in difficulty, merger control and patent litigation (T-79/14): quite a mix

In its Judgment of 1 March 2016, Secop v Commission, T-79/14, EU:T:2016:118, the General Court (GC) has ruled on the procedural rights of interested parties in a State aid case (for discussion of related case law in this area, see here). The Secop Judgment is interesting because it includes some analysis of the similarities and differences of the rights of interested (third) parties for the purposes of, on the one hand, State aid control (Arts 107-108 TFEU and Reg 2015/1589 and its predecessor Reg 659/1999) and, on the other, merger control (Reg 139/2004) under EU law.

The analysis in the Secop case is complicated by two elements. First, by the fact that the State aid was given under the guidelines on rescue and restructuring aid (in their 2004 version) and, because parts of the restructuring plan implied the acquisition of assets of the financially distressed group (ACC) by a competitor (Secop), this required merger control clearance from the European Commission. Second, the analysis is complicated by the subsequent emergence of a patent litigation between the two industrial conglomerates involved in both State aid and merger procedures (ie between the 'surviving' parts of the distressed ACC group and Secop as the acquirer of some of its assets), which have an open dispute as to whether a valid licence agreement for the use of proprietary patented technology was entered into as part of the rescue plan. This dispute has led to two sets of proceedings concerning those patents, respectively before the German and Italian courts. It is interesting to look at the case and the GC's reasoning.

background of the case

The case concerned two industrial conglomerates: ACC and Secop. ACC was an industrial conglomerate with an Italian holding company and a number of subsidiaries at different levels. For the purposes of the case, it is only necessary to note that HCH was the holding company of the group, ACC Compressors was the operating subsidiary of first level, and ACC Austria was an operating subsidiary of second level. Following financial difficulties within the ACC group, all its subsidiaries and the holding company itself were eventually declared insolvent. As the GC summarises,  'following a call for tenders launched in the context of ACC Austria’s insolvency proceedings, a purchase agreement for the assets of ACC Austria was signed between [Secop] ... and ACC Austria’s insolvency administrators. That contract was made subject to the suspensive condition of a declaration by the European Commission that the transaction was compatible with the internal market' (para 3).

In order to cover the liquidity needs of the ACC group and to allow it to continue its activities pending the preparation of a restructuring or liquidation plan, Italy gave ACC Compressors (the parent company ACC Austria) a State guarantee of 6 months for credit lines in support of liquidity needs of a total amount of EUR 13.6 million. Subsequently, the European Commission decided not to raise objections to the acquisition of ACC Austria’s assets by Secop (see Case No COMP/M.6996 - Secop/ ACC Austria, the ‘merger decision’), thereby validating the contract between Secop and ACC Austria's insolvency administrators. Shortly afterwards, the Commission also decided not to raise objections to the State aid given by Italy to ACC Compressors (see Case No COMP/SA.37640 - Rescue aid for ACC Compressors S.p.A. - Italy, the 'contested State aid decision').

What I find interesting in the case is that the challenger of the State aid (Secop) is the beneficiary of the asset disposal under the merger procedure, which was in turn opposed by ACC Compressors as the parent company of the 'traded subsidiary' under insolvency administration (ACC Austria). Thus, Secop and ACC, as industrial conglomerates, hold opposite interests in the merger and the State aid cases.

It would seem that, by aiming to enforce the exclusive rights deriving from the patents acquired together with ACC Austria's assets against the former parent company (ACC Compressors), as well as challenging the State aid given by the Italian Republic to that same company, Secop is clearly engaging in an all-out strategy to eliminate a competitor at at time when it faces financial difficulties (which would nullify the Italian intervention to rescue it). Conversely, it could also seem that by selling assets linked to specific patents and claiming to have retained a right of use of the patents (through the entering of a valid licence agreement, or otherwise), and at the same time receiving State aid from Italy, ACC could be trying to obtain dual support in times of financial difficulty--ultimately at the expense of a competitor (Secop) that acquired assets at a time of distress. These issues and considerations are not particularly clear in the Secop Judgment, but my intuition is that they influenced the outcome of the case.

In particular, the GC's Secop Judgment refers to the action by Secop seeking the annulment of the State aid received by ACC Compressors after the transfer of ACC Austria's assets took place. For the purposes of our discussion, the two main arguments submitted by Secop are that: 1) the European Commission should have taken into account that, following the transfer of ACC Austria's assets, ACC Compressors would not be legally entitled to keep on using certain patents now held by Secop, which would prevent ACC from carrying on with its industrial activity and, ultimately, infringe the 2004 guidelines for rescue and restructuring aid; and 2) that it is discriminatory for ACC Compressors to have been able to oppose the acquisition of ACC Austria's assets by Secop in the framework of the merger control procedure (where ACC Compressors was recognised as an interested party), whereas Secop has been denied the equivalent possibility in the State aid case because the Commission decided not to open a formal investigation. The discussion focuses on each of these arguments in turn. 

Arguments regarding the use of patents

On the substance of the dispute, primarily, Secop contends that 'following the disposal of ACC Austria’s assets, the patents at issue can no longer be used by ACC Compressors, which must, therefore, be considered to be a firm emerging from the liquidation of an existing firm and, consequently, a newly created firm ... failing the ability to use the disputed patents, ACC Compressors does not have sufficiently developed structures to be eligible for rescue aid' (para 30). This argument concerns point 12 of the 2004 guidelines for rescue and restructuring aid, which indicated that 'a newly created firm is not eligible for rescue or restructuring aid even if its initial financial position is insecure. This is the case, for instance, where a new firm emerges from the liquidation of a previous firm or merely takes over that undertaking’s assets. A firm is in principle considered to be newly created for the first three years following the start of operations in the relevant field of activity. Only after that period will it become eligible for rescue or restructuring aid …’. The GC dismisses this argument on the following grounds:

35 First, ACC Compressors and ACC Austria were initially part of one and the same undertaking in that the two companies produced the same products, on two different sites, but under the same economic management. Upon the transfer of ACC Austria’s earning assets ... it is true that the volume of activity of this firm had been reduced, since the activities corresponding to the production site located in Austria no longer formed part of it. Thus, the undertaking to which the contested aid ... was granted comprised only ACC Compressors’ earning assets. Nevertheless, ACC Compressors managed the undertaking concerned, both before and after the transfer, and ... it carried on ... albeit in a reduced fashion, the production and marketing of compressors, which was the traditional activity of that undertaking. Therefore, contrary to the applicant’s claims, it was the same undertaking as that which had been making compressors since 1960.

36 Second, ... in the situation in which the assets are transferred, it is not the entity formed of the economic activities retained by the transferor company that is relevant, for the purpose of the classification ‘newly created firm’ but the entity made up of the economic activities of the transferee company, within which the transferred assets were integrated. It is also normal and reasonable for a firm in difficulty to dispose of certain assets and focus its activity on its core business, whether from a geographical or sectoral perspective, in order to improve the chances of economic recovery. Point 39 of the Guidelines thus expressly envisages the divestment of assets as a means of preventing undue distortions of competition, in the context of the examination of a restructuring plan for the purpose of granting restructuring aid. It would be contrary to the overall purpose of the Guidelines for such a sale of assets to lead systematically to the exclusion of the transferring company from the benefit of rescue aid.

37 The fact that a legal dispute over the ... patents is under way between ACC Compressors and [Secop] cannot lead to a different assessment.

38 Indeed, at the time the contested [State aid] decision was adopted, the Commission could take into account only the factual and legal situation of ACC Compressors as it was at the date of that adoption; at the most, it had to take into account the foreseeable evolution of that situation, for the period for which rescue aid was granted, namely, six months ... However ... at the date of the adoption of the contested [State aid] decision, ACC Compressors was still using the disputed patents to manufacture compressors ... and there was nothing to indicate that this situation could have changed in the six following months.

39 In addition, the existence of the patent dispute was not relevant for the purposes of assessing the compatibility of the contested aid with the internal market. It is true that, had [Secop] won the case in the patent dispute, it would have been conceivable that ACC Compressors could no longer have used the disputed patents and would, accordingly, have had to cease production of a significant range of compressors ... However, this also depended on the question of whether, after a possible defeat in the courts, ACC Compressors could obtain a user license for those patents. Moreover, it could not be ruled out from the outset that it could offset the possible disposal of its activity producing ... compressors against the development of other lines or activities. In any event, it must be considered that it was not for the Commission to anticipate the outcome of the patent dispute, pending before the national courts at the date of adoption of the contested decision, by substituting its assessment for that of the competent courts, seized of that dispute.

40 Finally, it is appropriate to reject the applicant’s argument ... that the Commission ought to have taken into account that, in the context of the merger procedure, ACC Compressors itself had indicated that, if [Secop] were to purchase the assets of ACC Austria, it could not pursue its production of compressors, since it would not then be able to use the disputed patents any longer.

41  In the merger decision, the Commission considered ACC Compressors’ claims and found that, given, in particular, the patent dispute between the two parties, it was not inconceivable that an agreement on a licence should be concluded between them. The Commission had therefore already found, in the merger proceedings, that ACC Compressors’ claims that it could not pursue the production of compressors when there was no licence for the disputed patents were hypothetical (T-79/14, paras 35-41, emphasis added).

I find the second part of the GC's position difficult to share. In particular, I struggle to understand why the Commission did not require the granting of a sufficient licence as a condition for the clearance of the merger. This would have avoided all issues leading to the existing patent litigation and, in the specific circumstances of the State aid case, it would have also allowed for the rescue and restructuring plan to avoid a major risk of discontinuation of industrial activity by the beneficiary of the aid, which would have seemed desirable.

It is clear that the GC cannot review or alter the merger decision when reviewing the contested State aid decision, but it seems strange that it shows such deference to the Commission's argumentation in the merger decision, which is very weak. Indeed, the Commission's considerations (as presented by the GC in para 40 and 41) are equally hypothetical and rather counterintuitive--why would the companies reach a licence agreement now, when they could have included it in the negotiations leading up to the contract for the purchase of the assets? Were there any impediments for ACC Compressors to obtain that licence via the insolvency administrators of its subsidiary ACC Austria.

Somehow, it seems that the Commission was cutting corners in its analysis during the merger control procedure, particularly by failing to impose a behavioural remedy that could certainly have dispelled uncertainties in the market prognosis. Then, it seems once again too lenient for the GC to allow the Commission to also cut corners in the State aid case by refusing to open a formal investigation, where it would have had to take Secop's arguments into consideration and dispose of them in a more robust manner. 

Arguments regarding the asymmetrical access by interested parties to merger and State aid procedures

On the procedural side of the dispute, in short, Secop submits that 'it has not had the opportunity to present its views in the State aid procedure, initiated for the benefit of ACC Compressors, in order to oppose the grant of the contested aid to the latter ... On the other hand, ACC Compressors has had the opportunity, as part of the merger procedure, to oppose the takeover of ACC Austria’s assets by [Secop]. In its view, it is a violation of the principle of equal treatment, since the competitive relationship between the ACC group and the Secop group ought to have been assessed in both procedures' (para 61). The GC also dismisses this argument, following this reasoning:

62 ... the principle of equal treatment, as a general principle of EU law, requires comparable situations not to be treated differently and different situations not to be treated in the same way, unless such treatment is objectively justified ...

63 ... both in the context of a State aid procedure and in a merger procedure, the competitors of the firms at issue have no right to be automatically associated with the procedure, and this is particularly so in the context of the initial phase of the procedure, in the course of which the Commission makes a preliminary assessment of either the aid at issue, or the notified merger.

64 Indeed, first, as far as concerns State aid ... It is only in connection with the [the actual investigation stage referred to by Article 108(2)], which is designed to allow the Commission to be fully informed of all the facts of the case, that the FEU Treaty imposes an obligation, for the Commission, to give interested parties notice to submit their comments ... It follows that interested parties, other than the Member State concerned, including competitors of the aid recipient, such as the applicant in the present case, have no right to be associated with the procedure in the preliminary examination stage.

65 Secondly, as regards mergers, ... the Commission may hear — on its own motion — natural or legal persons other than the notifiers and other parties to the proposed merger, but it is obliged to do so only on the two conditions that those persons have a sufficient interest and that they make such a request ...

66 ... ACC Compressors’ position in the merger procedure was not only that of a competitor of [Secop], the undertaking notifying the merger, but also one of an ‘interested party’ ... in that, as ACC Austria’s parent company, all assets of which were to be sold, it had to be assimilated to the vendor of those assets and, therefore, had the status of party to the proposed merger. However, unlike its competitors ... interested parties have the right to express their view at all stages of the procedure, including the preliminary phase ...

67 It must therefore be stated that the situation of the applicant, under the State aid procedure that led to the contested decision, is different from that of ACC Compressors under the merger procedure that led to the decision on the merger, in that ACC Compressors had a right to be heard before the adoption of that latter decision. Consequently, the fact that the Commission did not, before adopting the contested decision, give the applicant the opportunity to state its point of view does not infringe the principle of equal treatment (T-79/14, paras 62-67, emphasis added and references to further case law have been omitted).

I find this analysis too formalistic and, in my view, the GC has ultimately failed to engaged with the argument on discrimination at a substantive level. The recognition of specific rights to interested parties in merger proceedings is not a useful comparator in this case. Rather, the GC could (should) have focused on the different access to the Commission given to competitors in merger cases and in State aid cases, particularly at the initial stage of proceedings, and assessed from a functional perspective whether that difference makes sense (ie is justified and proportionate). In my view, it is not. 

More importantly, the Secop Judgment moves in the same direction as a line of case law where the GC is making it increasingly difficult for competitors to challenge State aid decisions. This is very counter-productive for the consolidation of a State aid 2.0 control system, where the Commission needs to increasingly rely on market intelligence provided by third parties and market complaints raised by competitors. This line of case law will, ultimately, consolidate the ineffectiveness of the EU State aid rules [as discussed in detail in A Sanchez-Graells, “Digging itself out of the hole? A critical assessment of the Commission’s attempt to revitalise State aid enforcement after the crisis” (2016) Journal of Antitrust Enforcement, forthcoming]. This is an undesirable development of EU economic law in this area. 

New Paper: "Exclusion of Economic Operators from Public Procurement Procedures. A Comparative View on Selected Jurisdictions"

I have uploaded a new paper on SSRN, entitled: 'Exclusion of Economic Operators from Public Procurement Procedures. A Comparative View on Selected Jurisdictions'. In this paper, I focus on issues that may be relevant for Member States transitioning from the exclusion rules under Directive 2004/18 towards those in Directive 2014/24. 

In the more elaborate terms of the abstract:

This chapter takes a comparative view on the rules applicable to the exclusion of economic operators from public procurement procedures covered by the EU rules. It focuses on seven Member States (France, Germany, Italy, Portugal, Romania, Spain and the United Kingdom) and in their law, administrative and judicial practice under the framework created by Directive 2004/18. When possible, the chapter also looks into the likely changes that the transposition of Directive 2014/24 will bring about, particularly in those of the covered jurisdictions that have been quicker to move towards its transposition (namely, France, the United Kingdom and, to some extent, Germany).

The chapter pays attention to both substantive and procedural issues regarding the exclusion of economic operators. Given that the 2004 framework was limited to substantive provisions (ie grounds for exclusion included in art 45 dir 2004/18), one would expect to see convergence on substantive issues, as well as a relatively high level of variety in both the procedural setting, the legal mechanisms and the actual practice of exclusion of economic operators. This chapter tests this intuition by looking in detail at several substantive and procedural regulatory choices adopted by the Member States, mostly under the 2004 framework. It then reflects on the implications of those findings for the implementation of the revised 2014 framework for the exclusion of economic operators from procurement procedures. The chapter submits that for discretion-oriented Member States the main challenges will revolve around compliance with the Charter of Fundamental Rights of the European Union, whereas for procedure-oriented Member States the challenges will lie in trying to gain advantage of the flexibility afforded by the new rules in Directive 2014/24, as well as to avoid liability for the imposition of unjustified requirements on economic operators.

As always, comments most welcome. The full citation of the paper is A Sanchez-Graells, 'Exclusion of Economic Operators from Public Procurement Procedures. A Comparative View on Selected Jurisdictions', in M Burgi & M Trybus (eds), Qualification, Exclusion and Selection in EU Procurements, vol. 7 European Procurement Law Series (Copenhagen, DJØF, 2016) forthc. Available at SSRN: http://ssrn.com/abstract=2739363.

The Legal Status of the Agreement of the Heads of State or Government (re Brexit)

By Dr Phil Syrpis, Reader in Law (University of Bristol Law School).

(c) http://arthur.co.uk/

On 19 February 2016, sometime well after breakfast, the members of the European Council reached an agreement concerning a new settlement for the United Kingdom within the EU. The Government was quick to proclaim that the UK’s ‘special status’ in ‘a reformed European Union’ amounts to ‘the best of both worlds’. David Cameron’s ‘hard-headed assessment’ is that the UK will be stronger, safer and better off by remaining inside this reformed European Union, and so he is recommending that the British people vote to ‘remain’ in the in-out referendum on 23 June.

The substance of the reforms, which focus on economic governance, competitiveness, sovereignty, and welfare and free movement, is and will continue to be much debated. This contribution instead focuses on a more technical question - the legal status of the deal – a subject which is now said to be creating ‘open warfare’ in the Tory party.

Let me attempt to distil the question. To do so I focus on one key aspect of the Agreement; the agreement to restrict the social benefits payable to migrants. In this area, there is pre-existing Court of Justice case law interpreting the provisions of the Treaties and the relevant secondary legislation. Many governments have argued that the case law goes too far, and that it creates threats to the sustainability of social security systems. This agreement amounts to a further attempt to limit the rights which will be available for migrants; specifically in the UK. It includes elements relating to the interpretation of current EU rules, and proposes changes to EU secondary legislation. The specific question I am addressing here is whether the Agreement will be successful in influencing the Court's interpretation of the Treaties; others have already commented on the extent to which we can be sure that the legislation (and future Treaty change) envisaged in various parts of the Agreement will be adopted.

The Heads of State or Government certainly appear to have intended to attach the greatest possible legal significance to their Agreement. They assert that ‘the content of the Decision is fully compatible with the Treaties’. Its intent is to clarify ‘certain questions of particular importance to the Member States so that such clarification will have to be taken into consideration as being an instrument for the interpretation of the Treaties’ (emphasis added). The UK Government is at pains to make the same point. In its White Paper it includes a section assuring us that the agreement is ‘legally-binding’ (see paras 2.128-2.145). It makes the points that the Agreement is legally binding under international law; and that it will be registered as a Treaty with the United Nations if the British people vote to remain in the EU. Most pertinently, it argues that agreements between Member States on the meaning of the EU Treaties are required to be taken into account by the Court of Justice when interpreting the Treaties in the future (here it refers to the Court’s judgment in Rottman). It also refers to a note by Professor Sir Alan Dashwood which suggests that there is nothing in the Agreement ‘likely to encounter the disapproval of the CJEU’, and no proposed amendments to EU legislation which would ‘run a serious risk of being struck down by the CJEU’.

I have written (in the 2015 Common Market Law Review) on the relationship between EU primary and secondary law, essentially asking a question which resonates with public lawyers – whether the adoption of secondary legislation is able to influence the Court's interpretation of the Treaties. I framed the discussion in the following way: ‘Most lawyers would, at first blush, assume that there is a simple hierarchical relationship between primary and secondary law, that primary law does and should take priority over secondary law, and that the adoption of secondary legislation should not affect the way in which primary law is interpreted. Political scientists on the other hand, might expect the passage of legislation to have a greater impact on the case law of the Court. The somewhat confused reality which this article exposes, illuminates the tensions between the judiciary and the legislature in the EU, and between what may be termed the “legal” or “political” nature of the EU’s constitutional settlement.’ My main conclusion was that ‘it is almost impossible to predict with any certainty what effect the passage of secondary legislation will have on the pre-existing case law of the Court on the interpretation of primary law’.

The issues raised by the Agreement are, notwithstanding the claims made for its status, similar to those raised by the passage of secondary legislation. The extent to which the political institutions are, and ought to be, able, to tie the hands of the Court remains a matter of acute academic controversy. I argue that the Court should be more responsive to the interventions of the political institutions; and that it ‘should strive to maintain clearer standards as regards not only the intensity of judicial review, but also the way in which its arsenal of interpretative strategies are deployed and combined’.

Any uncertainty of course plays into the hands of the ‘leave’ campaign. It is an unavoidable feature of all constitutional systems that it falls to courts to assess the legality of, and to interpret, the interventions of the political institutions with reference to constitutional texts; and so certainty is, for better or worse, unattainable. But, like Sir Alan Dashwood, I am confident that the Court will not attempt to unpick the Agreement of the Heads of State. In its case law relating to, for example, economic and monetary union and citizenship (most recently last week…), the Court has shown itself increasingly willing to embrace political reality and endorse the choices of the Member States in areas of high political salience. This Agreement represents an unambiguous attempt by the political institutions at the highest level to influence the Court’s interpretation of the Treaties. It is unusually clear and forthright. And while the legal obligation on the Court is indeed no stronger than an obligation to take the political signal ‘into account’, the mind of the Court should be concentrated. In its future case law, it will be faced with a stark choice – either choose an interpretation of the Treaties which is in conformity with the Agreement and endorse the new restrictions; or precipitate huge constitutional conflict within the EU by insisting on interpreting the Treaties in a manner antithetical to the Agreement. It only has one realistic choice. 

The saga of Mr Brouillard and the EU Courts (F-148/15, T-420/13, C-298/14 ... and C-590/15 P)

By Dr Andrea Gideon (NUS Singapore and University of Liverpool).

Mr Brouillard has indeed kept the EU Courts busy in the last couple of years. Apparently keen to find his dream job, this Belgian national legally trained in France applied to the Court as a lawyer-linguist in an EPSO competition, he tried to become a linguist for the Court of Justice of the European Union (the CJEU, or the Court) through another company tendering in a procurement procedure of the Court, and he applied to become a legal secretary at the Belgian Cour de Cassation.

Unfortunately for Mr Brouillard, he was rejected every time due to his vocational master’s degree by the University of Poitiers in France (which he received following completion of a correspondence course in law, economics and management, private law, lawyer-linguist specialism) not being deemed a sufficient qualification for the positions in question.

Mr Brouillard, determinedly, initiated proceedings against the decisions in each case [cases Brouillard v Commission (F-148/15, EU:F:2016:4, only in French), Brouillard v Court of Justice (T-420/13, EU:T:2015:633, only in French) and Brouillard (C‑298/14, EU:C:2015:652) respectively]. The ‘saga of Mr Brouillard’ brings to light some inconsistencies in the EU Courts’ approach to the assessment of (university) qualifications in different settings, which is the focus of this comment.  

F-148/15 Brouillard v Commission is still pending. So far only the interim measure applied for by Mr Brouillard that, while the case is pending, he would be allowed to the next stage of the concours has been rejected.

C‑298/14 Brouillard adopted a preliminary ruling in the case where Mr Brouillard challenged his rejection from the competitive procedure to become a legal secretary at the Belgian Cour de Cassation. The ruling of the CJEU in this case was in itself not very surprising. The Court reaffirmed that Article 45 TFEU applies to situations where a national of the Member State in question (here a Belgian national participating in a selective procedure in Belgium) seeks recognition of a qualification he has obtained abroad. Yet, the CJEU further stated that such a situation cannot fall under Article 45(4) TFEU since the person in question still is a national. The Court then set out that ‘legal secretary’ is not a regulated profession and, therefore, only Article 45 TFEU rather than Directive 2005/36/EC applies. Finally, the Court restated the principle in Vlassopoulou (C‑340/89, EU:C:1991:193) by deciding that

Article 45 TFEU must be interpreted as meaning that it precludes […] the selection board for a competition for recruitment […] from making […] participation contingent on the possession of diplomas required by the legislation of that Member State or the recognition of academic equivalence of a master’s degree awarded by the university of another Member State, without taking into consideration all of the diplomas, certificates and other qualifications, and the relevant professional experience of the person concerned, by comparing the professional qualifications attested by those qualifications with those required by that legislation (C-298/14, para 67, emphasis added).

Therefore, the CJEU indirectly (but quite clearly) required the Belgian court to remedy the rejection of Mr Brouillard from the selective process to become a legal secretary (or at the very least, to have his application reassessed) on the basis that his master’s degree was not the only relevant qualification.

Interestingly, though, the Court did not seem to like the taste of its own medicine when it came to Mr Brouillard’s intent to provide the Court services as a freelance lawyer linguist. Indeed, in its own procurement decision, the Court has not held itself to the standard expected of the Member States. Instead the Court required Mr Brouillard to be excluded from a tender for the provision of translation services for not having completed a full legal education of at least five years (his master's was only partially legal and included other content, such as linguistic training). Remarkably, the Court did so without checking if other qualifications and professional experiences could be regarded equivalent.

These issues emerged in T‑420/13 Brouillard v Court of Justice (i.e. the judgment on the challenge of that decision) where the General Court (GC) lengthily establishes that the master’s degree Mr Brouillard holds is in itself not equivalent to a full five year law study, without taking anything else into consideration (para 71 seq). The GC justifies this difference in approach by saying that none of the applicant’s arguments were able to demonstrate the existence of an obstacle to the freedom of workers or freedom of establishment and that therefore it is not appropriate to apply the Vlassopoulou case law. In particular, he had not been rejected because he graduated from a French university, but because his degree did not represent five years of (exclusively) legal study. In any event, an argument that additional qualifications had to be taken into account (à la C- 298/14 Brouillard) should also be dismissed because the Court did not have the information needed to examine equivalence through other qualifications and experiences (para 96).

Yet, national authorities seem to be held to a different standard because they still have to take other degrees and experiences into account cumulatively and offer the possibility of an equivalence test, without being able to say that they did not have the information or that the applicant did not prove a hindrance to his free movement rights. This seems to indicate an internal inconsistency in the Courts’ approach to fundamentally the same issues (how to recognise or give value to a specific university qualification) in different settings.

In the eyes of the GC, the difference potentially lies in the fact that T‑420/13 Brouillard concerned a procurement decision and not rules applicable to the general access to a profession, since it emphasises the fact that decisions on professional qualification are more complex for contracting authorities:

La comparaison des diplômes effectuée par le système de la directive 2005/36 étant réalisée aux fins de l’accès à certaines activités règlementées dans les différents États membres, une telle appréciation ne saurait être confondue avec l’appréciation complexe, par un pouvoir adjudicateur, de la valeur universitaire respective des titres obtenus dans les différents États membres, dans le but de garantir que les personnes qui seront engagées dans la prestation des services faisant l’objet du marché disposent de la capacité technique suffisante (T-420/13, para 81, emphasis added).

However, the Court omits to explain why this is more complicated for a contracting authority.

One could potentially argue that professional recognition in order to gain access to a profession in another Member State on a more permanent basis makes it more proportionate to justify an extensive examination of the qualifications of an individual than the more temporary nature of a public contract. However, the Court has held a similar standard applicable in the area of freedom to provide services in the recent case X-Steuerberatungsgesellschaft (C-342/14, EU:C:2015:827). In this case a tax service company established in the UK with seats in the Netherlands and Belgium wanted to provide a tax consultancy service for a tax return to a German customer, but was hindered by the tax authorities since it had not been authorised under German law. The German law made authorisation dependent on certain qualifications. Service providers from other Member States could, however, seek such authorisation if they were providing temporal services in Germany, but only if that involved physical travel of the provider to Germany. In cases such as this, where only the service travelled, but neither the recipient nor the provider, this was not possible.

The Court thus established an infringement and, while regarding fear of tax evasion as well as consumer protection as legitimate justification grounds, it did not find this restriction proportionate here because there was no possibility of authorisation at all in such cases (i.e. did not provide any possibility of the qualification obtained by the providers to be ‘accorded its proper value and being duly taken into account’). In so far this case is following the Vlassopoulou case law despite it only concerning short term services. X-Steuerberatungsgesellschaft would thus lead any argument that the length of the services would justify a difference ad absurdum, since in this case the service provided was a single tax return.

Overall, it seems difficult to conceive why an examination of equivalence should be less burdensome for a national authority than for the Court (acting as a contracting authority), which, by its very nature as a European institution filled with lawyers from various Member States, seems in fact more likely to be able to assess equivalence of qualifications. Furthermore, on a more general level, one might just wonder why the Court does not use the opportunity to set a positive example by applying its own case law. However, the Court still has the opportunity to do just that because, not content with the General Court’s decision, Mr Brouillard has brought an appeal before the Court (case Brouillard v Court of Justice, C-590/15 P). And so the saga continues …

Interesting Procurement Paper (Li & Xu, 2016): A Blueprint for Variable Remuneration of Public Procurement Officers? A Warning against some types of Centralised Procurement?

I have just read the paper by D Z Li and M Xu, 'Competition in Procurement Auctions with Corruption' (February 2, 2016), which assesses an interesting scenario of competition in public procurement tenders where the person in charge of running the procedure (the procurement officer, or 'bureaucrat', in their terminology) can require bribes from winning bidders, and where those bribes can be proportionate to the final value of the contract awarded.

Their paper is interesting because it fleshes out the incentives that a bureaucrat that expects to obtain a rent at the end of the procedure has, both in terms of affecting the number of bidders (to reduce it), and the level of disclosure of information (to conceal information in order to cover the corrupt practice). My personal intuition is that their insights should be useful to consider non-corrupt scenarios involving buyer rents other than bribes and, in particular, the introduction of bonuses or other variable retribution mechanisms for public buyers, which could well create the same incentives (as discussed below). Moreover, I find the paper thought-provoking because (legitimate) kick-backs are used to finance the activities of central purchasing bodies, which raises issues of their impact on social welfare if they behave like individual bureaucrats would (as also discussed below).

The paper and its model

As they explain in their abstract:

We study the effects of corruption on equilibrium competition and social welfare in a public procurement auction. A bureaucrat runs the auction on behalf of the government. He invites firms into the auction at positive costs, and may request a bribe from the winning firm afterward[s]. We first show that, in the absence of corruption, the bureaucrat invites more firms than social optimum under quite standard assumptions. Secondly, the effects of corruption on competition and social welfare vary across different forms of bribery. In the case of fixed bribe, corruption has no effect on equilibrium competition, yet [it does] induce social welfare loss due to the distortion cost of increased public spending. In the case of proportional bribe, the corrupt bureaucrat will invite less firms into the auction, which may result in Pareto-improving allocation in equilibrium. Finally, we also show that information disclosure may consistently induce more firms to be invited, if compared with the case of no information disclosure, no matter [whether] there is corruption or not.

I find some of the assumptions and insights of their paper particularly thought-provoking. They (implicitly) base their model on the existence of an agency relationship between the bureaucrat and the government, as well as between the government and society at large [for discussion, see here and here and, in Spanish, here]. This makes the model interesting from the perspective of the social externalities that improperly designed public procurement models can create, particularly if they allow public buyers to pursue (self-serving) goals that do not align with promotion of social welfare.

In their paper, Li & Xu explain that 'the government is modelled as a government division ... who cares about its own procurement pay-off rather than the overall social welfare' (p. 2). This can lead to designing the procurement process in a manner that invites too many interested bidders because 'the optimal number of firms that maximizes the government's pay-off is larger than the efficient number of firms that maximizes social welfare' (ibid), and due to the fact that 'the government prefers [a] higher level of competition in the procurement process' than would be socially efficient (p. 3). The undesirability of the excessive number of bidders is mainly derived from the costs they incur in order to participate in the tender, which are wasted for all those that did not stand a real chance of winning the contract (or, indeed, for all except the winning bidder).

The main insight of their paper is that, while the existence of a fixed bribe hurts both the government and society at large due to the higher cost of procurement, the existence of a proportionate bribe may 'increase social welfare [by inducing an efficient number of firms, or just one firm, to be invited], yet it hurts the government, as the government prefers higher level of competition in the procurement process' because that reduces its (private) procurement cost and imposes the externality derived from excessive tendering costs assumed by the disappointed private bidders [for discussion on the absence of consideration of these costs in economic surveys supporting recent public procurement law reforms in the EU, see here].

Their insight is based, among other elements, on the 'standard assumption for procurement auctions that firms' cost distribution is of decreasing reversed hazard rate (DRHR)' (p. 1, for an explanation of the reversed hazard rate and how it operates, see here). As Li & Xu explain, 'The intuition behind this ... is that increasing competition will gradually squeeze out the expected rent of the winning firm. Furthermore, the expected rent converges to zero when the number of firms approaches to infinity'. Or, in very simple words, that the lower the number of bidders, the higher the expected rent by those that participate. That is what would allow bidders to tender less competitive prices when competitive pressure is reduced (ie less bidders are invited), which would also be in the interest of the bureaucrat expecting to receive a proportional bribe (a higher rent for the winning bidder carries a higher rent for the bureaucrat as well).

They also stress in clear terms that 'information disclosure will increase both the efficiency and the optimal number of firms in the procurement auction. The intuition is that, under information disclosure, firms' cost estimates become more heterogen[e]ous, and therefore, for [a] given number of firms, the auction becomes less competitive than before' (p. 13). Furthermore, 'under information disclosure, firms become more heterogen[e]ous in their cost estimates, and the winning rent, which [in their model] is the difference between the lowest and second lowest costs, may also get larger as well'. However, t'when a corrupt bureaucrat can control information release, it would be more difficult to detect corruption. As we know, information disclosure implies more firms to be invited into the auction, and corruption under the proportion[ate] bribe implies less firms to be invited. The combined effects of these two are mixed'. Overall, then, the implications of their findings seems to be that a corrupt bureaucrat will have mixed incentives on whether to reduce the volume of information disclosed in the tender process because more information may increase its own proportionate rent, but it will also trigger both more interest in the tender and more risk of detection of the corruption.

a blueprint for variable remuneration of procurement officers?

As mentioned, my intuition is that these insights can be useful to consider non-corrupt scenarios involving 'bureaucrat' rents other than bribes and, in particular, the introduction of bonuses or other variable retribution mechanisms for public buyers, which could well create the same incentives. My intuition is that, should the bureaucrat have a legal financial incentive to obtain a rent a the end of the tender, and should the existence of this rent not need to be hidden, it would have an incentive to pursue strategies that maximize social value (even if not necessarily government pay-offs) by disclosing information that reduces the number of potentially interested bidders for which the tender is not actually competitive. Moreover, the financial incentive could include an element of reverse proportionality, so that the bonus would be larger when the government pay-off is increased (ie when the total cost of the procurement is reduced as much as possible within the framework of the competition between the efficient number of bidders). If this is true, then, one of the main aspects that Member States should consider going forward would not only be linked to decisions on how to transpose and develop the rules for restricted procedures and for procurement procedures involving negotiations, but also linked to the establishment of appropriate systems of incentives for procurement officers (bureaucrats) to make the right choice of procedure and to conduct the tender in a way that is aligned with social welfare and with (intra)governmental pay-offs.

what implications for kick-back based central purchasing financing?

Central purchasing bodies (CPBs) can be financed in many ways, but a popular model is for them to receive kick-backs (in the form of rappels of fees) from suppliers included in the framework agreements and other contracts that CPBs manage. Those kick-backs are generally proportionate the value of the call-offs that end-user contracting authorities place with each supplier. In that case, the CPB is not in a different economic position than a procurement officer (bureaucrat) expecting to receive a proportionate rent (or bribe) at the end of the procurement process it runs. Therefore, it seems to me that one of the transferable insights of Li & Xu's paper is that CPBs will be structurally in a situation where they might as well aim to achieve the highest rent, which would require for them to reduce the number of bidders and (possibly, but not necessarily) the information disclosed at the outset of the procedure, so as to reduce the number of competitors and increase their expected rents--thus triggering higher kick-backs for the CPB. This would match well with the intuition that CPBs can become self-interested organisations in the way they run their framework agreements, and not pay excessive attention to the real interest of their principal (end-user contracting authorities) or society at large, particularly if the use of their services is mandatory (ie if they do not need to justify net advantages, at least for the end-user contracting authorities, in order to attract volume of orders).

If this intuition holds true, it would be interesting to look at the impact of the financing of CPBs through kick-backs in more detail, in order to assess whether this system of financial incentives and rewards fosters social welfare overall, or is only beneficial for the CPB (and/or, the government) at the expense of broader social interests. This would be particularly relevant if, as anecdotal evidence indicates, access to centralised procurement is difficult for most firms (and, in particular, SMEs), so that CPBs structurally reduce the number of bidders for their (large) contracts, which the model in the paper would suggest increases the rents for both the CPBs and the included suppliers, but imposes both direct costs on government (through higher procurement costs that could be achievable in alternative settings of increased competition within CPB procurement) and indirect social costs via externalities [for discussion of some of these economic issues, see here].

ERA Annual Conference on European Public Procurement Law 2016 (Trier, 14-15 April 2016)

The Academy of European Law (ERA) is organising its Annual Conference on European Public Procurement Law 2016, which will take place in Trier (Germany) on 14-15 April 2016. The conference will help practitioners keep abreast of the latest developments in law, policy and jurisprudence and discuss current challenging issues in EU public procurement law. 

I am thrilled to be joining a top-level roster of speakers, including

• Christopher Bovis, Professor HK Bevan Chair, Law School, University of Hull
• Dr Vera Eiró, Consultant, Linklaters; Professor, Catholic University and New University School of Law, Lisbon
• Pascal Friton, Principal Associate, Freshfields Bruckhaus Deringer, Berlin
• Nikolaos Korogiannakis, Managing Partner, G.S. Kostakopoulos & Associates, Brussels
• Dr Albert Sánchez Graells, Senior Lecturer, University of Bristol Law School; Member of the European Commission Stakeholder Expert Group on Public Procurement
• Katharina Vierlich, Deputy Head of Unit G2, DG GROW, European Commission, Brussels
• Michael Jürgen Werner, Partner, Norton Rose Fulbright, Brussels

Registration details and further information are available at the conference page.

A PLEA FOR A MORE NUANCED APPROACH THAN AG BOT'S to the INTERACTION BETWEEN ART 267 TFEU AND FUNDAMENTAL RIGHTS TO FAIR TRIAL AND PRESUMPTION OF INNOCENCE (C-614/14)

In his Opinion of 23 February 2016 in case Ognyanov (C-614/14, EU:C:2016:111, not available in English), Advocate General Bot addressed the question whether, regarding the content of a reference for a preliminary ruling, compliance with Articles 267 TFEU and 94 of the Rules of Procedure of the Court of Justice of the European Union (CJEU) by a domestic criminal court may impair the exercise of the rights guaranteed in Articles 47 (right to a fair trial) and 48 (presumption of innocence) of the Charter of Fundamental Rights of the European Union (CFR). AG Bot answers in the negative. He considers that a national rule that presumes that referring a case to the CJEU for a preliminary ruling is a breach of judicial impartiality, and therefore requires the referring criminal court to inhibit itself (and face disciplinary sanctions) upon having referred the case to the CJEU is contrary to EU law. In my view, AG Bot raises important points on the need to keep an effective level of judicial cooperation between the domestic courts and the CJEU, also when criminal matters are concerned. However, some parts of the reasoning in the Opinion are too formal and too heavy-handed in favour of the CJEU's monopoly of interpretation of EU law and the effectiveness of the preliminary reference mechanism, at the expense of a substantive assessment of the proper respect to the presumption of innocence guaranteed by Art 48 CFR. In my view, a more nuanced position would be preferable, even if it requires a revision of the rules of procedure of the CJEU in relation to preliminary references in criminal law matters.

The case at hand concerns criminal law enforcement in Bulgaria, where a domestic rule concerning breaches of judicial impartiality could be interpreted so as to require a referring national court that has laid out the factual background and the law applicable to the case for the purposes of the reference to the CJEU, to inhibit itself from any further decisions in a criminal case (and face disciplinary action).

In particular, the dispute is about the 'EU law-compliant' interpretation of Art 29(2) of the Bulgarian Code of Criminal Procedure (BCCP), which  establishes that 'A judge ... may not be part of the court composition due to some other circumstances on account of which he/she may be considered biased or interested, directly or indirectly, in the outcome of the case'. In stylised terms, the argument is that, by laying out the relevant facts and the rules applicable thereto, the national court expresses a 'preliminary view' on the substance of the case. By doing so before the case is at deliberation phase, and then refraining from inhibiting itself from further decisions in the case, the criminal court would be breaching its duty of impartiality (which is a fundamental guarantee of the right to a fair trial) and the accused's right to the presumption of innocence.

In case this interpretation was accepted, this would create a significant issue of coordination of EU law and domestic criminal law in the Member States--which may well be an unresolved issue in the deepening of judicial cooperation in criminal matters in the EU, since there are no special rules for the purposes of a reference for a preliminary ruling in criminal law matters under Art 94 of the rules of procedure of the CJEU (as acknowledge by AG Bot in para 19). Thus, the case is important beyond the technical point concerning the current rules applicable to the content of references for a preliminary ruling and their effects in criminal law cases, and could easily be pointing out to the need to create such special rules.

In addressing the question referred by the Bulgarian court, AG Bot indeed acknowledges that the referral mechanism 'can create difficulties in situations requiring delicate handling by domestic courts of all jurisdiction and rank' (para 6, own translation from Spanish). However, he rejects that the referral of a case for a preliminary ruling can be interpreted as requiring the inhibition of the referring criminal court (much less the imposition of disciplinary sanctions). His arguments are based both on the need to facilitate judicial cooperation, and on the specific rules applicable to the preliminary reference procedure (para 7). More specifically, AG Bot submits to the CJEU that such a requirement for the inhibition of the referring criminal court would neutralise the effectiveness of Art 267 TFEU and would prevent (Bulgarian) criminal courts from referring cases for a preliminary ruling to the CJEU, which would encroach upon the prerogatives of the Court under Art 267 TFEU--most notably, its monopoly on the interpretation of EU law, which is an issue that comes up again and again in the area of enforcement of fundamental rights under EU law, as became clear in relation to Opinion 2/2013 on the accession of the EU to the ECHR (EU:C:2014:2454; see comments here, here and here).

AG Bot's point of departure is encapsulated in his consideration that 'case law and doctrine have sufficiently stressed that preliminary references are the cornerstone of the Union's judicial system, which exercise concerns the national courts' (para 36, own translation from Spanish). He further relies on Opinion 2/2013, where the CJEU stressed that 'by setting up a dialogue between one court and another, ... between the Court of Justice and the courts and tribunals of the Member States, [the preliminary ruling procedure] has the object of securing uniform interpretation of EU law ... thereby serving to ensure its consistency, its full effect and its autonomy as well as, ultimately, the particular nature of the law established by the Treaties' (para 176). Moreover, he stresses that the proper exercise of the possibility to refer cases to the CJEU for a preliminary ruling is an integral part of the right to a fair trial, as recognised by the European Court of Human Rights (ECtHR) in Dhabbi v Italy (No. 17120/09) (para 38 of AG Bot's Opinion).

All the ensuing analysis concerning the content of the factual and legal requirements of Art 267 TFEU and Art 94 of the rules of procedure (paras 41-72) rests fundamentally on the importance of the exposition of facts and the explanation of the applicable domestic law that the domestic court needs to provide the CJEU for the purposes of enabling the Court to provide a ruling on the proper interpretation of EU law as it relates to the relevant domestic rules. AG Bot stresses that there is no reason to apply different requirements in criminal matters as compared with civil or administrative law cases (para 66, although he offers no further elaboration or support for this position); and that, if anything, the imposition of higher thresholds of precision and motivation in criminal cases would be justified by the impact that the CJEU's ruling can have on the accused's freedom (para 68).

AG Bot proceeds to consider the arguments regarding the lack of impartiality derived from the 'preliminary view' expressed by the criminal court in the referral (paras 73-87). Remarkably, he stresses that '[i]t is clear from settled case law of the European Court of Human Rights that the mere fact that a judge adopts resolutions before the process can not justify by itself any reproaches regarding his impartiality. What should be assessed is the extent of the measures which have been adopted ... Consequently, although a preliminary question before the Court is a court decision, it is not least true that stating, in that context, the circumstances of fact and legal issues inherent to the case constitutes only a mere statement by the national court, which, furthermore, does not to carry out any legal characterisation' (para 83, references omitted, own translation from Spanish, emphasis added). AG Bot supports this argument with his view that, in the specific case, there is no reason to believe that the referring court is biased or partial. This reasoning is, however, problematic because it tries to address a substantive requirement (ie assessment of the extent of the measures) with a formal justification (that, formally, the description of the legal rules applicable to the case by the domestic court does not necessarily imply a definite legal characterisation of the facts of the case).

Moreover, when it comes to the arguments on a potential breach of the presumption of innocence (paras 88-104), the Opinion seems to get into a muddy road. It starts off by acknowledging that the adoption of any preliminary view on the guiltiness of the accused would infringe the right to the presumption of innocence (para 89) and that, consequently, the key element in an analysis of compliance with Art 48 CFR would be to determine whether, in the referral for a preliminary ruling, the domestic criminal court has indicated that it considers the accused guilty, without guilt being duly proven. In my view, this is indeed the proper framework for the analysis. However, AG Bot proceeds to stress that, in the specific circumstances of the case, the accused cannot benefit from the presumption of innocence because he had already been convicted (para 91).

He also indicates that '[i]n any case, we must not forget that the request for a preliminary ruling by a national court is only intended to obtain a correct interpretation of EU law--whereas determining, on the basis of this interpretation, if the accused is to be found innocent or guilty of the facts, is a task that can only result from the unique and personal appreciation of that [national] court' (para 92, own translation from Spanish). Then, he proceeds once more to arguments on the neutralisation or deactivation of the preliminary reference mechanism should domestic courts be forced to inhibit themselves (and face disciplinary sanctions) in case they referred cases to the CJEU (which is circular and returns to the initial points). AG concludes on this point that 'there is no doubt whatsoever that European Union law, and in particular Articles 267 TFEU and 94 of the Rules of Procedure, precludes national legislation ... which, if maintained, could very seriously affect the preliminary ruling mechanism and, with it, the cooperation established between the Court and national courts, and threaten the primacy of EU law' (para 103, own translation from Spanish).

I find this line of reasoning exceedingly formal because it creates an absolute separation between a view on the need of asking for the interpretation of specific legal provisions and the domestic court's position on the need or likelihood to apply that law to the case. Granted, not every instance in which a request is made necessarily indicates that the referring court has reached a decision on whether the rules will be applicable (as this may, in fact, be affected by the outcome of the CJEU's interpretative exercise). However, in my view, it cannot automatically be ruled out that by its nature the content of a reference for a preliminary ruling is inapt to contain an indication of bias by the referring court, or a breach of the presumption of innocence of the accused. Where that was apparent, and in order to properly protect the rights of the individuals affected by the procedure under the CFR, the CJEU shall engage in a substantive assessment to determine whether Art 48 CFR was at risk and, where warranted, include adequate safeguards when deciding on the preliminary ruling--such as, in specific instances, requiring the referring court to inhibit itself in favour of a different court.

Granted, the main difficulty is that there is no procedural avenue for this as Art 94 of the rules of procedure stands--which in my view seems to be more than a good reason to revisit the assumption that the same rules apply for civil/administrative and criminal references for a preliminary ruling (see para 66 of AG Bot's Opinion).

Beyond these issues, I find it troubling that AG Bot submits to the CJEU that it also needs to rule that a discretionary inhibition by the referring court should also be declared contrary to EU law. Specifically, when considering 'whether EU law prevents [the referring national court] from opting, in application of the national rule under dispute, to inhibit itself because that rule ensures a higher level of protection of fundamental rights of the individuals concerned' (para 113, own translation from Spanish), AG Bot argues considers that the question is actually whether 'European Union law precludes the national court's application of a national rule that has been declared contrary to EU law [by the CJEU]?' (para 114, own translation from Spanish). Of course, AG Bot considers that the answer is that EU law indeed prevents the referring court from relying on that rule to opt for discretionary inhibition. 

However, in my view, given that the domestic rule at stake is the fundamental rule for the disqualification of judges in criminal proceedings, this seems way too far fetched. In particular, because Art 29(2) BCCP establishes a general, open-ended standard to ensure judicial impartiality (see above), there seems to be no reasonable way to conclude that, even if the mere fact of having referred the case to the CJEU for a preliminary ruling does not necessarily trigger the application of Art 29(2) BCCP, its application should be completely excluded for the reasons discussed by AG Bot in his Opinion. More leeway is necessary for the referring court to exercise her own discretion and decide whether, all things considered, she is no longer in a position to make further decisions in the criminal process in an impartial way. Any other interpretation would be, in my submission, a breach not only of Article 48 CFR, but also of Article 6(1) of the European Convention on Human Rights, as it ensure the right to a 'fair and public hearing ... by an independent and impartial tribunal established by law'.

Therefore, overall, I would like to see the CJEU decide this case in a more nuanced way than AG Bot proposes. I do not hold very high hopes, though.

ANNOUNCING AN EVENT TO DISCUSS REGIOPOST AT LENGTH

As promised in previous posts, I am organising an event on the enforcement of labour standards in public procurement. Titled 'Public Procurement & Labour Standards–Reopening the Debate after RegioPost', it will take place at the University of Bristol Law School on 9 May 2016, as our celebration of Europe Day. Together with my colleagues, we have invited a panel of academics of the highest quality, including

• Prof Catherine Barnard, Professor of European Union Law, University of Cambridge
• Ms Nina Boeger, Senior Lecturer in Law, University of Bristol Law School and Director of Centre for Law and Enterprise
• Dr Richard Craven, Lecturer in Law, University of Leicester
• Prof Anne Davies, Professor of Law and Public Policy, University of Oxford
• Prof Michael Ford QC, Professor of Law University of Bristol Law School and Employment Silk of the Year 2015
• Dr Amy Ludlow, Lecturer in Law, University of Cambridge
• Prof Tonia Novitz, Professor of Labour Law University of Bristol Law School
• Dr Lisa Rodgers, Lecturer in Law, University of Leicester
• Dr Albert Sanchez-Graells, Senior Lecturer in Law University of Bristol Law School
• Ms Abby Semple, University of London/Birkbeck College & PriceWaterhouseCoopers
• Dr Phil Syrpis, Reader in Law University of Bristol Law School

Ultimately, the event aims to take stock of the recent developments resulting from the adoption of Directive 2014/24 and the Judgments of the Court of Justice of the European Union (CJEU) in Bundesdruckerei and RegioPost. Beyond getting to grips with legal updates, we aim to assess them, both from an EU and domestic UK law perspective. In particular, the event aims to invite leading academics to answer the following questions:

• How does the revised approach to the enforcement of labour standards in public procurement fit within the EU constitutional and internal market framework?
• What are the limits of the enforcement of labour standards under the new EU public procurement rules and, in particular, under Art 70 of Directive 2014/24? How do the CJEU Judgments in Bundesdruckerei and RegioPost affect the interpretation of the provision?
• What are the implications of these developments in the broader context of EU labour law? How does this relate to the implementation of the Posted Workers Enforcement Directive?
• What are the implications of these developments in the specific context of UK law? How can they impact on the interpretation and effectiveness of the Social Value Act 2012? How do they affect the design of procurements covered by the Public Contracts Regulations 2015?

I hope you can join us and contribute to these important debates. Please register for free here.

(c) by Denis Bocquet

Some recent indicators of public procurement in the EU

The European Commission has published some indicators on the evolution of public procurement in the EU up to December 2014 (most recent available data). There are two sets of indicators worth having a look at.

Public Procurement Performance

First, the Commission (DG Grow) has published indicators on public procurement performance in the Member States, which provide a comparative view of the countries' adherence to 'good procurement' as measured by 6 simplified indicators. Or, in other words, indicators aimed to measure 'the extent to which purchasers obtain good value for money'.  The creation of a single 'quick-look' indicator seems appealing. However, some attention to the way in which the indicator is calculated may raise issues as to its usefulness.

View fullsize

Source: European Commission.

In that regard, it is worth mentioning that the Commission has created 6 discrete indicators: [1] One Bidder; [2] No Calls for Bids; [3] Aggregation; [4] Award Criteria; [5] Decision Speed; and [6] Reporting Quality (details available here). Interestingly, in order to construct the 'Overall Performance' indicator (used in the map above), the Commission uses a 'weighted average of all the performance indicators. Triple weight is given to most important indicators: One Bidder and No Calls for Bids.' Given this methodology, the Commission is careful to indicate that

Like all indicators, however, these indicators simplify reality. They are affected by country-specific factors such as the composition of procurement, the structure of the economies concerned, and the relationships between different tendering options, none of which are taken into account. Also, some aspects of public procurement are omitted entirely or covered only indirectly - for instance corruption, administrative burden and professionalism. Thus, although the Scoreboard provides very useful information, it gives only a partial view of EU countries' public procurement performance.

In my opinion, this is a valuable first step towards developing performance indicators in public procurement. However, the 'qualitative policy judg[e]ment on what is good practice' behind some of the criteria is questionable. For instance, the rationale behind criterion [3] Aggregation is that 'Buying in bulk often leads to better prices and also offers an opportunity to exchange know-how. While not every type of purchase can benefit from aggregation, excessively low aggregation levels mean that an opportunity is probably being missed. Aggregation measures the proportion of procedures with more than one public buyer.'

This is by no means clear, given the difficulty in assessing the net economic effects of procurement aggregation [see A Sanchez-Graells and I Herrera Anchustegui, 'Impact of Public Procurement Aggregation on Competition: Risks, Rationale and Justification for the Rules in Directive 2014/24', in R Fernandez & P Valcarcel (eds), Centralizacion de compras publicas (Madrid, Civitas, 2016) 129-163]. Moreover, the reasons that led the Commission to give a positive value of the indicator when Member States aggregate 10% or more of their procurement expenditure seems completely arbitrary.

Ultimately, the use of such indicator may push Member States towards excessive aggregation of demand (particularly through procurement centralisation, see discussion on the UK CCS' strategy below), which seems to be a policy drive of the European Commission that may well create excessive difficulties [particularly when cross-border collaboration is involved, as discussed in A Sanchez-Graells, 'Collaborative Cross-Border Procurement in the EU: Future or Utopia?'].

Therefore, great care needs to be exercised to avoid creating indicators that may trigger specific policy options with doubtful beneficial net effects.

evolution of public procurement markets

Second, the Commission has also published raw indicators of the volume of procurement subjected to the EU rules in 2014. This serves to provide a broad overview of the evolution of EU public procurement markets in recent years. 

There are two results I find interesting. At a general level, the 'estimate of total general government public procurement expenditure (TGGPPE), excluding utilities and defence, was 1,931.5 billion euros in 2014, 2.7 % higher than in 2013, continuing the increased trend of recent years'. However, there are great national disparities that still reflect the effects of the economic crisis, with 'countries like Spain, Italy or Cyprus ... with their TGGPPE the minimum in the last four years'.

And, at a country level, I find it remarkable that, overall, the UK publishes larger contracts than the EU average (see graph below). This issue is linked to the discussion on aggregation above because, '[t]he concentration of procurement in large notices is outstanding in the UK, particularly in the procurement of services, where the UK alone accounts for 84 % of the total value procured at EU level in awards of more than 100 million euros' (emphasis added).

Source: European Commission. Graph represents the distribution of contract award notices in logarithmic scale in million Euros. The dashed-blue line represents EU distribution. 

Qualitatively, it is worth stressing that this is, at least in large part, the immediate result of the enormous framework agreements for services contracts tendered by the Crown Commercial Service (CCS) in recent years. However, this strategy has led to significant operative problems and the CCS is moving away from such large service frameworks, in favour of alternative procurement strategies. 

Also from a qualitative perspective, analysing this data would require to access details on whether these contracts are adequately split into lots, eg so as to ensure SME access to procurement markets in the UK. If not, this could be an indicator that UK markets are relatively more geared towards large suppliers than in the rest of the EU, which would be a worrying situation and definitely not in line with declared policy goals.

Therefore, once more, care needs to be exercised in the extrapolation of any policy implications derived from such high-level quantitative indicators.

UK High Court soon to rule on conflicts of interest under reg.24 PCR2015 (Art 24 Dir 2014/24) (Counted4 CIC v Sunderland City Council)

In its Judgment of 18 December 2015 in Counted4 Community Interest Company v Sunderland City Council [2015] EWHC 3898 (TCC) [*], Justice Carr decided the first request for the lift of the automatic suspension under regs. 95 and 96 of the Public Contracts Regulations 2015 (PCR2015) and decided to keep the suspension of the award until trial--thus departing from the general trend of lifts before the UK Courts. This aspect of the Judgment has been discussed abundantly (for example, see here), and whether it will actually reverse the generous approach of the UK courts to lifting the automatic Alcatel suspension remains unclear.

However, there is a second aspect of the case that I find more interesting. The case concerns the procurement of a services contract for substance misuse treatment and harm reduction services for substance users in Sunderland. Counted4 CIC is the incumbent supplier and has initially lost in its bid to renew the contract to Northumberland Tyne and Wear NHS Foundation Trust (NTW), which was the immediate previous provider before Counted4 CIC.

The primary claim of Counted4 CIC in its challenge of Sunderland CC 's decision to award the services contract to NTW is based on the alleged existence of a conflict of interest affecting one of the members of the evaluation team. In particular, Counted4 CIC challenges the participation of the person responsible for the administration of the current contract [Mr. S] in the evaluation of the new bids. The challenge is not made in abstracto, but based on the existence of a strained relationship between Counted4 CIC and the contract administrator [Mr. S], of which there seems to be sufficient (indiciary) proof on the file.

What I find interesting is the way in which Carr J frames the issue in the following terms:

[31] I am quite satisfied there is a serious issue to be tried on the conflict allegation. Regulation 24 is relatively new and there is no relevant authority on it to date. It provides :

"Conflicts of interest

24. (1) Contracting authorities shall take appropriate measures to effectively prevent, identify and remedy conflicts of interest arising in the conduct of procurement procedures so as to avoid any distortion of competition and to ensure equal treatment of all economic operators.

(2) For the purposes of paragraph (1), the concept of conflicts of interest shall at least cover any situation where relevant staff members have, directly or indirectly, a financial, economic or other personal interest which might be perceived to compromise their impartiality and independence in the context of the procurement procedure."

[32] In my judgment, it is properly arguable that the Defendant failed effectively to prevent, identify and remedy conflicts of interest in allowing [Mr. S] to be on the evaluation panel. "Other personal interest" can be directly or indirectly held. The phrase is very broad on its face and is clearly intended to add to the other conflicts identified, namely financial and economic. The Defendant submits that it is designed primarily at financial interest. That cannot be said to be certainly the case. The Claimant's case that "other personal interest" means anything pertaining to the relevant individual is arguable. It is arguable that [Mr. S]'s personal interest in protecting his professional reputation and/or role at the Defendant by awarding a new contract to someone other than the Claimant might be perceived to compromise [Mr. S]'s impartiality and independence. The issues with [Mr. S] appear to have been grave. [Mr. D, the Claimant's Chief Executive] states the difficulties were beyond normal managerial issues. [Mr. S] often became emotional. It is said that his failings were recognised. It is also now apparent that the Claimant's complaints about [Mr. S] led to an internal investigation into [Mr. S]'s performance, though the results of that investigation have not hitherto been disclosed by the Defendant.

This will probably be the first time in which Article 24 of Directive 2014/24, as transposed in reg.24 PCR2015 is interpreted in the European Union as a whole. Without disagreeing with this approach in principle, I think that the broad terms in which Carr J foresees a possible interpretation of the provision may not necessarily be the most straightforward (ie 'other personal interests' could relate to family, sentimental or equivalent situations, rather than professional concerns)--or, at least, it seems obvious that there will certainly be opposing views and an interest in adopting a narrow interpretation of the provision. Consequently, a referral to the Court of Justice of the European Union for a preliminary interpretation may well be warranted (if not on on this first instance, certainly on appeal).

Additionally, given that the case concerns procurement 'at the edges' of NHS procurement activity, it will be interesting to compare the decision in Counted4 Community Interest Company v Sunderland City Council in this judicial setting, with that recently adopted by the sector regulator Monitor in a recent case involving allegations of conflict of interest against members of the evaluation team; see its Investigation into New Devon CCG’s commissioning of community services for adults with complex care needs in eastern Devon: final report [Case CCD01/15, decided on 26 August 2015]. This is something that we will do at this event organised at the University of Bristol Law School on 23 June 2016, so do come along if you are interested on these issues (registration is free).

[*] I am grateful to P Somalis for bringing this case to my attention.

CJEU consolidates push for overcompliance with EU public procurement rules in the provision of public services (C-446/14)

In its Judgment of 18 February 2016 in Germany v Commission (Zweckverband Tierkörperbeseitigung), C-446/14 P, EU:C:2016:97 (only in German and French), the Court of Justice of the European Union (CJEU) has supported the approach of the General Court (GC) in the assessment of the Altmark (C-280/00, EU:C:2003:415) conditions for the analysis of State aid regarding a system of financial support for a service of general economic interest (SGEI) consisting in the maintenance of reserve animal disposal capacity in the case of epizootic in a public abattoir in the state of Rhineland-Palatinate in Germany.

This appeal was against the GC's Judgment in T-295/12 (EU:T:2014:675, which is discussed by P Nicolaides here), but the analysis of the CJEU was highly relevant for the pending appeal against the GC Judgment in T-309/12 (EU:T:2014:676, discussed here), which has now been abandoned by the appellant (the abattoir, now in liquidation). The intricacies of the case are quite complex, and points of detail are too specific to discuss now. However, there are some general issues to note in view of the CJEU's Germany v Commission (Zweckverband Tierkörperbeseitigung) Judgment. 

From the outset, it must be stressed that the CJEU is following the GC in a trend that may well be modifying the scope of the Altmark test in a way that pushes for overcompliance with the EU public procurement rules as the only effective way in which Member States can achieve legal certainty in the way they organise their SGEIs. This requires to take a long view on some of the arguments in the case.

The CJEU has generally been very clear that 'the four conditions set out in Altmark ... are distinct from one another, each pursuing its own finality' (para 31, own translation from French). In particular, it stressed that the first condition requires 'that the recipient undertaking must actually be required to discharge public service obligations and those obligations must be clearly defined for such compensation to escape the classification as State aid' (para 26, own translation from French), while the fourth condition determines that 'when the choice of the undertaking which is to discharge public service obligations, in a specific case, is not in the framework of a public procurement procedure, the level of compensation needed must be determined based on an analysis of the costs which a typical, well run, undertaking would have incurred in discharging those obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations' (para 29, own translation from French). In that regard, these would seem to require separate, independent assessments of each of the Altmark conditions.

In contrast, in the challenged decision, the GC had determined that

as part of the review of the question whether the fourth Altmark criterion ... is satisfied, there is certainly room to take into consideration the nature of the service in question and the circumstances of the case, and it is therefore possible that this criterion, which requires a comparison of the costs and revenues directly related to the provision of the SGEI, can not be applied strictly to the present case (see, that effect, case BUPA ea / Commission (T-289/03, EU:T:2008:29) paragraph 246). Indeed, the Court has already held that ... although the conditions set out in Altmark ... concern without distinction all sectors of the economy, their implementation must take into account the specificity of a certain sector and, given the particular nature of the SGEI mission in specific sectors, it should be flexible in the application of the Altmark judgment ... in relation to the spirit and purpose that led to the establishment of said conditions, so that they are suitable to the particular facts of the case (see case of 7 November 2012 CBI / Commission, T-137/10 (EU:T:2012:584) paragraphs 85 and 86, and the cases cited) (T-295/12, para 131, own translation from French).

This was criticised by Germany as a conflation of the first and fourth Altmark conditions, particularly because the analysis supported by these general remarks implied dismissing the existence of an SGEI in the specific case in Rhineland-Palatinate, and a general consideration of the costs incurred by undertakings active in the same sector in other German states that, however, may have been subjected to different public service obligations or where no SGEI may have existed at all (T-275/12, para 130). In Germany's submission, this would have led the GC to a tautological conclusion. 

The CJEU dismisses the argument on the following basis:

... the Court cannot be criticized for having reached a tautological conclusion that would have linked the lack of satisfaction of that fourth condition to a finding of lack of qualification of maintaining a reserve capacity as a service of general economic interest [first condition]. Indeed, as is clear from paragraph 130 of the judgment, the Court, first, discussed the situation in which the maintenance of a reserve capacity in case of an outbreak could have validly received such qualification [of SGEI] and on the other hand, felt that, given the obligations of the competent public authorities in all German states to eliminate the largest quantity of substances ... received during an outbreak [regardless of the way they organised the discharge of that public obligation, and regardless of whether they defined an equivalent SGEI], it was necessary to take into account the existing situation in other German states to determine the necessary level of compensation on the basis of an analysis of the costs which a typical undertaking, well run and adequately equipped, would have incurred in meeting the public service requirements (C-446/14 P, para 35, own translation from French).

Thus, the general conclusion of the CJEU is that the GC did not err in law by conflating the different conditions established in Altmark. 

I disagree with the CJEU because, even if the conditions 'are distinct from one another, each pursuing its own finality', the logic in their application to a same set of factual circumstances requires that, once the scope of the economic activity that the Member State claims is an SGEI is properly established for the purposes of the judicial review (and regardless of whether the first condition is upheld or not in terms of whether those obligations are clearly defined), the analysis of the fourth condition (ie either procurement of that 'alleged' SGEI or analysis of the costs of a notional well-run undertaking providing that 'alleged' SGEI) needs to remain within that context.

Otherwise, the assessment of the notional, well-run undertaking's cost structure outside of the remit of the 'alleged' SGEI under dispute comes to basically neutralise the second alternative test in the fourth condition of Altmark by allowing the Commission and the GC (and ultimately the CJEU) to find any other comparator they deem to be sufficiently close to that economic activity, which nullifies the economic concept of the notional, well-run competitor. Immediately, this pushes Member States to try to avoid in this types of assessment, which can only be done by resorting to (certain types of) public procurement procedures under the first test in the fourth Altmark condition [for discussion, see A Sanchez-Graells, 'The Commission’s Modernization Agenda for Procurement and SGEI', in E Szyszczak & J van de Gronden (eds) Financing Services of General Economic Interest: Reform and Modernization, Legal Issues of Services of General Interest Series (The Hague, TMC Asser Press / Springer, 2012) 161-181]. 

This may well be cornering Member States in an impossible situation where, regardless of the way they conceive and delineate an SGEI [which they have exclusive competence to do, under Art 14 TFEU and Protocol No (26) therewith, and, currently, reminded in the provisions of Article 1(4) of Directive 2014/24], an assessment of the fourth Altmark condition only allows them to operate with sufficient legal certainty if they contract out the provision of that service in a way that complies with the EU public procurement rules (and not all of them, at that). This is certainly not a desirable outcome and, once more, the developments supported by the CJEU require a fundamental rethinking of the coordination of State aid and public procurement rules, in particular in the area of SGEIs [for discussion, particularly in the setting of procurement challenges, see A Sanchez-Graells, 'Enforcement of State Aid Rules for Services of General Economic Interest before Public Procurement Review Bodies and Courts' (2014) 10(1) Competition Law Review 3-34].

Collaborative Cross-Border Procurement in the EU: Future or Utopia?

I have uploaded a new paper on SSRN, which I will be presenting at the workshop on ‘Collaborative Efficiency in Government: The Trend, The Implications’ during the forthcoming ECPR Joint Sessions, Scuola Superior Sant’Anna and University of Pisa, 24-28 April 2016. 

The paper is entitled 'Collaborative Cross-Border Procurement in the EU: Future or Utopia?' and, in short, tries to conceptualise and look critically at the immensely complex legal issues that Directive 2014/24 has left unresolved. In order to conceptualise the political, economic and legal issues, I use a theoretical scenario that looks like this (so maybe it needs to be read with pen and paper, apologies!):

As the abstract explains in more detail:

Collaborative public procurement has been gaining traction in recent years and could be considered at the spearhead of public procurement reform and innovation. The 2014 reform of the EU public procurement rules (mainly Directive 2014/24) has expanded the tool-kit available to contracting authorities willing to engage in joint or centralised procurement activities, and in particularly in cross-border procurement collaboration. In a push forward, and as part of the Strategy for a deeper and fairer single market in its larger context, the European Commission is developing a policy to facilitate and promote cross-border collaborative public procurement in the European Union.

This paper adopts a sceptical approach and critically assesses the political, economic and in particular legal factors that can facilitate or block such development. To do so, it focuses on a case study based on a theoretical scenario of cross-border collaboration between centralised purchasing bodies in different EU Member States. The paper ultimately aims to establish a blueprint for future legal research in this area, in particular regarding the emergence of trans-EU public law.

This is an area where much more thoughtful legal research is needed, and I intend to do so in a paper I am just starting on the 'The emergence of trans-EU public law. Public procurement as a case study'. For now, though, the exploratory paper is out and comments would be most welcome!

The full paper is available: A Sanchez-Graells, Collaborative Cross-Border Procurement in the EU: Future or Utopia? (February 18, 2016). Available at SSRN: http://ssrn.com/abstract=2734123.