New paper: Territorial Extension and Case Law of the Court of Justice: Good Administration and Access to Justice in Procurement as a Case Study

I have uploaded a new paper on SSRN on 'Territorial Extension and Case Law of the Court of Justice: Good Administration and Access to Justice in Procurement as a Case Study', which develops previously sketched ideas on the challenges that the 'regulatory export' of EU procurement rules can create for the functioning of the CJEU and the Commission in the context of the EU's external trade activity (see here). The abstract of the paper is as follows:

This paper explores some of the legal implications of the territorial extension or extraterritoriality of EU public procurement law through free trade agreements and planned flanking retaliatory EU trade policy. The paper has the starting position that, with this policy and regulatory approach, the EU pursues two main goals: first, to further global standards of human rights protection and, second, to further regulatory convergence towards its own procurement standards. The paper concentrates on the pursuit of this second goal and, in particular, on the implications of such territorial extension or extraterritoriality of EU procurement law for the case law of the Court of Justice on good administration and access to justice, as recognised in the Charter of Fundamental Rights of the European Union. The paper concentrates on public procurement due to its relevance in free trade agreements between the EU and third countries, as well as the relevance of statutory and case law requirements concerning procurement remedies. The paper assesses both the outwards and inwards implications of the functional territorial extension for the case law of the Court of Justice. The discussion in the paper also raises general issues concerning procedural design and the consideration of foreign law by the Court of Justice in different settings.

The paper is freely available through SSRN: https://ssrn.com/abstract=3081061

New paper on the need to review the Remedies Directive

I have uploaded a new paper on SSRN: ‘If it Ain't Broke, Don't Fix It’? EU Requirements of Administrative Oversight and Judicial Protection for Public Contracts, to be published in S Torricelli & F Folliot Lalliot (eds), Administrative oversight and judicial protection for public contracts (Larcier, 2017) forthcoming.

As detailed in the abstract: 

EU public procurement law relies on the specific enforcement mechanisms of the Remedies Directive, which sets out EU requirements of administrative oversight and judicial protection for public contracts. Recent developments in the case law of the CJEU and the substantive reform resulting from the 2014 Public Procurement Package may have created gaps in the Remedies Directive, which led the European Commission to publicly consult on its revision in 2015. One year after, the outcome of the consultation has not been published, but such revision now seems to have been shelved. This chapter takes issue with the shelving of the revision process and critically assesses whether the Remedies Directive is still fit for purpose. 

The chapter focuses on selected issues, such as the interplay between the Remedies Directive and the Charter of Fundamental Rights, and with the general administrative law of the Member States. It also assesses the difficulties of applying the Remedies Directive ‘as is’ to some of the new rules of the 2014 Public Procurement Package, which creates uncertainty as to its scope of application, and gives rise to particular challenges for the review of exclusion decisions involving the exercise of discretion. The chapter also raises some issues concerning the difficulties derived from the lack of coordination of different remedies available under the Remedies Directive and briefly considers the need to take the development of ADR mechanisms into account. Overall, the chapter concludes that there are important areas where the Remedies Directive requires a revision, and submits that the European Commission should relaunch the review process as a matter of high priority.

The paper is freely downloadable at http://ssrn.com/abstract=2821828. As always, comments welcome.

Evaluation of tenders after the expiry of their validity does not annul tender for EU public contracts (T-553/13)

In its Judgment of 2 December 2015 in European Dynamics Luxembourg and Evropaïki Dynamiki v Joint undertaking Fusion for Energy, T-553/13, EU:T:2015:918, the General Court (GC) of the Court of Justice of the European Union (CJEU) has assessed one more case of procurement litigation concerning a cascade-based framework agreement for the provision of IT services (for previous cases, see here and here). This is proving to be quite a highly litigated design for framework agreements, so it is worth looking in detail at the scope of the dispute to determine whether the design of this type of arrangement makes them more exposed to litigation. The analysis will show that it does not because the claims made against the conclusion of the framework agreement are purely procedural.

In the case at hand, the Joint undertaking Fusion for Energy (F4E) issued a tender for a framework agreement for the provision of IT Services and requested that offers remained valid for a minimum of 130 days from the deadline for the receipt of tenders. The successful tenderers were also required to maintain the validity of their tenders for a further 60 days from the notification of the award of the contract. Given the high volume of tenders received, F4E took longer than 130 days in evaluating them, and the evaluation was concluded after the minimum validity period of the tenders had expired.

European Dynamics (ED) was once more a disappointed tenderer. Its offer was not included in the cascade mechanism of the framework agreement, which F4E intended to conclude with three alternative suppliers. Additionally to its standard arguments on failure to meet the duty to provide reasons (which, this time, do not constitute the core of the dispute), ED challenged the process claiming that by evaluating the tenders after their validity period had come to an end, F4E infringed the applicable rules [which require that [t]he invitation to tender ... shall at least … specify the period during which a tender will remain valid and may not be varied in any respect’] and treated ED in a discriminatory manner compared with other tenderers. The key argument submitted by ED is that
the principles of sound administration, transparency and equal treatment of tenderers require that no contract be awarded or signed in the event that one or more tenders are no longer valid in the course of the evaluation, unless the contracting authority officially requests and obtains an extension of the validity period of the tenders... Accordingly, it is a prerequisite for the validity of the evaluation of tenders and the award procedure that tenders be valid throughout the entire evaluation process, in order to ensure that the evaluator’s examination is impartial (T-553/13, para 18).
The GC rejects the argument on several points. Firstly, the GC stresses that the requirement to indicate a minimum tender validity does not impose 
an obligation on the contracting authority to complete the evaluation of a tender within the validity period of that tender. Whilst it is certainly in the interest of the contracting authority to complete its assessment before the expiry of the tenders’ validity period, exceeding that time-limit cannot render the procedure unlawful, nor can it constitute a ground for cancellation of the evaluation of the tenders (T-553/13, para 22).
The GC clarifies that 'the purpose of the validity period of tenders is to ensure that a tenderer does not vary his tender during the evaluation stage and that compliance with that period is not a condition sine qua non for the signature of contracts at the end of the award procedure' (T-553/13, para 24). 

The formulation of the second part of this clarification could lead to uncertainty, as it could be understood that a tender which validity period did not meet the minimum, or that was modified during that term, could still lead to award of the contract. That is not what the GC intends to indicate. In fact, the GC makes reference to the previous case Evropaïki Dynamiki v Commission, T-236/09, EU:T:2012:127, where that clarification was made in a different context. In that case, the GC ruled that
As regards the ... argument that the principles of transparency, good administration and equal treatment among tenderers preclude a contract being signed when one or more tenders are no longer valid, suffice it to say that the purpose of the period of validity of tenders is to ensure that a tenderer does not vary his tender during the evaluation stage ... it is not a condition sine qua non for the signature of contracts at the end of the award procedure. In the present case, the decisions to award the contracts were taken ... within the period of validity of the tenders. Moreover, the applicant merely states that signing the contract when one or more tenders are no longer valid is a breach of the principles of transparency, good administration and equal treatment, but does not explain in what way that constitutes a breach (T-236/09, para 40, emphasis added).
Therefore, the combined reading of para 24 of ED v E4F (T-553/13) and para 40 of ED v Commission (T-236/09) leads to the interpretation that the signature of the contract is not prevented by the fact that one or more tenders are no longer valid at that time. However, it also raises the issue of whether the tender chosen for the award of the contract must remain valid at the time of that decision (as T-236/09, para 40 suggests). The rest of the ED v E4F case discusses this in more detail. As the GC explains
25 ... the applicants may not regard evaluation of the tenders during their validity period as a condition of the validity of the tender procedure ...[the] claim that the principles of transparency, sound administration and equal treatment between tenderers preclude a contract from being concluded when one or more tenders is no longer valid must be rejected (see, to that effect, [T-236/09] paragraph 40).
26 Moreover, in so far as the applicants claim that F4E should have officially requested [ED] to extend the validity of its tender when it realised that the period in question was not long enough to complete the evaluation phase, it should be stressed that, whilst it is true that the contracting authority is entitled to request an extension of the validity period of tenders, it is not required to do so under any of the applicable provisions.
27 As F4E correctly notes, the only consequence that may arise from that provision for the contracting authority is that it cannot oblige a tenderer whose tender has expired to sign and perform a contract based on the conditions set out in that tender.
28 In addition, equal treatment between tenderers is ensured by evaluating all the tenders using the same evaluation criteria and comparing them with one another. If the validity period of the tenders is not one of the evaluation criteria, it could only lead to discrimination in respect of their evaluation if it were proved that a tender was not taken into account on the ground that it had expired ...
29 The file shows that the tenders of all tenderers were evaluated, including [ED]’s tender, and that that evaluation took place while the tenders were valid ...
30 In such circumstances, the mere fact that the final decision was adopted after that validity period had ended cannot render the award decision unlawful (T-553/13, paras 25-29, emphasis added).
In my view, the GC fails to take into account all possible scenarios of discrimination that could arise in such circumstances. It is true that not taking into account a tender for the purposes of evaluation on the ground that it had expired would constitute discriminatory treatment. However, it would also be discriminatory to allow undertakings that set a specific period of validity for their tender to waive it upon hearing that their tender was chosen for award. 

Thus, the argument that the contracting authority must ensure that all tenders remain valid throughout the period carries weight if one considers the strategic games that could ensue when tenderers whose offer has expired are allowed to extend them, particularly if that implicitly creates financial impacts that will (possibly) require modifications of the contract down the line (even if those modifications 'simply' result in the trigger of price revision clauses earlier than would have otherwise been expected).

In my view, the GC also fails to make proper use of the right to good administration. If a diligent contracting authority fails to evaluate the tenders it receives in good time to make sure that all of them remain valid when it aims to enter into the framework agreement or contract, it should (or, I would say, shall) actually request them to extend the validity of their offers. There is no reason to allow the contracting authority not to do so on the basis that "the only consequence ... is that it cannot oblige a tenderer whose tender has expired to sign and perform a contract based on the conditions set out in that tender". That would constitute very poor administration and would severely limit the ability of the contracting authority (and society at large, indirectly) to benefit from competitive outcomes leading to value for money due to its poor time and workload management. Thus, this does not seem to be a proper analysis under the principle of good administration.

On a related note, I think that the GC also got the wrong end of the stick when assessing instances where the contracting authority actually decides to request such extensions of the validity of offers when it realises that it cannot complete the evaluation and award the contract in time. In the previous ED v Commission case, the GC considered that "the fact that the [contracting authority] stated that it did not intend to cancel the tendering procedure in the event of a tenderer refusing to extend the validity of its tender does not mean that the [tenderer who was approach for an extension] was under pressure to agree to the request for extension" (T-236/09, para 39). From a business perspective, this simply makes no sense. Commercial pressure to extend offers should also be subjected to a high standard of assessment under the principle of good administration and the contracting authority should have very powerful reasons not to cancel the tender. The same reasoning that prevents contracting authorities to resort to urgency-based procedures due to situations they should have avoided applies here [see A Sanchez Graells, Public procurement and the EU competition rules, 2nd edn, (Oxford, Hart, 2015) 435-436].

Overall, it seems to me that the GC is generally failing to incorporate commercial reality arguments into its judicial decision-making when it comes to this tricky issue of expiry of time-limited tenders during the evaluation process, or before award of the contract. I would thus support a change of tack in future cases, so that there is really no space for strategic games at that stage, and so that contracting authorities do not engage in business-like negotiations that they could (and should) have prevented by reacting earlier on during the evaluation period.

Legitimate expectations claims and EU State aid rules after SAM: some thoughts

One of the points I raised in my paper "Digging Itself Out of the Hole? A Critical Assessment of the European Commission's Attempt to Revitalise State Aid Enforcement after the Crisis" concerned the treatment of legitimate expectations claims in EU State aid enforcement proceedings in the scenario created by the State Aid Modernisation (SAM). In probably not very clear terms, I submitted that
... the Commission will most likely not have the upper hand in withdrawal procedures where Member States (and beneficiaries) will raise important issues related to due process guarantees and good administration duties that limit the Commission’s leeway—unless the old mantra that ‘there is no legitimate expectation to be protected in the field of State aid so as to trump the application of Article 107(1) TFEU’ is extended and applied in an absolute manner—which I do not think possible after the Treaty of Lisbon granted binding force to the EU Charter of Fundamental Rights[68] and, in particular, to the rights to good administration (Art 41)[69] and to an effective remedy and to a fair trial (Art 47).[70]

[68] Charter of Fundamental Rights of the European Union [2010] OJ C 83/389. The specific reasons for this assessment exceed the scope of this paper. For discussion, see R Luja, “Does the Modernisation of State Aid Control Put Legal Certainty and Simplicity at Risk” (2012) EStAL 765-66.
[69] P Craig, “Article 41 – Right to Good Administration”, in S Peers, T Hervey, J Kenner and A Ward (eds), The EU Charter of Fundamental Rights: A Commentary (Oxford, Hart, 2014) 1069-98.
[70] P Aalto et al, “Article 47 – Right to an Effective Remedy and to a Fair Trial”, in S Peers, T Hervey, J Kenner and A Ward (eds), The EU Charter of Fundamental Rights: A Commentary (Oxford, Hart, 2014) 1197-275.
I was rightly challenged on this point by an anonymous reviewer, to whom I am grateful for the opportunity to rethink and expand my arguments on the treatment of legitimate expectations claims for the purposes of State aid enforcement after SAM. I have now addressed the comments and, in the final version of the paper (hopefully soon to be published in the Journal of Antitrust Enforcement), I now explain in more detail what I meant. I hope the argument is now easier to share or, at least, more strongly supported.
... the Commission will most likely not have the upper hand in withdrawal procedures where Member States (and beneficiaries) are likely to raise important issues related to due process guarantees and good administration duties that can limit the Commission’s leeway.[78] It is generally accepted that the principle of legal certainty is one of the general principles recognised in the EU legal order,[79] and that this principle and the corollary protection of legitimate expectations are binding on the Member States and the EU Institutions when they implement EU rules.[80] Nonetheless, the traditional position in this area has been to consider that ‘there is no legitimate expectation to be protected in the field of State aid so as to trump the application of Article 107(1) TFEU’.[81] This has been repeatedly criticised as an inconsistency in the development of the principle of legal certainty and its corollary, the protection of legitimate expectations, in the area of EU State aid law as compared to general EU law.[82] Furthermore, this old mantra may well have been significantly eroded by the entry into effect of the Treaty of Lisbon,[83] which granted binding force to the EU Charter of Fundamental Rights[84] and, in particular, to the rights to good administration (Art 41)[85] and to an effective remedy and to a fair trial (Art 47).[86] Any attempt to transfer the pre-Lisbon ‘no protection of legitimate expectations in State aid law’ paradigm to the post-Lisbon, post GBER paradigm is problematic. The Commission may be tempted to insist that nothing has changed and that, consequently, arguments of legal certainty cannot restrict its ability to dis-apply BER coverage ex post. That would push the old mantra to its extremes and, in my view, would break it. Relatively recent clarifications by the CJEU have tried to establish a balance, whereby recipients of State aid cannot claim legitimate expectations protection if, being diligent, they should have been capable of determining whether or not the EU procedure leading to the award of the aid was complied with or not.[87] Thus, the argument ultimately rests on the observability of the Commission’s ex ante intervention or the absence of such mandatory intervention, where prescribed by EU law (ie Arts 107 and 108 TFEU). In the case of BER protection, this is highly problematic because the restriction of any substantive analysis by the Commission to an ex post phase by necessity requires the recipient to rely on the Member States’ assessment of the BER. As the CJEU has also clarified, ‘a person may not plead breach of the principle of the protection of legitimate expectations unless he has been given precise assurances by the competent authority’.[88] A contrario, such assurances by the Member State as a co-enforcer of EU State aid law in the new post 2014 GBER paradigm may well trigger significant levels of protection of those legitimate expectations.[89] It is submitted, this is likely to increase the weight given to arguments based on legitimate expectations and legal certainty, particularly in the case of attempts to withdraw BER coverage based on a Commission’s ex post assessment that runs contrary to arguments of reasonable reliance (by recipients) on Member State-supported interpretations of the applicable BER,[90] particularly if it derives from a stricter interpretation of the EU State aid rules.[91] This arguments, or at least litigation based on these arguments, can add more layers of ineffectiveness to the post 2014 GBER paradigm based on more withdrawal procedures.
[78] Indeed, this argument is frequently raised in State aid litigation before the EU Courts. For a recent example, see Opinion of AG Whatelet in A2A SpA v Agenzia delle Entrate, C-89/14, U:C:2015:211, paras 44 to 53. However, the AG Whatelet rejected the arguments on the basis of reasons similar to those criticised in the main text.
[79] ISD Polska and Others v Commission, C-369/09 P, EU:C:2011:175, para 122.
[80] Gerekens and Procola, C-459/02, EU:C:2004:454, paras 21 to 24.
[81] However, this is not warranted upon closer examination of the case law, as demonstrated by A Giraud, “A study of the notion of legitimate expectations in State aid recovery proceedings: ‘Abandon all hope, ye who enter here’?” (2008) 45(5) CMLRev 1399-1431.
[82] See T Tridimas, The General Principles of EU Law, 2nd edn (Oxford, OUP, 2006, repr. 2009) 296; W Weiβ and M Haberkamm, “Legitimate expectations in state aid and the CFI” (2010) 9(2) EStAL 537; A Winckler and FC Laprévote, “Reconciling legal certainty, legitimate expectations, equal treatment and the prohibition of state aids” (2011) 10(2) EStAL 321-326.
[83] Similarly, see E Fink, “The Possibility of Protection of Legitimate Expectations in Recovery of Unlawful State Aid” (2013) 1 Juridica International 133-141.
[84] Charter of Fundamental Rights of the European Union [2010] OJ C 83/389. The specific reasons for this assessment exceed the scope of this paper. For discussion, see R Luja, “Does the Modernisation of State Aid Control Put Legal Certainty and Simplicity at Risk” (2012) EStAL 765-66.
[85] P Craig, “Article 41 – Right to Good Administration”, in S Peers, T Hervey, J Kenner and A Ward (eds), The EU Charter of Fundamental Rights: A Commentary (Oxford, Hart, 2014) 1069-98.
[86] P Aalto et al, “Article 47 – Right to an Effective Remedy and to a Fair Trial”, in S Peers, T Hervey, J Kenner and A Ward (eds), The EU Charter of Fundamental Rights: A Commentary (Oxford, Hart, 2014) 1197-275.
[87] Fink (n 83) 136, with reference to France Télécom v Commission, C-81/10 P, EU:C:2011:811, para 59.
[88] AJD Tuna, C-221/09, EU:C:2011:153, para 72; Agrargenossenschaft Neuzelle, C-545/11, EU:C:2013:169, para 25.
[89] At least, where the interpretation by the Member State was reasonable, in line with the original case law in the area of State liability as per The Queen v H.M. Treasury, ex parte British Telecommunications, C-392/93, EU:C:1996:131, para 43 in particular.
[90] The situation is not completely different to that of reliance on legal advisors’ advice, which could erode the argument by reference to Schenker & Co. and Others, C-681/11, EU:C:2013:404. However, this is clearly a controversial area of EU procedural law that requires future developments. In my view, a new wave of protection of legitimate expectations can be expected, particularly where domestic constitutional principles of protection of legitimate expectations as part of the right to good administration are engaged. For discussion, see R Bousta, 'Who Said There is a ‘Right to Good Administration’? A Critical Analysis of Article 41 of the Charter of Fundamental Rights of the European Union' (2013) 19(3) European Public Law 481-488.
[91] Fink (n 83) 139, with reference to Alcoa Trasformazioni v Commission, C-194/09 P, EU:C:2011:497.

Coauthored paper with @pacomarcos: “Human Rights” Protection for Corporate Antitrust Defendants: Are We Not Going Overboard?

There seems to be a clear trend of increased protection of ‘corporate human rights’ and, more specifically, due process rights (or procedural fairness) in the field of enforcement of competition law. To a large extent, that trend is based on the uncritical extension of human rights protection to corporate defendants by a process of simple assimilation of corporate and individual defendants.
 
This new coauthored paper briefly explores the rationale behind the creation of due process rights when the individual is the beneficiary of such protection. It then goes on to critically assess if the same need exists for the extension of those protections to corporate defendants, particularly in the field of competition law or antitrust enforcement. It concludes with some warnings concerning the diminishing effectiveness of competition law prohibitions and of human law protection that can result from an overstretched conception of due process protection in this area of EU economic law.

From a substantive perspective, this paper submits that the extension of human rights to corporations cannot be uncritical and should not be completely symmetrical to that for human beings; but that it rather needs to be necessarily adapted to their circumstances. To put it more bluntly, it is suggested that in the field of the enforcement of economic law, administrative law procedures should be sound and there should clearly be a strong system of judicial review in place, but corporations should not have access to broader constitutional or human rights protections and any perceived shortcomings in the design and application of those procedures should remain within the sphere of regulatory reform.
 
Sánchez Graells, Albert and Marcos, Francisco, “Human Rights” Protection for Corporate Antitrust Defendants: Are We Not Going Overboard? (February 2, 2014). University of Leicester School of Law Research Paper No. 14-04. Available at SSRN: http://ssrn.com/abstract=2389715.

Difficult balance between #transparency and #competition in #publicprocurement

This paper stresses the negative impact that the excessive levels of transparency imposed by public procurement rules can have on competition for public contracts and, more generally, on the likelihood of cartelisation of the markets where public procurement takes place. The paper critically assesses some recent Judgments of the Court of Justice of the European Union and the General Court from this perspective and shows how the top EU Courts are still oblivious to the fact that excessive transparency may diminish the effectiveness of procurement by reducing competition. It also indicates that the case law itself has unused balancing tools that may help reduce the negative impact of excessive transparency, particularly if coupled with a reduction of the financial incentives offered to litigants that have no other claim than a 'mere' lack of compliance with full transparency. The paper concludes that a reform in the enforcement and oversight mechanisms oriented towards the setting up of a semi-opaque review system would overcome some of the deficiencies identified in the current case law from a law and economics perspective.
Sánchez Graells, A 'The Difficult Balance between Transparency and Competition in Public Procurement: Some Recent Trends in the Case Law of the European Courts and a Look at the New Directives' (November 2013). University of Leicester School of Law Research Paper No. 13-11. Available at SSRN: http://ssrn.com/abstract=2353005.

Is Costa v Enel forgotten? CJEU trips over supremacy and direct effect in case concerning Art 41(2)(c) CFREU (C-313/12)

In its Judgment of 7 Movember in case C-313/12 Romeo, the Court of Justice of the EU issued an important ruling concerned with the extension of the obligation to state reasons derived from Article 41(2)(c) of the Charter of Fundamental Rights of the EU in purely domestic situations.
 
In the case at hand, the CJEU was especifically presented with a query regarding the compatibility with Article 41(2)(c) CFREU (and, more generally, with the case law on the duty to state reasons) of an Italian rule whereby faulty administrative decisions would not be quashed if the authorities supplemented their statement of reasons in subsequent court proceedings.
 
In my view, the reasons offered by the CJEU to decline jurisdiction to respond to the questions referred by the Italian court show a poor understanding of (or a lack of willingness to give effect to) the changed nature of the Charter after the entry into force of the Treaty of Lisbon. As very clearly stated, 'the EU Charter of Fundamental Rights is now legally binding, having the same status as primary EU law' [for discussion, see S Douglas-Scott, 'The European Union and Human Rights after the Treaty of Lisbon' (2011) Human Rights Law Review 11(4): 645-682].
 
In that regard, keeping in mind that Article 6(1) of the Treaty on European Union now very clearly indicates that 'The Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union of  [...] which shall have the same legal value as the Treaties' (emphasis added), it is very hard to understand how the CJEU can have unblinkingly held that:
it cannot be concluded that [...] Article 41(2)(c) of the Charter or indeed other rules of European Union law concerning the obligation to state reasons for acts have been made directly and unconditionally applicable (sic), as such, by [the relevant Italian rules], so that internal situations and situations relating to European Union law are treated in the same way. Therefore it must be held that, in the present case, there is no clear European Union interest in a uniform interpretation of provisions or concepts taken from European Union law, irrespective of the circumstances in which those provisions or concepts are to apply (C-313/12 at para 37, emphasis added).

I cannot get my head around the fact that, as no one would doubt, the CJEU has kept for time immemorial the position that the Treaties (now including the Charter of Fundamental Rights  for these purposes) are supreme and directly effective without any need for internal measures that receive them or recognise that they are directly and unconditionally applicable in all EU Member States--and, yet, it shows a stark resistance to apply these principles to the Charter (see also C-482/10 Cicala).
 
As very clearly summarised in Costa v Enel,
A Member State's obligation under the [Treaty], which is neither subject to any conditions nor, as regards its execution or effect, to the adoption of any measure either by the States or by the Commission, is legally complete and consequently capable of producing direct effects on the relations between Member States and individuals. Such an obligation becomes an integral part of the legal system of the Member States, and thus forms part of their own law, and directly concerns their nationals in whose favour it has created individual rights which national courts must protect (6/64, summary, point 7).
This, together with Art 6(1) TEU surely determines the supremacy and direct effect of the Charter--as also supported by an a contrario interpretation of Protocol No 30 on the Application of the Charter of Fundamental Rights of the European Union to Poland and the United Kingdom (what would be the purpose of the Protocol if not precisely to exclude such supremacy and direct effect regarding the UK and Poland?). Then, if the CJEU has not forgotten Costa v Enel, the only relevant question is: how are Judgments like Cicala and Romeo possible? Why is the CJEU (suddenly) so averse to (continuying to) act as constitutional court at EU level?

Missed opportunity for the CJEU to confirm 'non bis in idem' in State aid enforcement (C-560/12 P and C-587/12 P)

In contrast to its very recent Judgment in case C-77/12 P Deutsche Post, where the CJEU clearly barred the European Commission from adopting an indefinite number of 'follow up' decisions concerned with a single State aid investigation (in what I read as an incipient 'ne bis in idem principle' in State aid enforcement); in its  twin Judgments of 7 November 2013 in case C-560/12 P Wam Industriale v Commission and in case C-587/12  P Italy v Commission (only available in French and Italian), the CJEU has brushed aside a similar argument on the basis of its insufficient development by the appellant (C-560/12 P) and (implicitly) on the basis of the lack of independent legal effects of the fresh assessment carried out by the European Commission of the evidence on file after the initial decision had been quashed at judicial review (C-587/12 P). In my view, the Deutsche Post and (the set of) Wam Judgments are difficult to reconcile
 
In Wam, the European Commission had adopted a 2004 decision declaring the unlawfulness of State aid granted by the Italian State to support market expansion projects in Japan, Korea and China. After the quashing of the Commission's 2004 Decision by the GC in 2006 (T-304/04 and T-316/04) and the confirmation of that decision in 2009 by the CJEU (C-494/06), the Commission adopted a new incompatibility Decision in 2010.
 
In its challenge against the Commission's 2010 Decision (C-560/12 P), Wam argued that
the contested [2010] decision is not [merely] vitiated either by a 'procedural irregularity' or a 'formal defect', since the failure to state reasons does not constitute such a defect, but it rather lacks an "essential element", which effectively determines its nullity. In this case, therefore, there is a subjective claim preclusion between the parties [res iudicata] and, accordingly, the Commission, being under the obligation to give effect to the judgments of the Court in Italy and Wam v Commission [T-304/04 and T-316/04] and Commission v Italy and Wam [C-494/06]could not "in any way have adopted a new decision on the matter". The Court should therefore "for this [reason] only", have annulled the contested decision (C-560/12 P, para 6, own translation from Italian).
The argument sounds very similar to the one raised by Deutsche Post (although in that case the 'follow up' decision was not concerned with a full reassessment of the same measures, but with a fresh assessment of measures not expressly considered in the initial Decision eventually quashed), which the CJEU analysed in detail and actually backed in C-77/12 P.

However, in Wam the CJEU does not show the same appetite for the development of a strong limit on the Commission's ability to reopen a case after losing it on appeal (a sort of procedural estoppel or ne bis in idem), and dismisses the argument on the (very formal basis) that
15 By the first part of the first plea, it should be noted that the applicant merely submits that, for the mere fact [of the existence of] the judgments of the Court in Italy and Wam v Commission and Commission v Italy and Wam, the Commission would have been in any case precluded from adopting a new decision.
16 In that regard it should be noted that the argument concerning that matte is limited to a dozen lines on pages 26 and 27 of the appeal, the substance of which is taken up in paragraph 7
[sic, 6] of this judgment.
17 However, such an argument, marred by a lack of precision, clearly does not fulfill the conditions laid down in Article 169, paragraph 2, of the Rules of Procedure of the Court. Consequently, it must be rejected as inadmissible
(C-560/12 P, paras 15-17, own translation from Italian).
In my view, in adopting this approach, the CJEU has been too keen to take an easy way out and has missed an opportunity to reaffirm and give further guidance on the limits applicable to the reopening of State aid investigations by the European Commission. However, the CJEU does look into more detail to a similar submission made by Italy in the other Judgment concerned with the same State aid measures, of the same date (C-587/12 P).
According to the Italian Republic,
7 [ ...] the Court erred in holding that the Commission did not have an obligation to open a new contradictory investigation procedure with the national authorities. Contrary to what the Court found, the point would not have been to establish, in general and in theory if, after a judgment of annulment for failure to state reasons, the Commission could or could not take up the procedure from the adoption of the [annulled] act.
8 The Italian Republic considers that, given that the Commission has "renew[ed] completely" the examination of all matters in the contested decision, introducing new facts, it has hence recognized that the "defects criticized", despite being considered as defects of the duty to state reasons, actually had substantial implications that made it necessary to "redo from scratch" the 2004 decision.
9 The Italian Republic considers that the
[...] factual elements consisting of the alleged "relative strengthening" of Wam and the alleged "freeing up of resources" could never have been deducted from the [initial] investigation procedure. Consequently, them being decisive elements for the demonstration of the existence of aid, the Commission should have opened a new adversarial procedure with the parties concerned [...]
10 The Commission claims that the first part of the first plea is unfounded. It points out that the annulment of the 2004 decision was based on a lack of motivation because [...] that decision did not explain in what way the aid in question could affect competition and trade between Member States. On the contrary, the Court failed to criticize the inquiry into the matter as carried out during the administrative procedure, nor did it identify any deficiency in this regard (C-587/12 P, paras 7-10, own translation from Italian).
The CJEU sides with the European Commission in the following terms:
11 It should be remembered that in the judgment of the Court in Italy and Wam v Commission as well as in the judgment in Commission v Italy and Wam, the investigation conducted by the Commission on the aid in question was not at all criticized.
12 
[...] the General Court correctly pointed out that, according to settled case-law, the procedure for replacing an unlawful act that has been cancelled can be resumed at the point at which the illegality occurred, that the cancellation of a Union act does not necessarily affect the preparatory acts and, furthermore, that the annulment of an act that puts an end to an administrative proceeding which comprises several stages does not necessarily entail the annulment of the entire procedure prior to the adoption of  the contested measure for whatever reason, procedural or substantive, taken into account in the judgment of annulment.
13
 [...] the Court also correctly pointed out that if, despite of the investigations that enable a comprehensive analysis of the compatibility of the aid, the Commission's analysis is found to be incomplete, and it involves the illegality of the decision, the procedure for replacing such a decision may be resumed at that point making a new analysis of the investigatory measures.
14 As regards the present case
[...] the Court stated that the illegality of the 2004 decision [...] concerned the inadequate statement of reasons thereof. [...] the Court has, in fact, merely stated that this decision did not contain sufficient arguments that would allow the conclusion that they met all the conditions for the application of Article 107, paragraph 1, TFEU which was confirmed by the Court in its judgment in Commission v Italy and Wam. The illegality of the 2004 decision did not affect the proceedings before it. No argument leads to the conclusion that that procedure was, in itself, vitiated by any illegality.
15 As to the argument put forward by the applicant's claim that the Court failed to take account of the fact that the Commission has completely revisited the examination of all the evidence in the file and introduced new elements, it should be noted that this argument is not supported by anything which could demonstrate a misrepresentation of the facts relating to it by the Court.
16 As regards the applicant's claim that the Court, in the remainder of its reasoning, ignored any arguments to refute the conclusion set out in paragraph 50 of the judgment under appeal, the Court notes that, in paragraph 57 of that judgment, the Court stated that the circumstances relating to the strengthening of Wam's position and the release of resources were correctly assessed in the contested decision. The Court added in such a point that, in any case, it was not new factual circumstances, but considerations arising from the analysis of the Commission, based on elements with respect to which nothing allowed it to believe that they were not known at the time when the decision was taken in 2004.
[...]
19 In these conditions [...] the General Court correctly concluded that the execution of the judgment of the Court in Italy and Wam v Commission and the judgment in Commission v Italy and Wam did not require the Commission to take on again the whole process provided for in Article 108 TFEU and that the Commission had erred, as a result of the same judgment, by not initiating a new formal investigation procedure.
20 The first part of the first plea is therefore unfounded
(C-587/12 P, paras 11-20, own translation from Italian, emphasis added).
In my view, this is contradictory with Deutsche Post. There, the CJEU basically prevented the Commission from conducting a fresh (additional) assessment of the facts already contained in the file because, even if they were present from the beginning and known by the parties, because the initial decision adopted had exhausted the procedure and closed the investigation completely. Following the same line of reasoning, the Judgment in Wam should have been pointing in that direction by preventing the Commission from adopting a fresh 'theory of harm' on the basis of the facts already on file, as that would equally alter the legal position of the parties and would disregard the fact that the Commission had completely closed the investigation when adopting the initial (now quashed) incompatibility decision.
 
Effectively, Deutsche Post denied the Commission a second bite of the cherry, whereas Wam basically (potentially) allows for multiple bites. I find this inconsistency insatisfactory and, as I said already I would advocate for an approach where once a measure has been analysed and the Commission reaches a final decision, then the same measure should not be subjected to additional enquiries and no new findings of incompatibility should be acceptable.
 
In maybe more blunt terms, the Commission should have one shot (and only one) at each controversial State aid measure, in order to protect legal certainty and as an (implicit) requirement of the principle of good administration.
 
Overall, I would consider such a general principle a positive development in EU State aid law. It remains to be seen, however, whether there is true CJEU appetite for such a development.

"Ne bis in idem" in State aid control? CJEU quashes Deutsche Post decision (C-77/12 P)

In its Judgment of 24 October 2013 in case C-77/12 P Deutsche Post v Commission, the Court of Justice of the EU quashed a Judgment of the General Court (T-421/07) and (indirectly) questioned a decision taken by the European Commission concerning the State aid granted by Germany to Deutsche Post in the 1990s. The Commission had adopted an initial negative decision in 2002 (ultimately quashed by the CJEU in C-399/08 P) and, following a request by the initial complainants to look into the matter in more detail, it decided to extend the scope of the original investigation in a 'follow-up' enquiry carried out in 2007 (while the GC was still considering the legality of the original negative decision).
 
Germany challenged the decision of the European Commission on the general basis that, contrary to its allegations, this 'follow-up' enquiry would alter the legal effects of the initial decision (now annulled) and that such an enforcement strategy would be against the most fundamental principles of due process and good administration.
 
The GC (T-421/07) took no issue with the opening of the 'follow-up' investigation, as it considered that such a decision did not alter the legal standing of the State aid measures under investigation, since they had already been flagged as potentially illegal in the initial decision to open an investigation that the Commission adopted in 1999 (and regardless of the fact that they were not included in the original negative decision of 2002). In even more controversial terms, the GC brushed aside the argument that the annulment of the 2002 negative decision should also be taken into consideration in order to bar any 'follow-up' investigation that ultimately had the same origin. As the CJEU summarises,
In addition, the [General] Court observed in paragraphs 77 and 79 of the contested judgment, that this conclusion is not undermined by the judgment in Deutsche Post / Commission [...]. Indeed, this decision did not rule on the question whether the formal investigation procedure initiated in 1999 in respect of the disputed measures has been closed. The Court further considersed that this decision had the effect of retroactively eliminating the 2002 negative decision, so that "this decision can in no way affect the conclusion that the 2002 [negative] decision had no impact on the existence of any independent legal effects generated by [the contested decision] (C-77/12 P at para 37, own translation from French).
On the basis of those considerations, the GC considered that the 2007 decision to carry out a 'follow-up enquiry' was not open to an annulment action under Article 263(4) TFEU and, consequently, dismissed Deutsche Post's challenge. The CJEU has taken a different view.
 
I find it interesting to stress that the CJEU has argued that:
52 As regards, in particular, the binding legal effects of a decision to initiate the procedure provided for in Article [108], paragraph 2 [TFEU] with respect to a measure running and qualified as new aid, such a decision necessarily changes the legal status of the measure, as well as the legal position of the beneficiaries, particularly in regard to its implementation. After the adoption of such a decision, there is at least a significant doubt about the legality of this measure, which must lead the Member State to suspend the payment, since the opening of the procedure laid down in Article [108], paragraph 2 [TFEU] excludes an immediate decision on the compatibility with the common market that would allow for the regular execution of the measure. Such a decision could be invoked before a national court called upon to draw all the consequences of the violation of Article [108], paragraph 3, last sentence, [TFEU]. Finally, it is likely to lead beneficiaries of the measure to refuse in any event new payments or to provision the necessary funds for any subsequent repayments. The beneficiaries will also be affected in their relations with other agents, which will take into consideration the weakened legal and financial situation of the former (see judgment of 9 October 2001, Italy / Commission, C-400/99, Rec . P. I- 7303, paragraph 59).
53 It should be added that […] such a decision to open an investigation with respect to a measure that the Commission describes as new aid is not simply a preparatory step in that it has independent legal effects, particularly with regard to the suspension of the measure under consideration.
54 In this case, it should be noted that […] in the contested decision, the Commission qualified as new aid the transfer payments made by DB-Telekom and the system of public guarantees. Furthermore, as regards the public pension fund, this institution has expressed its doubts about the extent to which this funding granted an economic advantage to [Deutsche Post]. The Commission also pointed out […] that Germany was under the obligation to suspend the measures challenged by the decision.
55 It follows that the 2007 opening decision is an act that is likely to affect the interests of [Deutsche Post] by altering its legal status and, therefore, it meets all the elements of an act within the meaning of Article [263 TFEU].
56 Contrary to what the Court considered […] that finding is not challenged by the existence of the decision to open an investigation in 1999, by which the Commission opened the procedure laid down in Article [108], paragraph 2 [TFEU] in respect of a series of measures being implemented.
57 Indeed, it is clear that, in any event, the Commission, by its negative decision of 2002, closed the formal investigation procedure in 1999.
58 In this regard, it should be noted that the Commission dealt in its negative decision of 2002, of all the measures challenged by the opening 1999 decision, as argued rightly [Deutsche Post] (C-77/12 P at paras 52-58, own translation from French, emphasis added).

Even if this may not be the end of the story in this particular case, which has been sent back to the GC, I think that the principle established by the CJEU could be read as a sort of 'ne bis in idem' in the area of State aid enforcement. Once a measure has been analysed and the Commission reaches a final decision, then the same measure should not be subjected to additional enquiries and no new findings of incompatibility should be acceptable.
 
In maybe more blunt terms, the Commission has one shot (and only one) at each controversial State aid measure, in order to protect legal certainty and as an (implicit) requirement of the principle of good administration.
 
Overall, I would consider such a general principle a positive development in EU State aid law. It remains to be seen, however, whether this reasoning is only case-specific or the CJEU is willing to flesh out such a general principle in even clearer terms, should the opportunity arise in the future.

Rejection of Abnormally Low and Non-Compliant Tenders in EU Public Procurement: A Comparative View on Selected Jurisdictions

In this new paper, I attempt a concise comparison of the rules applicable to the rejection of abnormally low and non-compliant tenders in a number of EU jurisdictions (namely, Denmark, France, Germany, Italy, Poland, Romania, Spain and the United Kingdom). 

In order to set the common ground for the analysis of such domestic rules, which are solely applicable to non-negotiated procedures, the paper first offers a description of the rules in the EU public procurement Directives and the case law of the European Courts (ie GC and CJEU), and then proceeds to compare them against this benchmark and amongst themselves. Where possible, the paper highlights innovative or different solutions, as well as potential deviations from EU law.

  • Sánchez Graells, Albert, Rejection of Abnormally Low and Non-Compliant Tenders in EU Public Procurement: A Comparative View on Selected Jurisdictions (April 11, 2013). European Procurement Law Series, Vol 6 (forth). http://ssrn.com/abstract=224859