Labels under Reg. 43 Public Contracts Regulations 2015

As Pedro has already discussed (here), reg.43 of the Public Contracts Regulations 2015 (PCR2015) transposes the rules on the use of labels contained in Art 43 of Directive 2014/24. I agree with his general skepticism about the advantages that contracting authorities can actually derive from the use of labels, particularly in view of the need to always accept equivalents (as discussed at length regarding technical specifications, by Pedro as well). 

The following are my comments on Art 43 of Dir 2014/24 in my Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 332-334, which has been published today.

The Appropriate Use of Eco-Labels and other Labels Certifying Social or Other Product Characteristics.[1] On a related note, it is important to stress that Directive 2014/24 has gone beyond the limited rules of article 23(6) of Directive 2004/18 and put a clear emphasis on the possibility to use eco labels and labels certifying certain social aspects of products and services (such as fair trade, or sustainability)[2] as part of the process of detailing technical specifications and, generally, with the goal of creating some clear space for the introduction of environmental and social considerations in the drafting of technical specifications.[3] This was a highly contentious issue under the rules of Directive 2014/24 and required the intervention of the ECJ in order to interpret the limits in the incorporation of label-related requirements in procurement procedures.[4] Directive 2014/24 now aims at consolidating the guidance provided by the ECJ. As clearly stressed in recital (75),

Contracting authorities that wish to purchase works, supplies or services with specific environmental, social or other characteristics should be able to refer to particular labels, such as the European Eco-label, (multi-)national eco-labels or any other label provided that the requirements for the label are linked to the subject-matter of the contract, such as the description of the product and its presentation, including packaging requirements. It is furthermore essential that those requirements are drawn up and adopted on the basis of objectively verifiable criteria, using a procedure in which stakeholders, such as government bodies, consumers, manufacturers, distributors and environmental organisations, can participate, and that the label is accessible and available to all interested parties. … References to labels should not have the effect of restricting innovation (emphasis added).[5]

This general approach is later implemented in article 43 of Directive 2014/24, which sets clear restrictions on the types of labels that can be used by contracting authorities. From a competition perspective and particularly bearing in mind the general requirement of technical neutrality, it is important to stress that the label requirements can only concern criteria which are linked to the subject-matter of the contract and are appropriate to define characteristics of the works, supplies or services that are the subject-matter of the contract (art 43(1)(a) dir 2014/24)[6] and, more importantly, that ‘contracting authorities requiring a specific label shall accept all labels that confirm that the works, supplies or services meet equivalent label requirements’ (art 43(1)III dir 2014/24). This is in line with the position of the ECJ, which had clearly indicated that contracting authorities are banned from imposing compliance with a specific (eco)label rather than using the detailed specifications defined by that (eco)label[7] and, consequently, accepting all functional equivalents—as requested by the general rules controlling the setting of technical specifications and, more generally, the principles of non-discrimination, equal treatment and competition. This has now prompted the new rule under article 43(3) of Directive 2014/24, in virtue of which

Where a label … sets out requirements not linked to the subject-matter of the contract, contracting authorities shall not require the label as such but may define the technical specification by reference to those of the detailed specifications of that label, or, where necessary, parts thereof, that are linked to the subject-matter of the contract and are appropriate to define characteristics of this subject-matter (emphasis added).

Consequently, the rules on (eco)labels clearly follow the general criteria that regulate the establishment of technical specifications and particularly the prohibition of references to a specific make or source, or a particular process which characterises the products or services provided by a specific economic operator, or to trade marks, patents, types or a specific origin or production with the effect of favouring or eliminating certain undertakings or certain products of article 42(4) of Directive 2014/24. Moreover, as will happen with any other sorts of technical specifications (as discussed immediately below), contracting authorities are bound to adopt a possibilistic approach to the assessment of compliance with (eco)label requirements. This is particularly clear from the provision that, in cases where the tenderer has not been able to obtain the specific label indicated by the contracting authority or an equivalent label within the relevant time limits for reasons that are not attributable to that economic operator, requires contracting authorities to accept other appropriate means of proof, which may include a technical dossier from the manufacturer, provided that the economic operator concerned proves that the works, supplies or services to be provided by it fulfil the requirements of the specific label or the specific requirements indicated by the contracting authority (art 43(1) in fine dir 2014/24). In our view, this provision encapsulates the ultimate requirement of the principle of technical neutrality.

[1] Generally, see C Nouira, G Grolleau, and N Mzoughi, ‘Public Purchasing and Eco-labelling Schemes: Making the Connection and Reinforcing Policy Coherence’ (2004) 15(2) Journal of Interdisciplinary Economics 131–51.

[2] See E Fisher and S Corbalán, ‘Fair trade and European public procurement: legal principles and governance dynamics’ (2013) 9(1) Social Enterprise Journal 11–27; C Weller and JM Pritchard, ‘Evolving ECJ Jurisprudence: Balancing Sustainability Considerations with the Requirements of the Internal Market’ (2013) European Procurement & Public Private Partnership Law Review 55; D Dragos and B Neamtu, ‘Sustainable Public Procurement in the EU: Experiences and Prospects’, in F Lichere, R Caranta and S Treumer (eds) Novelties in the 2014 Directive on Public Procurement, vol. 6 European Procurement Law Series, (Copenhagen, Djøf Publishing, 2014) forthcoming.

[3] For a recent case concerned with the balanve between environmental requirements and compliance with the rules on technical neutrality of technical specifications, see Case T-402/06 Spain v Commission [2013] pub. electr. EU:T:2013:445. Generally, for discussion, see R Caranta, ‘Sustainable Public Procurement in the EU’, in R Caranta and M Trybus (eds), The Law of Green and Social Procurements In Europe, vol. 2 European Procurement Law Series (Copenhagen, DJØF Publishing, 2011) 15–51;J Hettne, Legal Analysis of the Possibilities of Imposing Requirements in Public Procurement that Go beyond the Requirements of EU Law (2012) available at; P Kunzlik, ‘Green Public Procurement—European Law, Environmental Standards and ‘What to Buy’ Decisions’ (2013) 25(2) Journal of Environmental Law 173–202; and A Wiesbrock, ‘An Obligation for Sustainable Procurement? Gauging the Potential Impact of Article 11 TFEU on Public Contracting in the EU’ (2013) 40(2) Legal Issues of Economic Integration 105–32.

[4] Case C-368/10 Commission v Netherlands [2012] pub. electr. EU:C:2012:284. For discussion, see T Kotsonis, ‘Commission v Netherlands (C-368/10): environmental and fair trade considerations in the context of a contract award procedure’ (2012) 21 Public Procurement Law Review NA234–NA244; A Semple, ‘Grounds for change: ECJ judgment in Dutch coffee case points to need for reform of procurement rules. Case C-368/10 Commission v Netherlands’ (2012) available at; and M Muller-Wrede, ‘Sustainable Purchasing in the Aftermath of the ECJ's Max Havelaar Judgment’ (2012) European Procurement & Public Private Partnership Law Review 110.

[5] For discussion on the last point, concerning innovation, see M Burgi, ‘Can Secondary Considerations in Procurement Contracts be a Tool for Increasing Innovative Solutions?’, in C Tvarnø, GS Ølykke & C Risvig Hansen, EU Public Procurement: Modernisation, Growth and Innovation (Copenhagen, DJØF Publishing, 2012) 275–90.

[6] M Martens and S de Margerie, ‘The Link to the Subject-Matter of the Contract in Green and Social Procurement’ (2013) European Procurement & Public Private Partnership Law Review 8.

[7] ibid 70.