Category: Public Procurement

Neues aus dem Elfenbeinturm: September 2014

Duty to give reasons under EU procurement law and EU trademark law: is there a contradiction?

Even if they may seem two – rather disconnected – areas of legal practice, reading cases on EU public procurement and on EU trademark law sometimes offers interesting insights into broader issues of EU economic law or, more generally, EU law. For instance, some recent case law on the duty to provide reasons under each of the specific adminsitrative procedures that govern contract tendering and trademark registration shows what, in my view, is rather a contradiction.

On the one hand, and as commented recently here, the General Court issued his Judgment in Sviluppo Globale GEIE v Commission where it imposed a very demanding standard for the duty to give reasons in procurement cases. Continue reading

Risk of anti-competitive collusion after excessive level of transparency in public procurement debriefing?

In its Judgment of 4 October 2012 in case C‑629/11 P Evropaïki Dynamiki v Commission (ESP-ISEP), the Court of Justice has issued another interesting decision on what should be considered sufficient debriefing of disappointed bidders in public procurement procedures.

The Evropaïki Dynamiki (ESP-ISEP) Judgment has been issued on the basis of Article 100(2) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 248, p. 1) (‘the Financial Regulation’). However, a ‘twin’ provision can be found in Article 41 of  Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114) (‘Directive 2004/18’). Consequently, the Judgment is of relevance in all areas of public procurement, and not only to that of the EU Institutions.

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Procuring military equipment under the public procurement directive

As one of the last bastions of purely national competence, trade in arms is excluded from the application of the Treaty rules. Article 346 TFEU provides that the Treaties do not preclude Member States to trade and procure war material for the protection of the essential interests of its security. Nonetheless, this provision is strictly interpreted by the Court and the case discussed here exemplifies that only goods intended for specifically military purposes qualify for the exemption under article 346 TFEU. But what exactly is equipment intended for specifically military purposes?

At issue in case C-615/10 Ins Tiimi is the procurement of the Finnish defense authorities of tiltable turntable equipment. This equipment is used to facilitate the ‘carrying-out of electromagnetic measurements and the simulation of combat situations’. As such it was argued by the Finnish authorities that it was procured for military purposes. Ins Tiimi, a company which lost the tender, did not agree, claiming that the equipment could be used  for civilian uses as well. Whether or not the tiltable turntable equipment qualified for the exemption was important because otherwise the procurement procedure had to comply with the public procurement directive (directive 2004/18/EC).

There are essentially two conditions that Member States have to fulfill in order to escape the application of EU law according to article 346 TFEU when procuring military material:

  • The measures relating to military procurement must concern ‘arms, munitions and war material’;
  • And secondly, those measures must be necessary for the protection of the essential interests of the security of that Member State.

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Fair-trade coffee and tea under the procurement directive

Can public authorities procure fair trade products, or are they debarred from specifically referring to the fair trade qualities of those products under the public procurement directive (directive 2004/18/EC)? This is one of the issues underlying the judgment of the Court in Case C-368/10 Commission v. Netherlands.

In 2008, the Dutch province of North Holland announced in a tendering procedure that it wished to procure coffee machines and the products necessary to make them function (coffee, tea, sugar, milk, cups). It required that those products to be delivered to bear the Max Havelaar label, a private label that adheres to the rules of the Fairtrade Labelling Organisation. Considering that this tender was contrary to the public procurement directive (2004/18/EC) the Commission started an infringement procedure against the Netherlands.

Obviously, specifically requiring products to bear only that label is contrary to EU public procurement law, as it is way too over specific and does not allow for any form of competition for the contract. However, the Court made – for the first time – some interesting points on procuring fair trade products in general.

The two points I will discuss are:

  • Fair trade requirements to products cannot be part of technical specifications but are conditions relating to the performance of the contract;
  •  Fair trade criteria can be used as award criteria for public supply contracts.

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Public procurement: are Fair Trade products different from Eco-products?

According to Advocate General Kokott they are. Public authorities wishing to procure such products should do so in accordance with article 23 of the public procurement directive (Directive 2004/18/EC) for Eco-products and in accordance with article 26 for Fair Trade products.

But does her reasoning make sense? Check out her logic in her Opinion in Case C-368/10 Commission v. Netherlands (sorry no English translation available!):

 77.      Comme nous l’avons déjà mentionné, conformément à son annexe VI, point 1, sous b), il convient d’entendre par des spécifications techniques au sens de la directive 2004/18 des spécifications figurant dans un document décrivant les caractéristiques requises d’un produit. Il doit donc s’agir d’indications qui décrivent les propriétés d’un produit. Cette analyse se trouve confirmée par l’énumération faite à l’annexe VI, point 1, sous b), de la directive 2004/18: les exemples de spécifications techniques y cités concernent tous le produit lui-même, sa fabrication, son emballage et son utilisation.

78.      Le label «Max Havelaar», en revanche, ne s’intéresse pas aux caractéristiques des produits, mais aux conditions commerciales accordées aux producteurs de produits agricoles dans les pays en voie de développement. Le label ne fournit aucune information sur les propriétés du produit, mais indique si les transactions dont il a fait l’objet étaient équitables, en particulier en ce qui concerne les prix et conditions accordés aux agriculteurs concernés.

What about Eco-products differentiating on the basis of the production process? Or certain ethical products, such as halal or kosher meat?