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. Indeed, the General Court held that:

27 […] despite the information contained in [debriefing] letters, and taking into account the relevant case law [Evropaïki Dynamiki/OEDT, T-63/06 at para 112, and Evropaïki Dynamiki/Commission, T-300/07 at para 50] the applicant has not received a response from the Commission showing in a clear and unequivocal fashion the reasoning followed in the adoption of the contested decision. […]

30 […] the Commission has not made a formal comparison of the projects described by the applicant in its expression of interest against the benchmark of the three criteria set out in paragraph 21.3.a) of the contract notice. In particular, it did not explain which of these three criteria was not satisfied by the projects [submitted by the applicant]. In these circumstances, the applicant was not able to know if the reason for the rejection of her expression of interest in the procurement in question concerned the minimum number of projects implemented, their budget, their completion in a timely manner or the areas in which they were executed. […]

35 […] when, as in this case, a European institution has a wide discretion, the guarantees conferred by the Community legal order in administrative procedures is of an even more fundamental relevance. Those guarantees include, in particular, the duty of the competent institution to state sufficient reasons for its decisions (Technische Universität München, C-269/90 at para 14; Le Canne v Commission, T-241/00 at paras 53 and 54, and Evropaïki Dynamiki v Commission, T-300/07  at para 45). […]

40 In light of the foregoing, it must be held that the applicant properly submits that, to the extent that the Commission has not developed further the reasons why her candidacy did not meet the technical selection criteria set in the contract notice, it has not received in a clear and unequivocal fashion the reasoning of the Commission, which would have allowed her to know the reasons for the decision not to be included in the shortlist of the contract at issue. Moreover, she could not sue without knowing what those reasons are. It is noteworthy in this regard that the right to good administration under Article 41 of the Charter of Fundamental Rights of the European Union (OJ 2007 C 303, p. 1) sets an obligation on the administration to justify its decisions and that this motivation is not only in general, the expression of the transparency of administrative action, but it must also allow the individual to decide, with full knowledge of the facts, if it is useful for her to apply to a court. There is therefore a close relationship between the obligation to state reasons and the fundamental right to effective judicial protection and the right to an effective remedy under Article 47 of the Charter of Fundamental Rights. (GC T-183/10, at paras 27 to 40, emphasis added, own translation from French).

As I said, this detailed debriefing standard imposes a very high burden on the contracting authorities and entities to provide very detailed reasons concerning every single criterion used in the evaluation of bids. Therefore, contracting authorities and entities will have a powerful incentive to be extremely cautious in the level of detail they provide in debriefing letters and meetings and, in case of doubt, they may feel that the safer position is to err on the side of providing excessive rather than insufficient information. And this generates some troubling incentives and risks, as discussed here.

 On the other hand and on the same day, the GC issued its Judgment of 10 October 2012 in case Case T-569/10 Bimbo v OHMI – Panrico (BIMBO DOUGHNUTS), where the challenger of OHIM’s decision contended, among other grounds for appeal, that OHIM had not expressly addressed some of the arguments presented during the trademark review procedure. In this case, the GC found that:

39 The applicant is in fact arguing that the Board of Appeal infringed the obligation to state reasons […]

40 It is to be observed that in the present case the Board of Appeal set out in the contested decision the facts and legal considerations which led it to take that decision […]

41 As regards, more particularly, the applicant’s argument that the Board of Appeal failed to respond to two specific arguments which it had put forward during the procedure before OHIM, the following points should be made.
42 Firstly, with regard to the applicant’s argument that the word ‘doughnuts’ is regarded by the Spanish public as descriptive of the goods in question, the Board of Appeal addressed that argument by stating, in paragraph 18 of the contested decision, that for the average Spanish consumer (excluding those who speak English) the word ‘doughnuts’ did not describe the goods or their qualities. It also held that the earlier sign, like the sign applied for, would be perceived as a foreign or fantasy term ‘by most consumers’.
43 Thus, the Board of Appeal implicitly held that the majority of average Spanish consumers did not speak English or, at least, did not speak it well enough to know the meaning of the word ‘doughnuts’. In that context, it should be observed that the reasoning of the decision of a Board of Appeal may be implicit, on condition that it enables the persons concerned to know the reasons for the Board of Appeal’s decision and provides the competent Court with sufficient material for it to exercise its power of review (Case T‑304/06 Reber v OHIM – Chocoladefabriken Lindt & Sprüngli (Mozart) [2008] ECR II‑1927, paragraph 55).
44 In this case, the Board of Appeal’s reasoning rejecting the argument based on the allegedly descriptive character of the ‘doughnuts’ element of the trade mark was sufficient to enable the applicant to understand the reasons that had led the Board of Appeal to adopt the contested decision and to enable the Court to exercise its power of review.
45 Secondly, with regard to the applicant’s argument based on the reputation of the ‘bimbo’ element of the trade mark applied for, it is true that the Board of Appeal did not explicitly address that argument in the contested decision. However, it pointed out that the ‘doughnuts’ element in the trade mark applied for ‘[would] catch the attention of the relevant Spanish public, as it appears unusual in Spanish due to the atypical combination of vowels “ou” and the accumulation of consonants “ghn”’. The Board thus held that that element could not be disregarded in the comparison in question. Thus, it follows from the contested decision that the Board of Appeal did not consider that the ‘bimbo’ element of the mark applied for dominated the overall impression created by the mark applied for to such an extent that the other component – the ‘doughnuts’ element – could be disregarded. The reasoning relating to this point was also sufficient to enable the applicant to know the reasons for the contested decision and to enable the Court to review the legality of the decision on that point.
46 The statement of reasons in the contested decision is thus sufficient in law. (GC T-569/10, at paras 39 to 46, emphasis added).

In my reading, the position of the GC in Bimbo Doughnuts is a more balanced review of the reasons provided by the authority than in Sviluppo Globale, and the focus is ultimately functional. Even if the bottom limit or the minimum standard concerning the duty to give reasons set by the GC in both Sviluppo Globale and Bimbo Doughnuts points towards the same functional requirement [ie that the affected party (either a bidder or a trademark applicant) must be able to decide whether to apply to a court to challenge the decision on the basis of its supporting elements, and that such court must be able to exercise its power of review], there seems to be a clear contradiction–or, at the very least–a significant discrepancy in the level of scrutiny in both cases.

Whereas Sviluppo Globale indicates the need to “show in a clear and unequivocal fashion the reasoning followed in the adoption of the contested decision”, Bimbo Doughnuts leaves more room to administrative restrictions of the information provided by accepting that “the reasoning of the decision may be implicit and even not expressly address all points raised by the applicant”, provided always that the information given is sufficient to understand the reasons for the contested decision. In my opinion, the second position is much less formal and allows for a more workable system of administration of EU rules. Therefore, it seems preferable and should be extended to the public procurement arena and, more generally, to all areas of EU Law.

In this regard, the codification of a proper set of rules (or standards) on EU Administrative Law seems a worthy regulatory exercise. For very interesting proposals, please see the projects conducted under the Research Network on EU Administrative Law http://www.reneual.eu/.