Competition and public procurement: a mind map

I have been asked to teach a workshop on competition and public procurement for an audience of postgraduate students and practitioners in this week’s session of the Competition Specialist Advanced Degree convened by Prof Antonio Robles Martin-Laborda at Universidad Carlos III of Madrid.

It has been some time since I last taught the topic, so I had to reconstruct my mind map in preparation for the workshop. This is a sketch of what I have come up with (not mind-blowing graphics…). Some additional bullet-points of the key issues in each of the areas of interaction and cross-references to papers where I have developed my ideas regarding each of the topics are below.

Mind map.png

Bid rigging

  • In principle, this is the least controversial area of competition and procurement interaction; bid rigging being an instance of anticompetitive conduct ‘by object’ (under Art 101(1) TFEU) (see here for discussion)

  • Fighting bid rigging in procurement is high on competition authority’s enforcement agendas

  • Procurement structurally increases likelihood of collusion; which is partially compensated by the counter-incentive created by the rules on exclusion of competition infringers (Art 57(4)(c) and (d) Dir 2014/24/EU), provided leniency does not negate its effects

Joint tendering

  • Analytical difficulties to establish a boundary between bid rigging (object-based analysis) and anticompetitive collaboration for the submission of joint tenders

  • Emerging approach to the treatment of joint bidding as a restriction of competition by object (cf EFTA Court Ski Taxi, 2018 Danish guidelines, see also here for analysis of their draft)

  • Particular complications concern the analysis of potential competition under Art 101(1) and 101(3) TFEU, in particular in cases where this is both used to subsume the practice under prohibition in Art 101(1) and also to assess whether the restriction is indispensable to the generation of efficiencies (or whether there were less restrictive forms to achieve them) under Art 101(3) TFEU (see here and here).

Exclusion & self-cleaning

  • Conceptual difficulties with boundary between Art 57(4)(c) and (d) of Directive 2014/24/EU, as well as applicable tests (see here)

  • Application complicated in leniency cases (see eg Vossloh Laeis, C-124/17, EU:C:2018:855, as well as due to different approaches to judicial and administrative finality (see eg Meca, C-41/18, EU:C:2019:507, not available in English)

  • These difficulties are particularly complex once the rules are implemented at the national level, as evidenced by the on-going Spanish sainete in the railroad electrification works cartel (see here and here)

Public buyer power

  • Inapplicability of EU antitrust rules (ie Art 101 and 102 TFEU) directly to the public buyer, given the FENIN-Selex case law (see here)

  • However, potential clawback under EasyPay’s strictest approach to separation test (see here)

CPBs

  • Difficult exemption from EU antitrust rules even under FENIN, given exclusive activity (see here and here)

  • Very minimal regulation and oversight, especially in the context of their cross-border activities (see here, here and here)

SGEI & In-house

  • Interaction complicated in these settings, both in terms of State aid rules (see here), as well as in potential accumulation of conflicting rules under Articles 102 and 106(2) TFEU (ie publicly-mandated or generated abuses of a dominant position)

  • Increasingly complicated tests to assess SGEI entrustment (Altmark, Spezzino, German slaughterhouses)

  • Move towards declaration of some types of procurement (eProcurement, centralised procurement) as an SGEI themselves

State aid (more generally)

  • Difficulties remain after the 2016 Commission notice on the notion of aid (see here)

Abnormally low tenders

  • Difficulties also remain after Art 69 Directive 2014/24/EU, in particular concerning those tainted by State aid (see here)

  • Mechanism hardly used to monitor ‘adequate competition’ or to prevent predatory pricing

Contract changes

  • Difficult analogical application of notice on notion of aid and almost impossible market benchmark in most cases

  • Similarly complicated interaction between merger control and public procurement rules on change of contractor, although these are partially alleviated by Art 72(1)(d)(ii) Dir 2014/24/EU (but cfr ‘economic operator that fulfils the criteria for qualitative selection initially established provided that this does not entail other substantial modifications to the contract and is not aimed at circumventing the application of this Directive’)

Principle of competition

  • Established in Art 18(1)II Dir 2014/24/EU, has the potential to be the gangway between competition and procurement spheres of EU economic law

  • Difficulties in its interpretation (see here), as well as in its application (see here)





Of lost emails, the duty to state reasons and a dimming light in the horizon of eProcurement (T-424/12)



In its Judgment of 28 November 2013 in case T-424/12 UAB Gaumina v Institut européen pour l’égalité entre les hommes et les femmes (EIGE), the General Court has ruled once more on the boundaries of the duty to state reasons in decisions addressed to tenderers whose offers are rejected in public procurement procedures. In my view, despite not advancing the law, this case is relevant because it deals with a fact that is bound to gain relevance as eProcurement (and the use of electronic means of communication in procurement) advances: emails may get lost (sometimes). 

In the case at hand, the contracting authority claims to have sent a disappointed tenderer an email detailing the reasons for the rejection of its offer (ie a detailed evaluation report showing that the offer did not reach the minimum 80% of technical points required to proceed to financial evaluation). The tenderer claims to never have received the email. The authority submitted evidence proving the email was sent from its server. However, there was no (clear) evidence supporting reception of the email by the tenderer. In these circumstances (slightly complicated due to the fact that the parties introduced or offered to submit evidence at different procedural phases), the legal issue at stake basically required determining whether the contracting authority had satisfactorily discharged its duty to state reasons by sending an email for which it had no proof of receipt.
The GC has assessed this issue on the basis of the requirements derived from Article 100(2) of the Financial Regulation applicable to the procurement activities of the EU bodies and institutions [Reg 1605/2002, now repealed by Reg 966/2012, which art 113 imposes the same substantive requirements], according to which
The contracting authority shall notify all candidates or tenderers whose applications or tenders are rejected of the grounds on which the decision was taken, and all tenderers whose tenders are admissible and who make a request in writing of the characteristics and relative advantages of the successful tender and the name of the tenderer to whom the contract is awarded.
With this background, the GC has considered that:
46 [...] in this case, the log of server connection history relied upon by EIGE is not susceptible of establishing receipt of the email of 13 August 2012 by the applicant. Indeed, [...] it is likely that this document was generated solely by EIGE's computer system and it is only capable of showing sent status for the email of 13 August 2012 to the applicant, but not of its receipt by the latter. EIGE could not demonstrate that the applicant's computer system guaranteed the delivery of the email of 13 August 2012, which was challenged by the applicant [...]

48 [ ...] contrary to what EIGE has essentially argued at the hearing, the fact that, during the proceedings before the Court, it presented several pieces of evidence that it had actually sent the email of 13 August 2012 to the applicant does not create the presumption that the latter also received this email, and so that it is for the applicant to prove the contrary. Indeed , for such a reversal of the burden of proof to eventually take place, EIGE should not only provide indicia that it had sent the email of 13 August 2012 to the applicant, but also that the applicant had received said email. However, in this case, the fact that EIGE sent the email to the correct email address and the document entitled "detail record" are only clues that EIGE sent the email of 13 August 2012 to the applicant, but not of the fact that the latter received it.

49 It follows from the foregoing that EIGE has failed to demonstrate that the applicant had received the email of 13 August 2012. It must therefore be held to have infringed the obligation to state reasons imposed on it by Article 100, paragraph 2 of the Financial Regulation [...]

54 [...] as EIGE failed to prove that the email of 13 August 2012 had been received by the applicant, it is clear that EIGE should be considered as not having responded to the request of the applicant to obtain additional information about the rejection of its bid in a timely manner (T424/12 at paras 46 to 54, own translation from French, emphasis added).
In my view, the Judgment can hardly be criticised for adhering to high standards of evidence submission and for upholding the burden of proof against the contracting authority (although some relaxation or a reversal of the burden of proof could have been created on the basis of the server log + use of the correct email address argument).
However, in practical terms, its implications can be very troubling and effectively put a brake on the take-off of eProcurement and the massive extension of the use of electronic means of communication intended by the European Commission as a development fostered by the impending adoption of new procurement Directives.
If authorities cannot invest in secure eProcurement technology and they have to create a paper trail when they use electronic means of communication (ie email), the advantages of the digital revolution can be doubted. Hence, it remains to be seen how technological developments can actually be used to their full extent in an area where traditional administrative law principles and guarantees are so deeply rooted.