New paper on the growing thicket of multi-layered procurement liberalisation between WTO GPA parties

© Tom Burke/Flickr.

I have expanded on the thoughts around the multi-layered regulation of procurement-related trade liberalisation in this new working paper: The growing thicket of multi-layered procurement liberalisation between WTO GPA parties, as evidenced in post-Brexit UK. The abstract is as follows:

The World Trade Organisation Government Procurement Agreement (GPA) has created the most comprehensive plurilateral system for procurement-related trade liberalisation. However, there has been a proliferation of free trade agreements (FTAs) regulating public procurement liberalisation, including between GPA parties, which seek to bypass or go beyond the GPA on a bilateral basis, or with a more limited plurilateral remit. Such FTAs tend to follow a ‘GPA+’ approach to provide incremental trade liberalisation based on the substantive provisions of the GPA. However, there is a trend of substantive deviation between the GPA regulatory baseline and the FTA regulation of crucial issues, such as the national treatment obligation or access to remedies, including in FTAs involving the European Union or, recently, its former Member State, the UK. This creates a situation of potential conflict of treaty norms that has so far received limited attention. This article focuses on the resolution of conflicts between GPA and FTA substantive provisions under the 1969 Vienna Convention on the Law of Treaties, using the UK’s post-Brexit FTAs as a case study. It argues for a rationalisation of the system by extending the use of incorporation by reference of the GPA in FTAs involving GPA parties.

As always, feedback and any suggestions for improvement before final publication would be most welcome. The paper can be freely downloaded via SSRN: https://ssrn.com/abstract=4054711.

Deviating from the GPA in bilateral or multilateral FTAs -- how good or effective is that regulatory strategy?

© Thomas Leth-Olsen/Flickr.

One of the issues procurement lawyers may be unlikely to think much about (at least going by my own experience) is the interaction of the several (and growing number of) pieces of international regulation of procurement-related trade liberalisation. And, in particular, the interaction between the World trade Organisation Government Procurement Agreement (GPA) and the procurement chapters in the multilateral and bilateral free trade agreements (FTAs) that have been mushrooming for a while now.

This is an issue I encountered for the first time when looking at the procurement chapter of the UK-Australia FTA (UK-AUS FTA, see here and here), and on which I will be submitting evidence to the International Trade Committee of the House of Lords tomorrow. In case of interest, here are my thoughts on the matter.

**Warning**, tackling this issue requires a bit of a deep dive into the 1969 Vienna Convention on the Law of Treaties, so this post may be niche (or even more niche than usual). TLDR: despite (intentionally?) deviating from the text of the GPA, FTAs are unlikely to generate practical effects where they vary or reduce GPA-based obligations, except in limited cases where the effects are only for the economic operators of the two jurisdictions signing the FTA, which is both counterintuitive and prone to litigation, especially where GPA- situations concern access to procurement remedies.

What’s the matter?

For an increasing number of jurisdictions, procurement-related trade liberalisation has become a multi-layered regulatory puzzle. Let’s take the example of the EU. The EU is a member of the GPA, as are Singapore and Canada (all of them members of the 2012 version of the GPA since 6 April 2014). The EU has also concluded procurement chapters in FTAs, eg with Canada in 2017 (EU-Canada FTA (CETA), Chapter 19), or Singapore in 2019 (EU-Singapore FTA, Chapter 9). In these chapters, the EU has adopted a GPA+ approach based on reiterating and tweaking the rules of the GPA—as opposed to the approach followed eg with the UK in 2021, where the EU-UK Trade and Cooperation Agreement explicitly incorporates the GPA (Art 277 EU-UK TCA), and then adds some additional rules.

The dual regulation of procurement liberalisation between GPA parties in bilateral FTAs (or in plurilateral agreements) can create legal issues where the rules in the later FTAs deviate from the GPA in a manner that varies or reduces GPA obligations (ie GPA-). This is the case, for example, of seemingly reduced national treatment obligations concerning suppliers of the relevant parties offering goods or services of other GPA parties. The issue is as follows (bear with me).

The GPA imposes national treatment and non-discrimination obligations as the foundation of its regulatory architecture. The GPA national treatment clause reads ‘With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall accord immediately and unconditionally to the goods and services of any other Party and to the suppliers of any other Party offering the goods or services of any Party, treatment no less favourable than the treatment the Party, including its procuring entities, accords to: a) domestic goods, services and suppliers; and b) goods, services and suppliers of any other Party’ (Art IV(1) emphasis added). This creates a two-tier requirement of ‘most favoured treatment’, both between the goods, services and suppliers of two given GPA members (procuring and supplying) and across the goods, services and suppliers of all GPA parties other than the procuring party. The underlined clause leaves the possibility open for differential treatment of suppliers of a GPA party offering goods or services of a non-GPA party but extends the national treatment obligation to suppliers offering goods of services originating anywhere in the ‘GPA club’.

This is in line with the GPA non-discrimination clause, which reads: ‘With respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not: … b) discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of any other Party’ (Art IV(2) emphasis added). Again, the possibility is open for differential treatment of suppliers of a GPA party offering goods or services of a non-GPA party—on the implicit assumption that domestic suppliers offering goods or services of a non-GPA party are subjected to the same differential treatment.

Now, under both CETA and the EU-Singapore FTA, the regulation of these obligations is altered (and seemingly narrowed down).

The position under CETA is that ‘With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall accord immediately and unconditionally to the goods and services of the other Party and to the suppliers of the other Party offering such goods or services, treatment no less favourable than the treatment the Party, including its procuring entities, accords to its own goods, services and suppliers.‘ (Art 19.4(1) CETA, emphasis added). Prima facie, this clashes with the GPA because it reduces the circle of protected goods and services accessing procurement opportunities via suppliers to Canadian and EU goods and services, and to the exclusion of those originating in other GPA jurisdictions. This is not contradicted by the non-discrimination clause, according to which ‘With respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not: … (b) discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of the other Party.’ (Art 19.4(2) CETA, emphasis added). Therefore, as a result of CETA, there is an open question as to whether EU/Canadian suppliers offering non-EU/Canadian (GPA) goods or services are protected from discrimination.

The position under the EU-Singapore FTA is perhaps slightly less straightforwardly in clash with the GPA, and it is that ‘With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall immediately and unconditionally accord to the goods and services of the other Party and to the suppliers of the other Party treatment no less favourable than the treatment the Party, including its procuring entities, accords to domestic goods, services, and suppliers’ (Art 9.4(1) EU-Singapore FTA, emphasis added). This omits the GPA reference to suppliers ‘offering the goods or services of any Party’ (although it does not limit it to the goods and services of the parties, as in CETA) and could seem like a logical tailoring of the obligation to a bilateral situation. However, it generates doubts as to the position of EU and Singaporean suppliers offering non-EU/Singaporean goods or services originating in GPA jurisdictions, which would have had access under the GPA but may not have access under the FTA. A restrictive interpretation limiting access to those suppliers offering EU/Singaporean goods and services could be supported by the parallel modification of the non-discrimination clause relative to the GPA standard, which reads ‘With respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not: … (b) discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of the other Party (Art 9.4(2) EU-Singapore FTA, emphasis added). Therefore, the same issues as in CETA arise, although there is some more wiggle room for legal interpretation in this case.

In both cases, however, it is at first difficult to establish definitely whether suppliers offering goods or services from GPA parties other than the EU and/or Singapore/Canada have indeed lost protection as a result of the newer FTA obligations. Such a modification would have been implemented without consent from the relevant GPA party and, in practice, would be challenged. More importantly, then, both FTAs create at least a risk of breach of GPA obligations for the EU (and Singapore and/or Canada) in relation to the goods or services from other GPA parties now potentially being (indirectly) discriminated against as a result of their being offered by an EU/Singaporean and/or Canadian supplier (in effect, a ‘GPA-’ situation, despite the aim of the FTA to create a GPA+ regime).

Here is where the Law of Treaties kicks in.

The regulation in the 1969 Vienna Convention

1. General regulatory background regarding conflicting treaty norms

Art 30 of the 1969 Vienna Convention on the Law of Treaties (VCLT)[1] controls the matter of conflicting treaty norms. Before engaging in an assessment of its conflict rules, it is worth stressing that a conflict between treaty norms will only arise where an interpretation of the later treaty that avoids it is either not possible, or not accepted by the parties.[2] Equally, or in a mutually reinforcing manner, understanding how the conflict norms would operate can have an effect on the interpretation of an obligation under the later treaty that the parties are likely to (voluntarily) adopt. In reality, in cases of potential conflict between treaty norms, there will be a clear interpretive ‘pull’ to try to ensure coherence, or minimise divergence, through interpretation of the later treaty which takes account of the obligations owed to others through the earlier agreement. It is a practical approach which can lessen (but cannot eliminate) the difficulties resulting from treaty clashes. In particular because Art 30 VCLT applies to successive treaties relating to the same subject matter and establishing the subject matter of a treaty can in itself be a disputed issue.[3]

Explicit regulation. In case of conflict between treaty norms other than the Charter of the United Nations (which has precedence; ex Art 30(1) VCLT), Art 30(2) VCLT foresees the possibility of explicit regulation via a conflict clause, in which case: ‘When a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail’.

Unregulated conflicts between the same parties. In the absence of an explicit conflict clause, the VCLT establishes residuary rules, distinguishing two situations. First, in the case of successive treaties with identical parties, Art 30(3) VCLT establishes precedence for the later treaty,[4] and ‘the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty’.

Unregulated conflicts between different parties. The second situation concerns successive treaties with different parties, for example a successive treaty between some but not all the signatories of the previous treaty. In this case, Art 30(4) VCLT establishes two rules, based on a distinction between the effects of the new treaty between its signing parties, and its effects vis-à-vis the other signatories of the previous treaty. Between the parties to both treaties, the rule in Art 30(4)(a) is the same as in Art 30(3) VCLT. That is, the newer treaty takes precedence and ‘the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty’. Conversely, and due to the relativity of treaty rights (Art 34 VCLT), under Art 30(4)(b) VCLT, ‘as between a State party to both treaties and a State party to only one of the treaties, the treaty to which both States are parties governs their mutual rights and obligations.’ Or, in other words, Art 30(4) VCLT establishes that ‘the newer treaty may be applied by its parties but only by leaving intact the rights of those that are only parties to the earlier treaty’.[5]

Modification of treaties between certain of their parties only. Art 30(5) VCLT clarifies that the two rules in Art 30(4) are subject to Art 41 VCLT concerning agreements to modify multilateral treaties between certain parties only, under the rules of those multilateral treaties. Art 41 VCLT covers two situations: (a) the possibility that such a modification is provided for by the treaty; or (b) the modification in question is not prohibited by the treaty, it does not affect the enjoyment by the other parties of their rights under the treaty or the performance of their obligations, and it does not relate to a provision, derogation from which is incompatible with the effective execution of the object and purpose of the treaty as a whole.

Art 30 VCLT does not provide explicit residual rules concerning ‘triangular situations’, where the same action by one of the parties to both conflicting treaties affects the rights resulting from both treaties at the same time (albeit for different parties), and thus unavoidably breaches one of the treaties[6] due to the 'variable geometry' of treaty-resulting obligations. In that case, the possibility of international responsibility of a State for the breach of one of the treaties arises (Art 30(5) VCLT)–especially in the cases falling under Art 30(4)(b) VCLT.[7]

Given this possibility, as mentioned above, where a State is party to two treaties imposing different obligations for triangular situations, it will have a strong incentive to try to resolve the conflict through interpretation or, to the extent allowed by the respective treaties, it will have a strong incentive to comply with the most demanding treaty in order to avoid incurring in international responsibility. Where avoiding breach of either of the treaties in those ways is not possible, States retain discretion to choose which treaty to breach[8] (under the so-called ‘principle of political decision’[9]) and may have an incentive to breach the treaty that would trigger the least (potential) international responsibility, which may well be the newer treaty with a more limited number of parties.

2. Application to the procurement context

The issue of conflicting treaty norms and their potential effect on the interpretation of the deviating clauses of the later treaty is relevant in the context of public procurement, and in particular in the context of the EU’s example above, in particular given the regulatory overlap and divergence between the GPA and the EU’s FTAs with Canada and Singapore.

Modification of the GPA between certain of its parties only. Given that the EU, Singapore and Canada are GPA parties, one possibility would be to consider their bilateral agreements as a modification of the GPA. In that regard, the GPA includes a specific clause on modifications (Art XXII(11) GPA) that would trigger Art 41 VCLT. However, Art XXII(11) GPA requires acceptance of the intended treaty modification by two thirds of the GPA parties, which makes bilateral modification of the agreement impossible (other than concerning schedules of coverage, which are structurally negotiated on a bilateral basis). Therefore, the relevant analysis is based on Art 30 VCLT.

Explicit conflict clause in the FTAs? It is worth noting that the EU-Singapore does contain a (pseudo)conflict clause regarding the GPA, according to which ‘If the Revised GPA is amended or superseded by another agreement, the Parties shall amend this Chapter by decision in the Committee on Trade in Services, Investment and Government Procurement … as appropriate’ (Art 9.20 EU-Singapore FTA). CETA contains another type of (pseudo)conflict clause in relation to the WTO Agreement and other agreements (Art 1.5 CETA), according to which ‘The Parties affirm their rights and obligations with respect to each other under the WTO Agreement and other agreements to which they are party.’ It is highly unlikely that either of these clauses qualifies as an explicit conflict clause meeting all requirements of Art 30(2) VCLT (above).

An unregulated conflict. Therefore, the potential conflict between the procurement provisions in CETA or the EU-Singapore FTA and the GPA seems to be governed by the rule in Art 30(4)(a) VCLT: ie the FTA prevails in the procurement relationship between the EU and Singapore/Canada, with the GPA provisions applying only to the extent they are compatible with the FTA. In any case and regardless of this interpretation, however, the rule of Art 30(4)(b) stands and, in their relationships with other GPA members, the EU, Canada and Singapore are bound by the GPA, regardless of any conflict with their FTA.

This makes the existence of unregulated ‘triangular situations’ particularly challenging where the FTAs deviate from the GPA in a manner that changes or limits the parties’ obligations towards each other (‘GPA-‘). Given that the extensions of coverage under CETA and under the EU-Singapore FTA are only incremental above the general coverage included in the GPA schedules for each of the parties, most of the procurement opportunities covered by the FTAs will be subject to dual regulation—or, in other words, most procurement covered by the EU’s FTAs will generate ‘triangular situations’.

GPA- situations pose significant legal uncertainty but, for the reasons below, they will likely lack any practical relevance if the EU (Canada and Singapore) want to avoid international responsibility for breach of the GPA.

What is the proper interpretation of the FTAs, then?

As above, a literal interpretation of Art 19.4 CETA would suggest that suppliers of either of the parties are protected under the national treatment regime only when they offer goods or services of the parties. This literal interpretation is clearly much more restrictive than the GPA and can affect the rights of suppliers offering non-EU/Canadian goods or services, as well as the access that should be afforded to those goods and services.

Conversely, a literal interpretation of Art 9.4 EU-Singapore FTA would suggest that suppliers of either of the parties are protected under the national treatment regime, even if they offer goods or services from third parties, whether those are GPA or not (unless domestic suppliers offering goods or services from third parties are also subjected to specific differential treatment—eg exclusion—which would set the benchmark of the national treatment obligation). Such an interpretation would significantly expand the scope of the national treatment under the EU-Singapore FTA compared to the GPA in relation to (non-GPA) third country goods and services, which does not seem to plausibly represent the parties’ intent under the FTA. However, such literal interpretation would follow Art 30(4)(a) VCLT.

In contrast, a systematic interpretation that took account of the fact that Art 9.4(2)(b) EU-Singapore FTA only refers to locally established suppliers offering goods or services of the other party (ie either EU or Singapore), would suggest an implicit requirement in Art 9.4(1) that suppliers are only protected as long as they offer EU or Singaporean goods or services. While this interpretation seems more aligned with the putative intention of the parties under the FTA, it does create problems in case of dual regulation procurement (or triangular situations), as EU and/or Singaporean suppliers offering goods or services of a different GPA origin could seek GPA national treatment of the goods or services themselves, which attempted exclusion (under a ‘GPA-’ approach) would likely breach Art 30(4)(b) VCLT.

To avoid breaching their international obligations under the GPA (Art IV(1)) in relation to the goods or services of other GPA parties offered by EU or Canadian/Singaporean suppliers, the EU, Singapore and Australia must refrain from any discrimination of covered suppliers offering goods or services originating anywhere in the ‘GPA club’. This means that, by virtue of the operation of the rule in Art 30(4)(b) VCLT in relation to the goods or services of the GPA parties protected by Art IV(1)GPA, the interpretation limiting the scope of protection under Art 9.4(1) EU-Singapore FTA cannot have any practical relevance. And, more challenging, it also means that the EU and Canada need to set aside Art 19.4(1) CETA.

Conversely, EU or Singaporean suppliers offering non-GPA goods or services may attempt to push for the maximalist literal interpretation sketched above, based on Art 30(4)(a) VCLT. However, given the explicit constraints in Art 9.4(2)(b) EU-Singapore FTA, this is unlikely to succeed under the broader rules of interpretation in the VCLT.

Conclusion

The (lengthy and technical…) analysis above shows that, given the pervasiveness of triangular situations, despite (intentionally?) deviating from the text of the GPA, FTAs are unlikely to generate practical effects where they vary or reduce GPA-based obligations. However, there is an important exception to this, which concerns cases covered by Art 30(4)(a) VCLT, where the effects are only for the economic operators of the two jurisdictions signing the FTA, which is both counterintuitive and prone to litigation, especially where GPA- situations concern access to procurement remedies (this is further assessed here).

Even if these views are correct and there is no practical effect resulting from the deviation in the text of the FTAs from the GPA standard wording, the mere existence of the legal uncertainty resulting from such deviation is undesirable. It is also difficult to ascertain whether any practical effects intended by the respective negotiating teams/governments deciding on the textual deviations are neutralised by the rules in the VCLT, in which case there may be knock-on effects concerning the balance of reciprocal concessions across the procurement chapter, or even across chapters, of the relevant FTAs. At any rate, in my view, a direct incorporation of the GPA rules and an explicit conflict clause giving the GPA precedence over the relevant FTA would be a preferable regulatory technique from this perspective, and one that has already been used by the UK, eg in the EU-UK TCA.

_________________________________________

[1] https://legal.un.org/ilc/texts/instruments/english/conventions/1_1_1969.pdf.

[2] Indeed, in some cases, they can avoid the ‘conflict’ altogether by agreeing to a GPA-compliant interpretation; see eg A Orakhelashvili, ‘Article 30’ in O Corten and P Klein (eds), The Vienna Convention on the Law of Treaties. A Commentary, vol. 1 (OUP 2011) 764, 776 at para 31; see also J Klabbers, ‘Beyond the Vienna Convention: Conflicting Treaty Provisions’ in E Cannizzaro (ed), The Law of Treaties Beyond the Vienna Convention (OUP 2011) 192, 203.

[3] However, as this is not a difficulty concerning the specific field of public procurement, this submission will not address it in any detail. For discussion, see A Orakhelashvili, ‘Article 30 of the 1969 Vienna Convention on the Law of Treaties: Application of the Successive Treaties Relating to the Same Subject-Matter’ (2016) 31(2) ICSID Review - Foreign Investment Law Journal 344-365.

[4] Subject to other general principles, such as those resulting from a conflict between lex posterior and lex specialis, see R Kolb, The Law of Treaties. An Introduction (Edward Elgar 2016) 190.

[5] Klabbers, above n 2, 194.

[6] Orakhelashvili, above n 2, 792 at para 75.

[7] International Law Commission, Draft Articles on the Law of Treaties with commentaries (1966) 271, para (11), https://legal.un.org/ilc/texts/instruments/english/commentaries/1_1_1966.pdf. See also K von der Decken, ‘Article 30’ in O Dörr and K Schmalenbach (eds), Vienna Convention on the Law of Treaties. A Commentary (Springer 2018) 539, 551.

[8] Kolb, above n 4, 186.

[9] Klabbers, above n 2, 195 and 204-205.

Interesting twist on the interpretation of extremely urgent procurement rules -- re [2022] EWHC 46 (TCC)

One of the most awaited court decisions in the PPE procurement litigation saga in the UK was handed down yesterday—see R (Good Law Project and EveryDoctor) v Secretary of State for Health and Social Care [2022] EWHC 46 (TCC). The case concerned, among other things, the interpretation of the authorisation to use a negotiated procedure without prior publication on grounds of extreme urgency, and its limits, under reg.32(2)(c) and 32(4) of the Public Contracts Regulations 2015 (‘PCR2015’), which transpose Art 32(2)(c) of Directive 2014/14/EU verbatim.

The case required an EU law conforming interpretation due to the procurement predating the end of the Brexit transition period (see para [308]). The High Court thus engaged in an analysis of CJEU case law and a functional interpretation of reg.32(2)(c) and 32(4) PCR2015 that is directly of interest regarding the interpretation of Art 32(2)(c) Dir 2014/14/EU (on which see P Bogdanowicz, ‘Article 32’ in R Caranta and A Sanchez-Graells, European Public Procurement. Commentary on Directive 2014/24/EU (Edward Elgar, 2021) 350-362]. There are two points worth highlighting in the Judgment (see also Pedro Telles’ hot take yesterday).

First, the High Court confirmed the ‘blanket approach’ interpretation that the pandemic, in its early stages, was itself sufficient justification to ‘deactivate’ procurement rules through the exception to competitive requirements in reg.32(2)(c) and 32(4) PCR2015 / Art 32(2)(c) Dir 2014/24’EU (paras [329]-[331]). This has been the position of the UK Cabinet Office and the European Commission in their ‘pandemic procurement’ guidelines of March and April 2020, respectively, and one that I share (see A Sanchez-Graells, ‘Procurement in the time of Covid-19’ (2020) 71(1) NILQ 81-87, at 83; see also Bogdanowicz, above, at 32.23, contra Telles, above).

Second, and more interesting, the High Court considered whether the authorisation to carry out a negotiated procedure without prior publication is still subject to some of the requirements of the PCR2015 (and, by analogy, Directive 2014/24/EU). The High Court found that, under certain circumstances, extremely urgent procurement is still bound to respect the equal treatment requirement of reg.18 PCR2015 / Art 18 Dir 2014/24/EU. The High Court’s reasoning was that

It is … necessary to consider whether there are any constraints on the permissible approach by a contracting authority when acting under regulation 32; in particular, whether there is an irreducible minimum standard of objective fairness that applies to such procurements, even in the absence of open competition (at [334], emphasis added).

and that

Regulation 18 provides that contracting authorities shall treat economic operators equally and without discrimination and shall act in a transparent and proportionate manner. Regulation 32 does not expressly disapply the obligations set out in regulation 18. … the question that arises is whether there is any implicit exclusion, or modification, of this provision arising from operation of the negotiated procedure without notice (at [340], emphasis added).

Within this framework, and taking into account the peculiar circumstances of the case — ie the fact that the UK Government ‘operated a high priority lane (“the High Priority Lane”, also referred to as … “the VIP Lane”), whereby suppliers who had been referred by Ministers, [Members of Parliament] and senior officials were afforded more favourable treatment, significantly increasing their prospects of being awarded a contract or contracts’ (at [4]) — the High Court established that

It is reasonably clear that where there is only one economic operator who can provide the works, supplies or services, the principle of equal treatment can have no application. Where there is no alternative source, there will be no comparative exercise carried out and no question of any discrimination arises. However, where the contracting authority considers bids from more than one economic operator, whether at the same or at different times, there is no obvious rationale for disregarding the principle of equal treatment in terms of the criteria used to decide which bidders should be awarded a contract. Dispensing with a competition does not justify arbitrary or unfair selection criteria where more than one economic operator could satisfy the demand (at [341]).

I have two comments here. The first one is that the analysis at para [341] is partially flawed when it initially refers to the existence of a single supply source, as that is covered by the grounds in reg.32(2)(b) PCR2015 / Art 32(2)(b) Dir 2014/24/EU. A proper analysis under ground (c) on extreme urgency should have triggered a different logic, as the presence of extreme urgency allows contracting authorities to simply choose a provider regardless of the existence of alternative providers, precisely because the supply, works or services are so urgent that there is no time to consider alternatives. The choice of the specific supplier to which the contract will be awarded is discretionary, and subject only to documentary requirements primarily concerned with the concurrence of the circumstances justifying the use of the negotiated procedure without prior publication (see Sanchez-Graells, above, 83).

If this premise is correct, on the basis of a maiore ad minus logic, the argument is difficult to extend to a situation where the contracting authority makes repeated choices for the direct award of contracts. That does not mean that unequal treatment is allowed, but rather that the source of the requirement for equal treatment can hardly be found in reg.18 PCR2015 / Art 18 Dir 2014/24/EU in relation to reg.32(2)(c) PCR2015 / Art 32(2)(c) Dir 2014/24/EU because its exclusion is implicit in the authorisation to directly and discretionarily choose the economic operator to be tasked with the extremely urgent supply, service provision or works—regardless of whether there is only one possible source or not, as that is covered in ground (b) of those rules instead.

The High Court dismissed this argument as follows:

The Defendant submits that, as he was not constrained to implement any competitive tender process, it was lawful for the Defendant to elect to approach an economic operator of his choice and negotiate directly with such economic operator for the purposes of awarding any individual public contract. In those circumstances, it is submitted, the principle of equal treatment did not apply. In my judgment that submission goes too far. It would be open to the Defendant to justify the selection of one economic operator but only: (i) where he could bring himself within the conditions set out in regulation 32(2)(b), for example where only one economic operator could source the required PPE; or (ii) where he could justify the extent of such derogation from the principles in regulation 18 under regulation 32(2)(c), for example where only one economic operator could source the PPE within the required timescale. That interpretation is consistent with the guidance issued by the European Commission on 1 April 2020 [at [346]).

I submit that the legal analysis of the High Court in this point is incorrect, simply because there is no single source requirement in reg.32(2)(c) PCR2015 (or in Art 32(2)(c) Dir 2014/24), even if this can be a matter of policy, as reflected in the European Commission’s guidance (at 1 and 2.3). And the absence of a sole source requirement is entirely justified on operational grounds. Imagine a situation where the contracting authority with the extremely urgent need identifies a potential provider and successfully and quickly reaches an agreement to get its urgent need satisfied. It would defy all logic to require the contracting authority to then check whether ‘only [that] undertaking is able to deliver within the technical and time constraints imposed by the extreme urgency‘ (in terms of the Commission’s guidance) and, if not, then engage with additional negotiations with the other/s, which would only generate further delay in getting the extremely urgent (public) need satisfied. Sole source requirements simply make no sense in this setting. In fact, the Commission’s guidance was (contradictorily?) clear that ‘as set out in Art. 32 of Directive 2014/24/EU (the ‘Directive’), public buyers may negotiate directly with potential contractor(s) and there are no publication requirements, no time limits, no minimum number of candidates to be consulted, or other procedural requirements. No procedural steps are regulated at EU level. In practice, this means that authorities can act as quickly as is technically/physically feasible – and the procedure may constitute a de facto direct award only subject to physical/technical constraints related to the actual availability and speed of delivery‘ (emphasis added), with this requirement logically only meaning that the awardee of the contract needs to be able to actually deliver at speed (which was the flaw with eg the ventilator challenge, see here).

Conflating both requirements constitutes an improper interpretation that runs contrary to the CJEU case law on extreme urgency grounds for the use of the negotiated procedure without prior publication. This may seem like a technical point, but I think it is important. It is also a rather unnecessary point for the High Court to have made, as the Judgment does not rest on it. At paras [348] and [350], the Court is clear that the equal treatment requirement emerged from the way in which the discretion was exercised, because the VIP Lane created a procedure that was structurally and unavoidably discriminatory.

Linked to that, my second comment is that the exclusion of reg.18 by reg.32(2)(c) PCR2015 (and EU equivalents) should not have pre-empted the finding of an ‘irreducible minimum standard of objective fairness’ in the organisation of a system to make repeated or multiple direct awards in the context of an extremely urgent need (the VIP Lane). However, such requirements should derive from general administrative law rules or principles and, in particular in the context of procurement covered (and authorised to be carried out via a negotiated procedure without prior publication) by EU law, from the duty of good administration in Article 41 of the Charter of Fundamental Rights of the EU (‘Charter’) — although, admittedly, the relevance of Art 41 Charter to procurement carried out by the Member States is controversial (in favour, AG Sharpston, Opinion in Varec, C-450/06, EU:C:2007:643, at 43; cfr. AG Bobek, Opinion in HUNGEOD, C‑496/18 and C‑497/18, EU:C:2019:1002, at 50).

And, although I am not an expert in UK public law, I would also have thought that general requirements of administrative decision-making should apply to that effect, such as the requirement for decision-makers to consider all issues which are relevant to a decision and not to consider any issues which are not [for discussion in the context of automated decision-making, and with references to case law, see J Cobbe, ‘Administrative law and the machines of government: judicial review of automated public-sector decision-making’ (2019) 39 Legal Studies 636-655, at 650]. However, the High Court also dismissed this argument, although seemingly on the specific factual circumstances of the case (at [456]-[459]).

So it could be that the stringency of the English case law’s approach to the control of objectivity in administrative decision-making provides an explanation for the, in my view, improper interpretation of the requirements that can be attached to procurement via a negotiated procedure without prior publication on grounds of extreme urgency. Whether the CJEU is likely to follow a similar approach to the imposition of equal treatment requirements in the interpretation of Art 32(2)(c) Dir 2014/24/EU in the future is thus difficult to assess.

The UK Parliament must force the UK Government to understand the Brexit game before it keeps playing

In terms of Brexit, the week ahead promises to bring new meaning to the ides of March. As clearly explained in last Friday's Commons Library Brexit Briefing, the UK Parliament, and in particular the House of Commons, is faced with a complex set of votes. They have to decide whether to uphold any of the amendments to the European Union (Notification of Withdrawal) Bill (ie "Brexit Bill") introduced by the House of Lords, which concern (a) the status of EU/EEA citizens in the UK, and (b) the legal enshrinement of on a ‘meaningful’ parliamentary vote at the end of the negotiation period. The House of Commons can decide to accept either of these amendments, or rather reject them and put pressure on the House of Lords to backtrack and provide the Government with the "no strings attached" authorisation to keep playing Brexit that David Davis MP has so vocally demanded this weekend.

These are two highly politically charged (and poisonous) issues. They are also highly complex from a legal perspective. More importantly, it must be stressed that they are also very different in nature. The issue of the status of EU/EEA nationals in the UK and UK nationals in the EU/EEA constitutes a known unknown which content is undiscoverable -- because it ultimately depends on future negotiations and, in the absence of explicit political compromises, its legal resolution will depend to a large extent on the ECJ's use of the principle of legitimate expectations in what promises to be protracted and difficult litigation down the line. Differently, the discussion on the possibility of creating a mechanism for 'meaningful' parliamentary decisions after Article 50 TEU has been triggered and, more generally, on whether Parliament can at any later point in time stop or defer the Brexit decision is a known unknown that is however discoverable.

The right time and occasion for such discovery was the Miller litigation before the Supreme Court. However, due to the UK Supreme Court's illegal failure to seek clarification on the implications and (ir)revocability of a notice under Article 50 TEU, this known unknown remains undiscovered. Given this avoidable uncertainty, it is painfully obvious that the debate being had at the UK Parliament is built on no legal foundation whatsoever. Indeed, as the Commons Library put it,

Underlying the whole debate is the unanswered question of whether a withdrawal notification can be suspended or revoked. Although there is a widespread assumption that it cannot, no court has ruled on this and there is considerable opinion that notification could in fact be revoked. The effects of a [parliamentary] vote against a withdrawal agreement (or against leaving without an agreement) would be completely different depending on the answer.

In simple terms, the UK Parliament is now faced with a skewed and asymmetric choice between two options of different legal weight and plausibility and, more importantly, which carry very different risks to the long term interests of the UK and its citizens. On the one hand, assuming irrevocability of an Art 50 TEU notification is a conservative approach to this protracted issue and works as the worse case scenario, and requires Parliament to be ready to approve the Brexit Bill on the basis that a Government's notification to the EU Council carries the (accepted) risk of the UK leaving the EU in two years' time without a deal. This is indeed a realistic scenario, as timely stressed today in the Commons Select Committee on Foreign Affairs' report "Article 50 negotiations: Implications of 'No Deal'". A vote to pass the Brexit Bill explicitly on these terms seems unlikely because MPs can hardly be expected to tell UK citizens that they support Brexit at any cost. However, this is what they would likely be doing, in particular if they passed the Brexit Bill without the House of Lords amendment (b above).

On the other hand, assuming revocability of an Art 50 TEU is a legally very risky strategy that works as a best case scenario, which would allow Parliament to approve the Brexti Bill (with or without the House of Lords amendment) on the hope that they can prevent a calamitous hard Brexit (ie Brexit with no deal) or even a deleterious soft Brexit (ie Brexit with a bad deal) in the future. The problem with this scenario is that it is exceedingly risky and would create a smoke screen to cover the implications of giving an irrevocable notification at this point in time. Moreover, it relies on a moving legal construction that rests either on the Art 50(2) TEU notification being strictly revocable, or in a dynamic understanding of what 'own constitutional requirements' means in Art 50(1) TEU -- to the effect that, as suggested by the now famous "Three Knights Opinion", a conditional notification requiring a further vote in the UK Parliament can be given, even if the condition is not explicitly stated in the notification.

In my view, there are now two options for the UK Parliament to seek to pursue this best case scenario. The first option encompasses a strategy aimed at making it impossible for the UK Government to continue playing Brexit without clarifying whether a scenario where the UK Parliament can have a 'meaningful' vote down the line actually exists, or if it is just normatively-biased wishful legal thinking. In short, to this effect, the UK Parliament needs to approve the Brexit Bill in a way that imposes an obligation on Theresa May PM's Government to notify to the EU Council that a decision to withdraw from the EU has been adopted in principle, but that such decision remains conditional on the UK Parliament's confirmation once the terms of the deal reached at the end of the two year period (or earlier) are settled.

This would, under the duty of sincere cooperation not only make it possible but, in my view, require the EU Council to ask the ECJ whether such notification seemingly in compliance with the UK's own constitutional requirements is a valid notification for the purposes of Art 50 TEU and whether that conditionality binds the EU Institutions and Member States. Rather than hoping for the best in the Irish litigation where Jolyon Maugham QC is trying to achieve this certainty, the way I have just sketched would be the quickest and most guaranteed avenue to (finally) obtain a decision from the ECJ settling the issue once and for all.

The second option is for the UK Parliament to cave in to the existing pressure and authorise the UK Government to give notice unconditionally -- that is, notably, without keeping the amendment introduced by the House of Lords -- and then hope that they got it right when they assumed that the best case scenario was actually in the cards. In my opinion, no responsible member of the UK Parliament (and in particular of the House of Commons) should gamble the long term interests of the UK and its citizens on such optimistic hopes, particularly when there is a way to clear up this uncertainty before it is too late and the process set in motion by an Art 50 TEU notification cannot be legally stopped (under EU law, which is a major risk currently very difficult to assess).

Of course, there would be some short term political cost if the UK Parliament decided to try out the strategy I am proposing. It could be seen as a waste of time if the ECJ's decision on the EU Council's request were to determine that and Art 50 notification can be conditional or revocable. It could also be seen as highly problematic if the ECJ decided the opposite and, after all, the UK Parliament was faced later with the same odious decision that the worse case scenario implies. However, unless the UK Parliament is willing to crash and burn in the worse case scenario, there is value in making the consequences of an irrevocable notification as clear as possible to UK politicians and UK citizens alike. Currently, democratic processes are skewed and distorted by an avoidable legal uncertainty. In my view, it is not wise, nor legitimate, to put pressure on the House of Commons (or later in the House of Lords) to ignore this very significant risk solely in the pursuit of preserving a short term political capital that Theresa May PM and her Government seem too willing to keep for themselves.

Free to use research project idea

I am in the process of editing a collection of papers on the Regiopost judgment for a book and, in one of them, my colleague Prof Tonia Novitz raises the point that the ECJ could have taken Directive 2014/24 into consideration even if it was not applicable ratione temporis. I found this a very valid point and it got me thinking about whether the ECJ is consistent (or not) in taking into account new(er) iterations of existing directives when they resolve disputes to which the (now) old directive still applies.

In the specific case of procurement, and based only on the 2016 cases I commented in this blog, I could find that the ECJ has sometimes considered ‘in anticipation’ the 2014 version of the public procurement directive (2014/24/EU) in cases where it was not applicable ratione temporis--and thus decided under the 2004 version (2004/18/EC). This happened, for example, in

• Judgment of 8 December 2016 in Undis Servizi, C-553/15, EU:C:2016:935
• Judgment of 2 June 2016 in Falk Pharma, C-410/14, EU:C:2016:399
• Judgment of 2 June 2016 in Pizzo, C-27/15, EU:C:2016:404
• Judgment of 7 April 2016 in PARTNER Apelski Dariusz, C-324/14, EU:C:2016:214

The ECJ has also engaged with other procurement directives (on Concessions, Dri 2014/23) before they were applicable, such as

• Judgment of 14 July 2016 in Promoimpresa, C-458/14, EU:C:2016:558

However, there are also cases where the ECJ rejected to do so, such as

• Judgment of 10 November 2016 in Ciclat, C-199/15, EU:C:2016:853
• Judgment of 27 October 2016 in Hörmann Reisen, C-292/15, EU:C:2016:817
• Judgment of 8 September 2016 in Politanò, C-225/15, EU:C:2016:645

More detailed analysis would be necessary to establish the type of cases in which the ECJ decided (not) to resort to the newer version of the directive, and the reasons it offered (not) to do so. It would also be interesting to expand the study significantly, both to make sure it is exhaustive in the area of public procurement (ie 2014-2017 + checking for additional cases) and to identify some additional area of internal market law to use as a comparator.

Like in (too many) other occasions, I am not sure I will have the opportunity to explore these issues any time soon. So here is the idea for a research project. Anyone that is interested and has the time / mental bandwidth for it, feel free to use it.

General Court forced to engage in 'law & language' analysis... Everything is relative... (T-722/14)

In its Judgment of 4 February 2016, PRIMA v Commission, T-722/14, EU:T:2016:61 (not available in English), the General Court (GC) was required to address a tricky (not to say risible) argument based on the language versions of the different rules applicable to procurement procedures carried out by the EU Institutions and, in particular, linguistic divergences in some versions of the Financial Regulation and its Implementing Regulation. 

In short, a Bulgarian disappointed tenderer complained that, despite having been debriefed by the European Commission as contracting authority on the reasons for the award of the contract to a different tenderer, it had not received an explicit detailed account of the 'relative advantages' of the chosen tender. The argument ultimately rested on the fact that

in Bulgarian, which is the language of the proceedings, the term "сравнителните предимства" ("sravnitelnite predimstva", that is to say "comparative advantages") is used in the Financial Regulation, while the term "относителните предимства" ("otnocitelnite predimstva", that is to say "relative advantages") is used in the Implementing Regulation; while in other languages​​, the terms used are "relative advantages", as in French or English, or the term "advantages", as in German or Italian. ... in several other languages, depending on whether it is contained in the Financial Regulation or the Implementing Regulation, the reference is to either the term "advantages" or the terms "relative advantages" (T-722/14, para 26, own translation from French).

The issue, in the end, is whether having been given reasons of the advantages of the tender chosen for the award of the contract suffices to meet the requirements to indicate relative advantages or comparative advantages in the debriefing documentation (I am not kidding...). The GC's analysisis as follows:

31 For the purposes of this interpretation, it is necessary to consider the various language versions of Article 113, paragraph 2, first paragraph, of the Financial Regulation and Article 161, paragraph 3, third paragraph, of the Implementing Regulation. These show some formal heterogeneity ...: in French, the terms "relative advantages" ["avantages relatifs"] are in both provisions. The English language version uses the same adjective in the Financial Regulation (relative advantages) and the Implementing Regulation (relative merits). In many other languages, the adjective "relative" is used in only one of those acts: in Spanish, in the Implementing Regulation (ventajas relativas), in Dutch, in the Financial Regulation (relatieve voordelen) and in Swedish, in the Implementing Regulation (relativa fördelar[na]). Several language versions only mention the term "advantages": it is, in particular, the German version (Vorteile), Spanish - for the Financial Regulation - (ventajas), Italian (vantaggi), and the Netherlands - for the Implementing Regulation - (voordelen). It should be added that the Swedish version of the Financial Regulation uses the relative proposition "fördelar som kännetecknar" (advantages that characterize). As for the Bulgarian versions of these acts, they use two different adjectives that have been mentioned in paragraph 26 above.

33 ... it is necessary to engage in both a literal and teleological interpretation of the term "advantages" as used, depending on the several cases, alone, or with the adjectives "relative" or "comparative".

34 From a literal point of view, it is essential to emphasize that the noun "advantage" in fact, is sufficient in itself. There can be no advantage other than within the framework of or, at least, in the context of a comparison. The expression "comparative advantages", used in the Bulgarian version of the Financial Regulation is redundant, and the language versions that only utilise the word "advantage" seem therefore legally more rigorous. The notion of relative advantages could, in turn, be of some use if the adjective "relative" could be opposed to the adjective "absolute". Nevertheless, it is clear that there is no "absolute advantage" in connection with the award of a public contract to the best bidder, which necessarily implies, firstly, the use of a range of criteria and, secondly, the lack of a systematic correspondence between the offer of the lowest price and contract award. Therefore it is necessary to interpret the adjective "relative" in its meaning signifying that "which exists only in relation to something else" or "which is not independent". This leads to the conclusion that, ultimately, there is no semantic divergence between the language versions set out in paragraph 31 above, so that the objective of a uniform interpretation of Union acts with different language versions is achieved in this case (see, to that effect, Judgments of 29 April 2010, M e.a., C-340/08, ECR, EU:C:2010:232, paragraph 44, and 26 April 2012, Able UK, C- 225/11, ECR, EU:C:2012:252, paragraph 13 and the case law cited therein).

35 The contracting authority is only required to inform the unsuccessful tenderer having made a request in writing for additional information of which advantages the offer of the successful tenderer had in relation to his (T-722/14, paras 31-35, own translation from French).

The GC could have dispensed with all this linguistic analysis, particularly because, after engaging with the teleological analysis (para 36), it concludes that 'given the constraints, primarily of time, inherent in public procurement procedures, it is sufficient for the contracting authority to forward to the unsuccessful tenderer, in addition to the name of the awardee, the respective scores of their offers under each of the award criteria and the comments underpinning those ratings, so as to allow said tenderer to understand what were the strengths and weaknesses of its offer and how the awardee's offer supplanted (sic?) his' (para 37, own translation from French). 

In my view, all of this is an unfortunate exercise in futility, because the GC insists in a line of case law that imposes excessive transparency in public procurement debriefing processes, allows disappointed tenderers excessive detail of the winning bid and, in the long run, not only creates risks for the competitive tension for future contracts, but also runs important risks of technical levelling and undue constraint on bidders' choices [see A Sanchez-Graells, '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)]. Everything is relative...

Nothing is what it seems: A different concept of 'body governed by public law' for public procurement and VAT (C-174/14)

In its Judgment of 29 October 2015 in Saudaçor, C-174/14, EU:C:2015:733, the Court of Justice of the European Union (CJEU) followed the Opinion of Advocate General Jääskinen (of 25 June 2015, C-174/14, EU:C:2015:430, paras 59-67) and ruled that the concept of ‘other bodies governed by public law’ within the meaning of Article 13(1) of Directive 2006/112 on the common system of value added tax (VAT) must not be interpreted by reference to the definition of ‘body governed by public law’ in Article 1(9) of Directive 2004/18 on public procurement (now substituted by Art 2(4) of Directive 2014/24). 

This is an important Judgment because it consolidates the atomisation of concepts that are increasingly relevant for the application of EU economic law in a scenario of ever growing recourse to private law institutions by the public sector in the organisation of its activities. Thus, it is worth looking closely at the reasons that led to this disconnect between concepts of 'body governed by public law' for the purposes of different branches of EU economic law (namely, taxation and public procurement).

In the Saudaçor case, the dispute concerned the VAT treatment of Sociedade Gestora de Recursos e Equipamentos da Saúde dos Açores SA (Saudaçor). This entity was created by Regional Legislative Decree No 41/2003/A of the Autonomous Region of the Azores (RAA) transforming the Institute of Financial Management of the Health Service of the RAA into a limited company with exclusively public capital, that company being wholly owned by that region. 

Saudaçor has the task of providing services of general economic interest in the field of health and, particular, the planning and management of the regional health system and associated information systems, infrastructure and facilities and the completion of construction, conservation, rehabilitation and reconstruction work on health establishments and services, in particular in areas covered by natural disasters and in areas regarded as risk areas. 

Saudaçor had not been charging VAT to the RAA for the provision of these services. It relied on the exemption as a non-taxable person under Article 13(1) of Directive 2006/112, according to which

States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions.

However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition.

In this setting, the Public Treasury opened an investigation and considered that the services provided by Saudaçor in respect of the planning and management of the regional health service concern areas of activity involving private initiative, which means that treatment as a non-taxable person for VAT purposes might lead to distortions of competition, thus challenging Saudaçor's status as a non-taxable person.

The appeals of the case went all the way up to the Supreme Administrative Court of Portugal, who harboured doubts as to the interpretation of the concept 'other bodies governed by public law' used by the judge of instance, which had decided that 

for the purpose of interpreting the rule laid down in the first subparagraph of Article 13(1) of Directive 2006/112, under which bodies governed by public law are not regarded as taxable persons for VAT purposes, there is no need to refer to the concept of ‘body governed by public law’ defined, in the context of public procurement law, in Article 1(9) of Directive 2004/18 since the latter concept is understood in a broad sense, whereas the concept of ‘body governed by public law’ within the meaning of the first subparagraph of Article 13(1) of Directive 2006/112 must be interpreted strictly when applying the rule of treatment as a non-taxable person for VAT purposes because that rule constitutes an exception to the general rule of taxation of any economic activity (C-174/14, para 24).

The Supreme Administrative Court of Portugal considered that

whilst it is clearly established in the [CJEU]’s case-law that only the activities of bodies governed by public law acting as public authorities are excluded from liability to VAT, it cannot be determined on the basis of that case-law whether an entity such as Saudaçor, having regard to its legal status as a limited company originating from the transformation of a State entity, comes within that concept of body governed by public law. The question arises in particular whether the scope of that concept tallies with the scope of the concept of ‘body governed by public law’ in Article 1(9) of Directive 2004/18 in the context of the definitions of the various categories of ‘contracting authorities’ (C-174/14, para 28, emphasis added).

In his Opinion, AG Jääskinen considered that there was no need to consider the compatibility of the definition in Article 13(1) of Directive 2006/112 and that in Article 1(9) of Directive 2004/18. In his view, such irrelevance of the concept of ‘body governed by public law’ within the meaning of Directive 2004/18 for the interpretation of Article 13(1) of Directive 2006/112 derived from the following reasons

63. Article 13 has been regarded in the Court’s case-law as an exemption which should be placed in the general context of the common system of VAT. Thus, as a derogation from the principle that any activity of an economic nature must be subjected to VAT, the first subparagraph of Article 13(1) of Directive 2006/112 must be interpreted strictly. Obviously, this also holds for the interpretation of the concept of ‘other bodies governed by public law’ in the first subparagraph of Article 13(1).

64. By contrast, in the light of the objectives pursued by the provisions of Union law on the coordination of the procedures for the award of public contracts, and in particular the dual objective of opening up competition and transparency, the concept of ‘body governed by public law’ within the meaning of Article 1(9) of Directive 2004/18 should be given a broad and functional interpretation.

65. It should be stated that the meanings of, on the one hand, ‘body governed by public law’ for the purposes of Directive 2004/18 and, on the other, ‘other bodies governed by public law’ for the purposes of Directive 2006/112 cannot be the same, as those two directives have very different objectives (sic) [...]

66. It should be added that, as was rightly pointed out by the United Kingdom Government, the Union legislature made the deliberate choice not to make reference in Directive 2006/112 to the concept of ‘body governed by public law’ which appears in Directive 2004/18. In other contexts, where it considered that a link should be made between two instruments of EU law, the Union legislature chose to adopt the definition used in Directive 2004/18 by means of a cross-reference (Opinion of AG Jääskinen in C-174/14, paras 63-66, references omitted and underlining added--other emphasis in the original).

In my view, this approach creates two difficulties. Firstly, if concepts of identical wording are to be interpreted differently depending on the ultimate goals of the rules of EU economic law in which they are inserted, legal certainty can hardly be satisfied. Secondly, the narrow interpretation of Article 13 could have been implemented through a strict approach to the concept of  'activities or transactions in which they engage as public authorities', or to the existence of 'distortions of competition'. This would have been preferable to the dissociation of concepts that are meant to determine the subjective scope of application of rules of EU economic law--which, by the way, are meant to be applied concurrently to the those entities.

In its final Judgment, the CJEU followed the Opinion of AG Jääskinen and ruled that

46 By defining in broad terms the concept of ‘body governed by public law’ and, as a result, the concept of ‘contracting authorities’, Article 1(9) of Directive 2004/18 seeks to define the scope of that directive in a sufficiently extensive manner so as to ensure that the rules on, in particular, transparency and non-discrimination which are required in connection with the award of public contracts apply to all State entities which do not form part of the public administration but which are nevertheless controlled by the State, in particular by means of their financing or their management.

47 However, the context of the concept of ‘other bodies governed by public law’ referred to in Article 13(1) of Directive 2006/112 is fundamentally different.

48 That concept is not intended to define the scope of VAT but, on the contrary, makes an exception to the general rule on which the common system of that tax is based, namely the rule that the scope of that tax is defined very broadly as covering all supplies of services for consideration, including those provided by bodies governed by public law (see, to that effect, judgment in Commission v Netherlands, C-79/09, EU:C:2010:171, paragraphs 76 and 77) (C-174/14, paras 46-48, emphasis added).

I have difficulty accepting the reasoning of the CJEU as persuasive. Taken literally, it would mean that the rules that determine the (material, and personal?) scope of application of a norm are only those of a positive nature--ie rules of inclusion--whereas the negative rules that free situations or agents from coverage by that norm--ie rules of exclusion--would not be seen as able to construct its scope. This is logically confusing, as delineating the actual scope of application of a norm involves taking into account both the elements that determine what is included and those that determine what is not included therein [for a discussion on the validity and effectiveness of restrictive legal norms, see K Larenz, Metodología de la Ciencia del Derecho, 2a ed (Madrid, Ariel, 2001) 252-253].

Moreover, when the CJEU engages in the determination of whether Saudaçor meets the requirements to be considered within the category of ‘other bodies governed by public law’ for the purposes of Article 13(1) of Directive 2006/112 (paras 55 and ff), the CJEU uses criteria that are fundamentally aimed at determining if: 1) it has powers that traditionally would belong to the public sector (paras 58-59), 2) the region that owns it can exercise decisive control over it (paras 60-65), and 3) it engages in any competition with private providers (para 66). Implicitly, the CJEU also considers whether more than 50% of its funding comes from the public sector (para 63), and it stresses that the activity carried out by Saudaçor is a service of general economic interest (para 67), to the effect of (implicitly) determining that it is not of a purely commercial nature. 

Thus, in my view, these are fundamentally the same criteria and considerations that would apply under the test designed to determine whether an entity is a body governed by public law under the applicable public procurement rules. Functionally, then, the analysis actually carried out by the CJEU is convergent in the fields of taxation and procurement. I consequently struggle to see what was there to be won in the position that "the concept of ‘other bodies governed by public law’ within the meaning of Article 13(1) of [Directive 2006/112] must not be interpreted by reference to the definition of ‘body governed by public law’ in Article 1(9) of Directive 2004/18". 

It seems that the CJEU is only willing to engage in functionalism in the application of the rules, but not in the formulation of the concepts that underpin them. This creates significant confusion and threatens legal certainty. Specially when it is impossible to know in which situations where it is confronted with (almost) identically drafted provisions of EU economic law the CJEU will adopt a single 'EU law' autonomous concept or more than one... Nothing is what it seems under EU economic law...

When a commercial lawyer is (also) a consumer: Excessive paternalism by the CJEU (C-110/14)

In its Judgment in Costea, C-110/14, EU:C:2015:271, the Court of Justice of the European Union (CJEU) has engaged in extreme formalism in the interpretation of the notion of 'consumer' under EU law [and, more precisely, under Article 2(b) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts]. Costea is, in my view, a criticisable Judgment because it pushes legal fiction too far and departs from what I would have considered a sensible functional approach to the concept of consumer. It is worth looking closer at the reasoning of the CJEU.

The CJEU provides a very useful summary of the facts of the case: 

Mr Costea practises as a lawyer and, as such, primarily handles cases in the field of commercial law... he concluded a credit agreement with Volksbank. The repayment of that loan was secured by a mortgage registered against a building belonging to Mr Costea’s law firm ... That credit agreement was signed by Mr Costea, not only in his capacity as borrower but also in his capacity as representative of his law firm, owing to the latter’s status of mortgage guarantor (C-110/14, para 9, emphasis added).

In short, then, Mr Costea was legally acting in several capacities in a single commercial transaction, where he was both borrowing money personally and representing the legal entity that acted as his guarantor. However, he claimed protection under EU law so as to detach both legal positions and avoid his professional qualification from reducing the protection that he would otherwise be afforded as a lay consumer.

His claim was, in very simple terms, that he was at the same time a commercial lawyer acting for his firm and a consumer acting for himself. Given the impossibility of splitting the human mind and detaching oneself from knowledge already acquired, it is very hard to understand how--beyond the legal fiction derived from his ability to represent a legal entity created and owned by himself, as well as his own personal interests--he could ever be considered to functionally hold two very opposite positions: ie that of the knowledgeable commercial lawyer that acts under the general duties of his lex artis, and that of the unknowing consumer that deserves special protection when it enters into complex transactions.

However, the CJEU does precisely that. Following the Opinion of AG Cruz Villalón (see a comment here), the CJEU engages in the following reasoning:

17 It is ... by reference to the capacity of the contracting parties, according to whether or not they are acting for purposes relating to their trade, business or profession, that the directive defines the contracts to which it applies (judgments in Asbeek Brusse and de Man Garabito, C-488/11, EU:C:2013:341, paragraph 30, and Šiba, C-537/13, EU:C:2015:14, paragraph 21).
18 That criterion corresponds to the idea on which the system of protection implemented by that directive is based, namely that the consumer is in a weaker position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge. This leads to the consumer agreeing to terms drawn up in advance by the seller or supplier without being able to influence the content of those terms (judgments in Asbeek Brusse and de Man Garabito, C-488/11, EU:C:2013:341, paragraph 31, and Šiba, C-537/13, EU:C:2015:14, paragraph 22).
21 The concept of ‘consumer’, within the meaning of Article 2(b) of Directive 93/13, is ... objective in nature and is distinct from the concrete knowledge the person in question may have, or from the information that person actually has (C-110/14, paras 17-18 and 21, emphasis added).

In setting up this analytical framework, the CJEU conflates two arguments. The first one relates to the weak position of the consumer in terms of unequal bargaining power. The second one relates to the information imperfection that can affect the consumer. At least on this second point, the CJEU is extremely formalist and engages in an interpretation of EU law that is not adjusted to commercial reality, but simply aimed at the world of ideas. By  flatly rejecting that the specific knowledge and expertise of the consumer can alter its legal position, the CJEU preempts any granularity in EU consumer law, at least when it comes to a potential reduction of the standard of protection of the savvy consumer--which is also functionally in stark contrast with the increased protection afforded to the particularly vulnerable consumer, and thus creates a clear imbalance in the development of this area of EU economic law.

Moreover, this formalism exacerbates the paternalism of the CJEU in its aim to protect consumers, even when they are in a situation where they do not actually deserve protection because they are not affected by an information asymmetry or imperfection [for extended discussion on this rationale for consumer protection law, see F Gomez Pomar, 'EC Consumer Protection Law and EC Competition Law: How related are they? A Law and Economics perspective' (2003) InDret 113, pp. 10 and ff]. Thus, the Costea Judgment is bound to expand consumer protection beyond its desirable remit.

The line of argument based on the consumer's limited bargaining power is the one that allows the CJEU to afford protection to Mr Costea as an individual. It is harder to take issue with the reasoning of the CJEU in paras 24-27 because the CJEU assesses the relative bargaining power of a lawyer in the abstract and concludes that 'even if a lawyer were considered to display a high level of technical knowledge ..., he could not be assumed not to be a weak party compared with a seller or supplier'. However, this should have been left for a factual assessment under the circumstances of the case, in which it could actually be proven (not presumed or assumed) that the lawyer was in no weaker position.

This is where the CJEU again engages in a line of reasoning that is extremely formalistic, particularly because it loses perspective of the fact that several legal persons are actually embodied in a single natural person. According to the CJEU

28 As regards the fact that the debt arising out of the contract in question is secured by a mortgage taken out by a lawyer in his capacity as representative of his law firm and involving goods intended for the exercise of that lawyer’s profession, such as a building belonging to that firm, it should be held that ... it has no bearing on the assessment carried out in ... this judgment.

29 The case in the main proceedings concerns the determination of the status (that of consumer or of seller or supplier) of the person who has concluded the main agreement (the credit agreement) and not the status of that person under the ancillary agreement (the mortgage), securing the payment of the debt arising from the main agreement. In a case such as that at issue in the main proceedings, the categorisation, as a consumer or as a seller or supplier, of the lawyer in the context of his taking out a mortgage cannot, consequently, determine his status under the main credit agreement (C-110/14, paras 28-29, emphasis added).

In my view, this is simply functionally absurd. The CJEU failed to look at the transaction as a whole and afforded protection beyond what might have been necessary. Moreover, the reasoning seems exceedingly simplistic in its dichotomy: ie in a given contract, each of the parties is either a consumer or a seller/supplier. This is not in line with the fact that, as AG Cruz Villalón pointed out in his Opinion, 'the contrast between the concepts of seller or supplier and consumer does not operate in completely symmetrical terms' (para 21). A functional approach should certainly allow for a more nuanced approach, so that a specific party (ie the one that demands the services in the transaction) can be categorised as consumer/no-consumer. This is certainly the case with legal entities [Judgment in Cape and Idealservice MN RE, C-541/99 and C-542/99, EU:C:2001:625, para 16], and there seems to be no good reason to automatically exclude such analysis in the case of professionals.

Overall, then, the Costea Judgment seems like an exceedingly formalistic exercise and leaves a flavour of undue expansion of consumer protection that could well backfire by allowing professionals to access unnecessary protection by the simple use of separate legal entities (which they can create and control). Will this lead to a future extension of the doctrine of lifting the corporate veil to the area of consumer protection? That would certainly be bonkers...

A network of papers on competition in public procurement: What a summer

If anyone has followed my SSRN account over the summer, they could not be blamed for thinking that I have been uploading quite a number of relatively similar papers on the interaction of competition and public procurement rules, and particularly the interpretation of Article 18(1) of Directive 2014/24. Given that this is something I explore in detail in Public Procurement and the EU Competition Rules, 2nd end (Oxford, Hart, 2015) 195-237 (generously made freely available by Hart Publishing here), the reader may wonder what else was there to say about this.

It is true that some of these papers touch upon connected issues and even have some overlapping sections. This could indeed lead readers to think that the papers are a simple iteration of the same ideas and, consequently, there is no point in reading them. This post explains how these papers interact and relate to each other--and it will hopefully clarify that I have not simply engaged in a massive exercise of self-plagiarism (or at least not willingly!). The papers address different specific issues or have different overall aims, which I hope makes them interesting to different scholars and practitioners for different reasons.

(1) The paper with a more general view is 'Competition Law and Public Procurement', which explores two of the areas in which antitrust prohibitions and public procurement law interact. This forms part of a larger project led by Dr Jonathan Galloway of the Newcastle Law School, which researches the way in which antitrust law (ie arts 101 and 102 TFEU) has developed through its interaction with other sets of economic law rules, both in the public and private law sphere. Thus, the paper provides an overview of the areas where the antitrust rules and EU public procurement law overlap, and zooms in to propose that the principle of competition in Art 18(1) of Dir 2014/24 may serve as a transmission belt to bring competition considerations and analysis to the public procurement sphere.

(2) With a similar general approach, I have updated 'Public Procurement and Competition: Some Challenges Arising from Recent Developments in EU Public Procurement Law' (originally drafted in 2013), to be included in Professor Chris Bovis' Research Handbook on European Public Procurement (Edward Elgar, forthcoming). This paper aims to map some of the challenges for a better integration of competition and public procurement rules that remain after the adoption of Dir 2014/24, and pays attention to issues related to eProcurement and the need of further professionalization of procurement. The paper points at research questions that may lead to further research, so it will hopefully be relevant to academics and postgraduate students looking for not so trodden paths to further our knowledge in this area of EU economic law.

(3) The most recent paper 'A Deformed Principle of Competition? – The Subjective Drafting of Article 18(1) of Directive 2014/24' provides a contextual analysis of the legislative process that led to the adoption of Dir 2014/24. Again, this paper forms part of a larger project led by Dr Grith Skovgaard Ølykke and myself that explores broader issues of the EU legislative process and the interaction of the EU Institutions involved, using the 2011-2014 EU public procurement reform as a case study. From this perspective, the paper focuses on the EU legislative process that led to the consolidation of the principle of competition in Art 18(1) of Dir 2014/24, as well as the modifications that its drafting suffered as a consequence of the negotiations between the Member States at the Council and the further amendment proposals by the European Parliament in preparation of the trialogue with the European Commission. This is, on its whole, a 'law and political science' paper--which is a methodological approach that we are trying to embrace as part of the project.

(4) Following this approach of assessing the interaction between law and policy, 'Truly Competitive Public Procurement as a Europe 2020 Lever: What Role for the Principle of Competition in Moderating Horizontal Policies?' tackles the implications of the principle of competition for the pursuit of horizontal policies as part of the broader Europe 2020 strategy. The paper takes the view that the principle of competition in Art 18(1) of Dir 2014/24 is the main tool in the post-2014 procurement toolkit and the moderating factor in the implementation of any horizontal (green, social, innovation) policies under the new rules — that is, that competition remains the main consideration in public procurement and that the pursuit any horizontal policies, including those aimed at delivering the Europe 2020 strategy, need to respect the requirements of undistorted competitive tendering. This is part of a broader discussion on the position and role of public procurement in the Europe 2020 strategy with Dr Richard Craven, Dr Sylvia de Mars and Dr Rike Kraemer at the forthcoming UACES conference.

(5) Finally, adopting a different perspective, 'Assessing Public Administration’s Intention in EU Economic Law: Chasing Ghosts or Dressing Windows?' looks at public procurement and State aid rules as two examples of areas of EU economic law subjected to interpretative and enforcement difficulties due to the introduction, sometimes veiled, of subjective elements in their main prohibitions. The paper explores the main thesis that such intentional elements need to be ‘objectified’, so that EU economic law can be enforced against the public administration to an adequate standard of legal certainty. Thus, the paper does not delve into the substantive implications of the principle of competition in Art 18(1) of Dir 2014/24, but on the technical aspects implied in its apparent requirement of assessing the intention of contracting authorities whose procurement activities are covered by the EU rules.

Overall, in my view, the papers offer quite a complementary set of perspectives on the general issue of the interaction between competition law and public procurement (1, 2), the way in which this interaction is fleshed out in the EU legislative process (3), the way in which diverging and conflicting policy goals can be balanced-out in a pro-competitive way (4) and the broader implications of the development of EU administrative law issues within these fields of EU economic law (5). Their common theme or common denominator is the permanent main focus on the principle of competition consolidated in Art 18(1) of Dir 2014/24. However, when taken as a whole, that is solely the conduit for the exploration of broader issues. Thus, I hope they will still be relevant for interested readers. From now on, I will focus on different issues. Enough of this topic, at least for the summer!

New Paper: Assessing Public Administration’s Intention in EU Economic Law: Chasing Ghosts or Dressing Windows?

I have uploaded a new paper on SSRN that explores the issue of the assessment of 'intention' for the purposes of enforcing EU economic law against the public administration.

The paper looks at public procurement and State aid rules as two examples of areas of EU economic law subjected to interpretative and enforcement difficulties due to the introduction, sometimes veiled, of subjective elements in their main prohibitions. The paper establishes parallels with other areas of EU economic law, such as antitrust and non-discrimination law, and seeks benchmarks to support the main thesis that such intentional elements need to be ‘objectified’, so that EU economic law can be enforced against the public administration to an adequate standard of legal certainty. This mirrors the development of the doctrine of abuse of EU law, where a similar ‘objectification’ in the assessment of subjective elements has taken place.

The paper draws on the case law of the Court of Justice of the European Union to support such ‘objectification’ of intentional elements in EU economic law, and highlights how the Court has been engaging in such interpretative strategy for quite a long time. It then goes on to explore the interplay between such an approach and more general protections against behaviour of a public administration in breach of EU law: ie the right to good administration in Article 41 of the Charter of Fundamental Rights of the European Union, and the doctrine of State liability for infringement of EU law. The paper concludes with the normative recommendation that EU economic law should be free from subjective elements in its main prohibitions.

 

The full reference is: A Sanchez-Graells, 'Assessing Public Administration’s Intention in EU Economic Law: Chasing Ghosts or Dressing Windows?' (August 7, 2015). Available at SSRN: http://ssrn.com/abstract=2641051.

New paper on principle of competition and pursuit of horizontal policies in public procurement

I have uploaded on SSRN a new paper entitled: Truly Competitive Public Procurement as a Europe 2020 Lever: What Role for the Principle of Competition in Moderating Horizontal Policies? I will be presenting it at UACES 45th Annual Conference.

The paper discusses issues of balance between promotion of competition and the pursuit of horizontal or secondary policies in public procurement under the rules of Directive 2014/24. The abstract is as follows:

Public procurement is a pillar in the Europe 2020 strategy and one of the core policies derived from the Single Market Acts I and II. Majoritarian views advocate for an interventionist approach and instrumental utilisation of procurement for the promotion of horizontal policies seen as deeply embedded in the Europe 2020 strategy. Conversely, public procurement can only make such a contribution by promoting the maximum degree of competition and being open to market-led innovation, instead of trying to mandate or ‘drive’ such innovation or ‘greening’ of procurement.

This paper takes the view that the principle of competition is the main tool in the post-2014 procurement toolkit and the moderating factor in the implementation of any horizontal (green, social, innovation) policies under the new rules—that is, that competition remains the main consideration in public procurement and that the pursuit any horizontal policies, including those aimed at delivering the Europe 2020 strategy, need to respect the requirements of undistorted competitive tendering. To substantiate that claim, the paper focusses on the interpretation of Article 18(1) of Directive 2014/24, which consolidates the principle of competition, and proposes a strict proportionality test applicable to the promotion of horizontal procurement policies where such ‘strategic’ or ‘smart’ use of public procurement can generate market distortions.

The full reference is: Sanchez-Graells, Albert, Truly Competitive Public Procurement as a Europe 2020 Lever: What Role for the Principle of Competition in Moderating Horizontal Policies? (July 31, 2015). Available at SSRN: http://ssrn.com/abstract=2638466. Comments welcome!

CJEU consolidates functional approach to customs nomenclature interpretation (C-380/12)

In its Judgment of 23 January 2014 in case C-380/12 X, the Court of Justice of the European Union (CJEU) was presented with a request for a preliminary reference on the proper interpretation of certain headings of the applicable customs nomenclature.

 

The case is riddled with technical (biochemical) complications but, in my best understanding of it, the key issues focussed on whether certain washing processes altered or not the molecular structure of a specific type of earth used to decolour edible oils. In the end, the dispute was concerned with a reclassification of that type of (washed) decolourising earth from a heading applicable to natural clays [which included those that had been washed (even with chemical substances eliminating the impurities, without changing the structure of the product)] to a heading applicable to activated natural mineral products (such as activated carbons, which structure has been altered). The impact of such a reclassification based on the alteration of the natural molecular structure of the product was the application of a higher tariff of 5.7% in customs duties. And, consequently, it was litigated.

 

In its Judgment, the CJEU follows its standard approach to this type of (fiendish) issue and makes it clear that it is for domestic courts to reach the final decision on nomenclature classification, but it aims to provide some general criteria to guide their decision.

 

In my view, the indication towards the need for a functional approach, based on the intended use of the products (rather than simply following a strict consideration of the production or treatment processes) seems worth highlighting. Indeed, in its Judgment, the CJEU indicated that:

39 [...] the intended use of a product may also constitute an objective criterion for classification if it is inherent to the product, and that inherent character must be capable of being assessed on the basis of the product’s objective characteristics and properties (see [Case C-183/06 RUMA [2007] ECR I‑1559], paragraph 36; Case C‑123/09 Roeckl Sporthandschuhe [2010] ECR I‑4065, paragraph 28; and [C-568/11 Agroferm [2013] ECR I-0000], paragraph 41).

40 It is apparent from the order for reference that the treatment applied to the products at issue in the main proceedings, batches of decolourising earth, consists in effecting a structural replacement of calcium ions with hydrogen ions in order to increase their adsorption capacity, which makes them suitable for purifying and decolourising edible oils. It is, furthermore, apparent from the observations put forward by the Commission at the hearing – without being contradicted on the point – that that treatment rules out the possibility of decolourising earth for purposes other than the purification and decolouration of edible oils (C-380/12, paras 39-40, emphasis added).

That does not mean that the issue of the actual change of the molecular structure of the product becomes irrelevant. As the CJEU also indicated:

46 [...] the treatment at issue in the main proceedings involves the use of chemical substances, more specifically sulphuric acid, which it is nevertheless for the referring court to verify. Accordingly, assuming that treatment does entail the elimination of impurities, which it is also for the national court to verify in the light of the answer to the first question referred, the decisive criterion for determining whether, under Note 1 to Chapter 25 of the CN, the products at issue must remain classified under CN tariff heading 2508, is whether their structure is changed.

48 The [International Convention on the Harmonised Commodity Description and Coding System, concluded at Brussels on 14 June 1983] Explanatory Notes, [...] despite their lack of binding force, are an important means of ensuring the uniform application of the Common Customs Tariff and, as such, may be regarded as useful aids to its interpretation (Case C‑173/08 Kloosterboer Services [2009] ECR I-5347, paragraph 25, and Agroferm, paragraph 28).

49 In that regard, the HS Explanatory Notes relating to heading 3802 state that ‘[c]arbon and mineral substances are said to be activated when their superficial structure has been modified by appropriate treatment (with heat, chemicals, etc.) in order to make them suitable for certain purposes, such as decolourising, gas or moisture adsorption, catalysis, ion-exchange or filtering’. Those same notes state that heading 3802 does not cover ‘[n]aturally active mineral products (e.g., fuller’s earth), which have not undergone any treatment modifying their superficial structure (Chapter 25)’.

50 Consequently, as rightly pointed out by the Commission, Note 1 to Chapter 25 of the CN, interpreted in the light of the HS Explanatory Notes relating to heading 3802, rules out the possibility that products which have undergone treatment modifying their superficial structure may be classified under CN tariff heading 2508, with the result that they must be classified under CN tariff heading 3802 (C-380/12, paras 46-50, emphasis added).

 

In my view, and if I understood the (technical) reasoning properly, the emphasis on the functional (i.e. intended-use) approach can help overcome truly difficult technical considerations (such as to what extent has the structure actually been modified or not), because the ultimate objective of the treatment given to the decolourising earths was to increase their decolourising properties and made them useless otherwise. Consequently, the CJEU seems to be advocating (in rather convoluted and implicit terms) for an application of the same nomenclature classification to products which are aimed at the same use (i.e., truly competing products).

 

If that is correct, this seems the right approach in order to minimise competitive distortions resulting from the interpretation and application of customs rules. Hence, I think that the functional approach that the CJEU has continued to consolidate in its Judgment in X (decolourising earths) should be welcome, unless I have gotten lost at molecular level disquisitions...

Principle of competition finally consolidated into public procurement directives

The provisional text of the new public procurement Directives has been made available by the European Parliament. In the final version of 15 of January, the principle of competition is finally consolidated in article 18 of the new general Directive in the following terms:

Article 18 - Principles of procurement

1. Contracting authorities shall treat economic operators equally and without discrimination and shall act in a transparent and proportionate manner. The design of the procurement shall not be made with the intention of excluding it from the scope of this Directive or of artificially narrowing competition. Competition shall be considered to be artificially narrowed where the design of the procurement is made with the intention of unduly favouring or disadvantaging certain economic operators.

The explicit inclusion of the principle must be welcome, even if its drafting creates some interpretative uncertainties--particularly in regards to the intentional element ("with the intention of  [...] artificially narrowing competition") or the way in which the presumption linking (intended) discrimination with an actual distortion of competition.

 

In my view, these interpretative uncertainties deserve some clarification and there are sufficient interpretative criteria in the "pre-consolidated" case law concerned with competition in public procurement as to drive the clarification process [Sanchez Graells (2009) 'The Principle of Competition Embedded in EC Public Procurement Directives'). The teleological and functional interpretation of the principle still has to go in the direction of acknowledging that it requires that: public procurement rules have to be interpreted and applied in a pro-competitive way, so that they do not hinder, limit, or distort competition. Contracting entities must refrain from implementing any procurement practices that prevent, restrict or distort competition.

 

At any rate, the explicit consolidation of the principle seems likely to strengthen the use of pro-competitive arguments in public procurement litigation and, hopefully, will drive legal changes. It will be an interesting process to follow closely.