Public procurement & competition law : to what extent related undertakings may submit separate bids in the same tendering procedure?

Judgment
C‑144/17
08.02.2018
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Preliminary rulingLloyd’s of London
v
Agenzia Regionale per la Protezione dell’Ambiente della Calabria (Aparcal)
Court of Justice Sixth ChamberE. ReganE. TanchevPublic procurement - Competition law
KeywordsReference for a preliminary ruling — Public procurement — Articles 49 and 56 TFEU — Directive 2004/18/EC — Reasons for exclusion from a tendering procedure — Insurance services — Participation of several Lloyd’s of London syndicates in the same tendering procedure — Signature of tenders by the Lloyd’s of London General Representative for the country concerned — Principles of transparency, equal treatment and non-discrimination — Proportionality
Significant pointsThe General Court has annulled a decision of This preliminary ruling relates to a tendering procedure launched by an Italian public authority, Arpacal, for the award for a public service contract for insurance. Two Lloyd’s ‘syndicates’ participated in the call for tenders. Their tenders were both signed by an agent of Lloyd’s General Representative for Italy. However, Arpacal excluded those syndicates from the tender due to the fact that the submissions were signed by the same person. It considered that a single decision-making centre would infringe the principles of confidentiality of tenders, equal treatment, fair and free competition, protected under EU law by Articles 49 and 56 TFEU and Directive 2004/18 on public procurement procedures (“Public Procurement Directive”). Lloyd’s argued, however, that those principles were respected because the members, whilst acting through syndicates, did operate independently and in competition with one another despite coming under the same legal entity. Moreover, the syndicates may only act through their sole representative for each Member State. The referring court observed that the Italian legislation did not forbid submissions to public tenders being signed by the same person and asked the Court clarification in this regard.
In its judgment, the Court recalled, first, that the legal grounds for exclusion from public procurement procedures set out in Article 45 of the Public Procurement Directive relate to the professional qualities of the persons concerned only. Nonetheless, the case-law of the Court has interpreted that this does not preclude the option for Member States to maintain or establish, in addition to those grounds for exclusion, substantive rules intended, in particular, to ensure, with regard to public procurement, observance of the principles of equal treatment of all tenderers and of transparency, which constitute the basis of the EU directives on public procurement procedures, provided that the principle of proportionality is observed.
In that regard, the Court firstly observed that the national legislation at issue, which is intended to prevent any potential collusion between participants in the same procedure for the award of a public contract, seeks to safeguard the equal treatment of candidates and the transparency of the procedure. Consequently, the principle of proportionality requires that such legislation must not go beyond what is necessary to achieve the intended objective.
The Court judged that the automatic exclusion of tenderers that are in a relationship of association with other competitors would go beyond what is necessary to prevent collusive behavior and to ensure equal treatment and transparency. An automatic exclusion would constitute an irrebuttable presumption of mutual interference and would not grant the possibility for the candidates of demonstrating that their tenders are in fact independent. Yet previous case law provides that it is of EU interest to ensure the widest possible participation by tenderers in a call for tenders.
The Court concluded, therefore, that the principle of proportionality requires that the contracting authority be required to examine and assess the facts, in order to determine whether the relationship between two entities has actually influenced the respective content of the tenders submitted in the same tendering procedure, a finding of such influence, in any form, being sufficient for those undertakings to be excluded from the procedure.
The Court also stated that the mere fact that tenders have been signed by the same person cannot justify their automatic exclusion from the tendering procedure. It noted in this regard that EU law applicable to insurance activities expressly allows Lloyd’s to be represented vis-à-vis third parties by a single representative for each Member State. Even though Lloyd’s may exercise its insurance activities in Member States only through the competent General Representative, the referring court must still verify that the tenders were determined and submitted independently by each syndicate.
Therefore, the Court considered that the national legislation at issue was compatible with EU law, given that it does not allow an automatic exclusion, but nonetheless allows the contracting authority to exclude tenderers where it finds, on the basis of unambiguous evidence, that their tenders were not drawn up independently.
NoteworthyIn this judgment completely in line with the Assitur case-law (C-538/07), the Court of Justice has again emphasized the importance of the principles of transparency, equal treatment and free competition in public procurement. Any exclusions from the right to tender are to be interpreted strictly and based on a factual analysis, this respecting the principle of proportionality.
The Court explained in length that the bids of undertakings linked by a relationship of control or of association should not be presumed collusive for the purpose of the EU public procurement rules and that a contracting authority had to look at the facts before any exclusion of linked undertakings. It is up to the contracting authority to establish whether the relationship between two entities has actually influenced the respective content of the tenders submitted in the same tendering procedure.
It can be interesting to compare this judgement with competition law, where it is possible for undertakings which share legal or financial links but enjoy commercial autonomy to submit separate and competing tenders, provided that they do not consult each other prior to the submission of their bids, such exchanges having an anti-competitive object (see for example, in French competition law, Paris Court of Appeal, 28 October 2010, n° 2010/03405). Accordingly, it seems that a violation of competition law would be more easily retained, given that the mere false autonomy of the bids allows the existence of a cartel to be presumed, whereas an actual influence on the content of the bids seems to be required to find a violation of EU public procurement law. Further explanations regarding this apparently partial convergence might be provided by the Specializuotas transportas upcoming judgment (C‑531/16).
Of particular importance to the insurance sector is the fact that Lloyd’s syndicates have the right to participate in the same tendering procedure and be represented by the same representative. This does not constitute a ground for exclusion from the procedure so long as the syndicates act independently in the formulation of their submissions.