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Print articleCombating Collusion Between Tenderers: the ECJ Clarifies the Limits
July, 2009 - Tim Bruyninckx
What are the limits on national public procurement law to prevent collusion between tenderers in award procedures? This was the question the ECJ dealt with in its recent Assitur judgment (C-538/07).
The facts of the Assitur case were as follows. Three tenderers passed the qualitative selection phase and were admitted to the final procedure. However, one of the admitted tenderers, Assitur, took the view that the other two tenderers, SDA and Poste Italiane, should have been excluded from the award procedure, because of the relationship of control between them: more specifically, SDA was wholly-owned by Attività Mobiliari which in turn was a wholly-owned subsidiary of Poste Italiane.
Italian law prohibits “linked companies” from participating in public tender procedures for works. This prohibition is based on an irrefutable presumption that the linked tenderers are aware of the specificities of each other’s bids. No such prohibition applies to public tender procedures for services (or supplies). Moreover, it could not be established that the principles of competition and secrecy of tender had been breached. Therefore, the contracting authority decided not to exclude SDA and Poste Italiane from the award procedure.
The competent Italian administrative court did not entirely agree with the point of view taken by the contracting authority. The court stated that the principle laid down for public contracts for works should also apply to public contracts for services (and supplies), since it is a general principle common to all award procedures. However, the Italian administrative court was concerned about how this prohibition related to Article 29 of the European Directive regarding the award of public service contracts, which lists the criteria for qualitative selection of the tenderers. Therefore, it asked the ECJ for a preliminary ruling.
It had already become clear from the Michaniki case (C-213/07) that the exhaustive character of this list did not preclude the national authorities from imposing additional provisions in national public procurement law to safeguard the principles of equal treatment and transparency. This case law was also relevant in the Assitur case. A national provision that prohibits linked companies from jointly taking part in public procurement procedures, does indeed favour equal treatment and transparency. In this respect, the ECJ states clearly in its Assitur judgment: “It is clear that a national legislative measure such as that at issue in the main proceedings is intended to prevent any potential collusion between participants in the same procedure for the award of a public contract and to safeguard the equal treatment of candidates and the transparency of the procedure”.
However, according to the ECJ, the principle of proportionality should also be taken into account. The question was raised of whether or not it is necessary to prohibit linked companies from participating in the same award procedure to respect the principles of equal treatment and transparency. This question is of particular interest, because the presumption of mutual awareness of the contents of the bids is irrefutable. The ECJ held that the prohibition did not meet the requirement of proportionality, since the linked companies concerned were not allowed to prove that no collusion between them had occured.
In its Assitur judgment, the ECJ grants a rather large margin of discretion to Member States to impose additional rules against collusion between tenderers. However, such burdens may not give rise to an automatic exclusion of linked companies from tender procedures. Linked tenderers should be able to produce evidence that no collusion has taken place.
Clearly, the ECJ does not like irrefutable presumptions in public procurement cases. Two interesting analogies can be made. First, we refer to the ECJ’s reasoning regarding abnormally low bids: such bidders must be given the opportunity to prove the seriousness of their bids (e.g. the Fratelli Costanzo case 103/88 and, more recently, the Secap and Santorso case, joined cases C-147/06 en C-148/06).
Second, we can refer to the Fabricom judgment (joined cases C-21/03 and C-34/03). In this case, the ECJ found that the rule which automatically prohibited bids from entities which had provided consultancy services relating to the same public contract in the past, was in breach of European public procurement law. The prohibition was based on the presumption that such entities would have an unfair advantage over the other bidders, thus preventing all the bids from being treated equally.
The facts of the Assitur case were as follows. Three tenderers passed the qualitative selection phase and were admitted to the final procedure. However, one of the admitted tenderers, Assitur, took the view that the other two tenderers, SDA and Poste Italiane, should have been excluded from the award procedure, because of the relationship of control between them: more specifically, SDA was wholly-owned by Attività Mobiliari which in turn was a wholly-owned subsidiary of Poste Italiane.
Italian law prohibits “linked companies” from participating in public tender procedures for works. This prohibition is based on an irrefutable presumption that the linked tenderers are aware of the specificities of each other’s bids. No such prohibition applies to public tender procedures for services (or supplies). Moreover, it could not be established that the principles of competition and secrecy of tender had been breached. Therefore, the contracting authority decided not to exclude SDA and Poste Italiane from the award procedure.
The competent Italian administrative court did not entirely agree with the point of view taken by the contracting authority. The court stated that the principle laid down for public contracts for works should also apply to public contracts for services (and supplies), since it is a general principle common to all award procedures. However, the Italian administrative court was concerned about how this prohibition related to Article 29 of the European Directive regarding the award of public service contracts, which lists the criteria for qualitative selection of the tenderers. Therefore, it asked the ECJ for a preliminary ruling.
It had already become clear from the Michaniki case (C-213/07) that the exhaustive character of this list did not preclude the national authorities from imposing additional provisions in national public procurement law to safeguard the principles of equal treatment and transparency. This case law was also relevant in the Assitur case. A national provision that prohibits linked companies from jointly taking part in public procurement procedures, does indeed favour equal treatment and transparency. In this respect, the ECJ states clearly in its Assitur judgment: “It is clear that a national legislative measure such as that at issue in the main proceedings is intended to prevent any potential collusion between participants in the same procedure for the award of a public contract and to safeguard the equal treatment of candidates and the transparency of the procedure”.
However, according to the ECJ, the principle of proportionality should also be taken into account. The question was raised of whether or not it is necessary to prohibit linked companies from participating in the same award procedure to respect the principles of equal treatment and transparency. This question is of particular interest, because the presumption of mutual awareness of the contents of the bids is irrefutable. The ECJ held that the prohibition did not meet the requirement of proportionality, since the linked companies concerned were not allowed to prove that no collusion between them had occured.
In its Assitur judgment, the ECJ grants a rather large margin of discretion to Member States to impose additional rules against collusion between tenderers. However, such burdens may not give rise to an automatic exclusion of linked companies from tender procedures. Linked tenderers should be able to produce evidence that no collusion has taken place.
Clearly, the ECJ does not like irrefutable presumptions in public procurement cases. Two interesting analogies can be made. First, we refer to the ECJ’s reasoning regarding abnormally low bids: such bidders must be given the opportunity to prove the seriousness of their bids (e.g. the Fratelli Costanzo case 103/88 and, more recently, the Secap and Santorso case, joined cases C-147/06 en C-148/06).
Second, we can refer to the Fabricom judgment (joined cases C-21/03 and C-34/03). In this case, the ECJ found that the rule which automatically prohibited bids from entities which had provided consultancy services relating to the same public contract in the past, was in breach of European public procurement law. The prohibition was based on the presumption that such entities would have an unfair advantage over the other bidders, thus preventing all the bids from being treated equally.
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