The principle of equal treatment may also constitute a ground for exclusion due to possible distortion of competition

Introduction

In December 2019, a German authority published a tender notice for public bus transport. Among the bidders were J. Sch. and K. Reisen, who were controlled by the same owner and management.

The German contracting authority rejected both offers, citing that there was a breach of the rules of competition, since the bids were in fact made by the same person.

J. Sch. and K. Reisen subsequently filed a complaint with the German appeals body, claiming that it is only possible to exclude a tender pursuant to the competition rules, if the situation in question is covered by the Treaty on the Functioning of the European Union ("TFEU") Article 101 regarding anti-competitive agreements. J. Sch. and K. Reisen also stated that the exhaustive enumeration of the reasons for exclusion laid down in the procurement directive Article 57(4), entails that the principle of equal treatment cannot be used by contracting authorities to exclude tenderers.

The German appeal body upheld the complaint on the grounds that the tenderers' conduct did not constitute an infringement of Article 101 TFEU.

The contracting authority appealed the decision to the German Court, which referred the case to the Court for a preliminary ruling.

The Court's ruling

The Court found that the procurement directive Article 57(4) has a wide scope, as additional types of agreements than those covered by Article 101 TFEU are covered by this provision. In this specific case, the Court stated that that it is up to the Member State to verify whether the agreement in question appears to distort competition - and thus whether the exclusion ground applies in the specific case.

The Court also looked at whether the voluntary grounds for exclusion mentioned in the procurement directive's Article 57(4) is exhaustive, to the effect that the principle of equal treatment cannot be used as an obstacle to a contract being awarded to economic operators who constitute an economic unit and have each submitted their own bid, even if they are neither self-dependent nor independent.

Here, the Court found that the enumeration in the procurement directive's Article 57(4) is exhaustive. However, this does not entail that the principle of equal treatment cannot prevent tenderers with mutual connections from being excluded from a tender if the relationship between them has affected their bids.

Bird & Birds comments

The Court stated that the grounds for exclusion in the procurement directive is not only limited to agreements covered by Article 101 TEUF. Article 57(4) must therefore be interpreted within its broad phrasing "sufficiently plausible indications" to conclude that an agreement has been entered into with other economic operators with the object or effect of distorting competition. However, it may seem surprising that the Court assigns Article 57(4) a wider scope of application than Article 101 TFEU, as the procurement directive contains a direct reference to the TFEU. On this basis, it may have been expected that the interpretation of the individual provisions should be carried out with respect to the competition rules to ensure a natural connection between the two legal areas.

It is, however, interesting to consider the Court's declarations in relation to the principle of equal treatment. It appears from the judgment, that even though the provided reasons for exclusion in the procurement directive’s Article 57(4) would be exhaustive it is possible to exclude tenderers with mutual connections in accordance with the principle of equal treatment on the count of the tenderers having such connections.

The Court thereby states that the list of grounds for exclusion is exhaustive, while at the same time opening for the possibility of exclusion based on the principle of equal treatment.

While the principle of equal treatment is a significant argument in procurement law, it gives food for thought that the Court allows the principle to influence an area that is already regulated by an exhaustive enumeration.

In this light, the judgment by the Court will constitute a relevant interpretive contribution in the practical work within procurement law.