1.
Difficulties in coordinating EU/EEA
competition, State aid and public procurement
law enforcement: some suggestions to the
EFTA Surveillance Authority
Dr Albert Sanchez-Graells
EFTA Surveillance Authority lunchtime seminar
Brussels, 16 June 2016
16 June 2016
1Some suggestions to the EFTA Surveillance Authority

2.
Agenda
• Stress some of the tensions in the design of a
system that ensures sufficient coordination of
substantive enforcement of EU/EEA law on
competition, State aid and public procurement
• Reflect on risks and opportunities for EFTA
Surveillance Authority to develop effective
enforcement mechanisms / strategies
Some suggestions to the EFTA Surveillance Authority 2
16 June 2016

3.
Interaction between competition, State aid and
public procurement rules
• These three bodies of EU/EEA law rarely interact
all at once (although it cannot be excluded)
• Most usual combinations are
• Competition law and public procurement
• State aid rules and public procurement
• Each of these two combinations triggers
different issues, which we will discuss in turn
Some suggestions to the EFTA Surveillance Authority 3
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4.
Competition law and public procurement
Some suggestions to the EFTA Surveillance Authority 4
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5.
Competition law and public procurement
• This raises two groups of issues
• Cartel enforcement in public procurement settings
(joint bidding, exclusion, leniency, etc)
• Enforcement of competition law on public buyers
and, in particular, centralised purchasing bodies
(reframing of ‘economic activity’ in this area)
Some suggestions to the EFTA Surveillance Authority 5
16 June 2016

6.
Cartel enforcement in procurement settings
• Procurement markets are ‘textbook scenario’ for
collusive practices ~ issues of transparency
• Need for guidance on competition-based restrictions of
information at debarment stage
• Art 4(3)(b) + rec (18) Directive on the protection of trade secrets
against unlawful acquisition, use and disclosure
• Enforcement of competition law requires careful
monitoring of procurement activity (data!)
• Procurement rules are adapting
Some suggestions to the EFTA Surveillance Authority 6
16 June 2016

7.
‘Screening’ / preventing collusion by means of
joint bidding / subcontracting arrangements
• How to ensure compliance with prohibition of collusive
practices in joint bidding?
• Recent case law shows potential gap in analysis due to
procurement authorities limited scope of review
• MT Højgaard and Züblin, C-396/14, EU:C:2016:347
• Absence of procurement-specific guidelines triggers
difficulties in the adaptation of general rules on (efficiency-
based) justification (Horizontal cooperation guidelines)
Some suggestions to the EFTA Surveillance Authority 7
16 June 2016

8.
Exclusion of tenderers that have infringed
competition law prohibitions – a closer look
• General debarment sanction imposed at the end of
competition law investigation [statutory basis…]
• ‘Ad hoc’ exclusion based Art 57(4) Dir 2014/24
• Past conviction [Art 57(4)(c)] ‘guilty of grave professional
misconduct, which renders its integrity questionable’
• Current (suspected) infringement [Art 57(4)(d)] ‘sufficiently
plausible indications to conclude that the economic operator
has entered into agreements with other economic operators
aimed at distorting competition’
Some suggestions to the EFTA Surveillance Authority 8
16 June 2016

9.
Commitments, settlements, leniency applications
and public procurement remedies
• Commitments create challenges for exclusion due to
lack of admission of wrongdoing
• Interaction between settlements / leniency and
procurement remedies deserve consideration
• ‘Specific performance’ related remedies (ineffectiveness)
against leniency applicants
• Damages claims derived from improper award of contracts
covered by leniency application
Some suggestions to the EFTA Surveillance Authority 9
16 June 2016

10.
Enforcement of competition law on public buyers
and, in particular, centralised purchasing bodies
• Dir 2014/24 changes nature of CPB activities, which
become (tendentially) economic & triggers application
of competition law [mostly, on abuse of dominance]
• FENIN, C-205/03 P, EU:C:2006:453
• ’there is no need to dissociate the activity of purchasing goods from
the subsequent use to which they are put’
• EasyPay, C-185/14, EU:C:2015:716
• ’in order to avoid classification as an economic activity, that activity
must, by its nature, its aim and the rules to which it is subject, be
inseparably connected with …’
Some suggestions to the EFTA Surveillance Authority 10
16 June 2016

11.
Competition law analysis in preliminary market
consultations / design of the tender
• Emerging area of possible interaction?
• Ultimate basis on the principle of competition
consolidated in Art 18(1) Dir 2014/24
• To what extent can ‘market test’ mechanisms be
used in connection with Art 40 Dir 2014/24?
• To what extent can there be competition complaints
based on tender documentation?
Some suggestions to the EFTA Surveillance Authority 11
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12.
State aid rules and public procurement
Some suggestions to the EFTA Surveillance Authority 12
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13.
Interaction between State aid and public
procurement is multidimensional
• There is not one single ‘point of interaction’ between
State aid and public procurement
• Direct award of contract = State aid
• Flexibility in negotiation of contract encapsulating the
possibility of State aid
• New (innovation) contracting procedures and State aid
• Complexities derived from new rules on modifications
• Revised rules on abnormally low tenders
• Increasing complexity of State aid to SGEIs and procurement
Some suggestions to the EFTA Surveillance Authority 13
16 June 2016

14.
Direct award of public contracts as State aid
• Traditional position that direct award of public contracts
can be constructed as illegal award of State aid
• Triggers issue of coordination of remedies (time limits for
actions for ineffectiveness much shorter than State aid
limitation period) and jurisdictional avenues
• ‘New’ difficulty derives from lack of precision of when
procurement rules should apply ~ what is direct award?
• Falk Pharma, C-410/14, EU:C:2016:399
Some suggestions to the EFTA Surveillance Authority 14
16 June 2016

15.
Negotiated procurement and State aid
• Standard test that ‘compliance with procurement rules
excludes existence of State aid’ is under pressure
• Increased possibility for negotiations raises issues of
discretion that exclude ‘procurement black box argument’
(2013 SGEI, State aid & procurement Guidelines)
• Interaction with de minimis and general BER rules is unclear
because this type of aid can hardly be considered transparent
• Need to develop a more substantive test to outcome of
procurement negotiations (legal certainty?)
Some suggestions to the EFTA Surveillance Authority 15
16 June 2016

16.
Innovation partnerships and State aid
• More specifically, the possibility to grant implicit R&D State aid
through innovation partnerships is very problematic
• Innovation partnership increases risk of implicit State aid due
to the explicit requirement of ‘need for an innovative product,
service or works that cannot be met by purchasing products,
services or works already available on the market’
• 2014 Framework for R&D aid [2.3] requires open procedure or
demonstration that price reflects market value of the benefits
obtained (but, by definition, there is no market for object of
the procurement)
Some suggestions to the EFTA Surveillance Authority 16
16 June 2016

17.
Contractual modifications and State aid
• Roughly same arguments / issues related to negotiated
procedures and the possibility to selectively improve
contractors’ economic position
• De minimis or non-substantial modifications under Art 72(2)
Dir 2014/24 particularly problematic (15% works = €778k) due
to higher threshold than State aid
• Oversight of restrictions of all types of (non de minimis)
modifications due to change of economic balance of the
contract in favour of tenderer [Art 72(4)(b)] = State aid?
Some suggestions to the EFTA Surveillance Authority 17
16 June 2016

18.
Abnormally low tenders due to State aid
• Increased difficulties when substantive assessment of
State aid required [Art 69(4) Dir 2014/24]
• “abnormally low because the tenderer has obtained State aid, the tender
may be rejected on that ground alone … unable to prove …
that the aid in question was compatible with the internal market”
• Issues of coverage by BER will be particularly problematic and require
assessments contracting authorities may not be ready to carry out
• Potential complications due to preliminary references in judicial
proceedings parallel to State aid investigations
• Deutsche Lufthansa, C-284/12, EU:C:2013:755
Some suggestions to the EFTA Surveillance Authority 18
16 June 2016

19.
State aid and the provision of
(directly awarded) SGEIs
• Test applicable to aid for SGEIs particularly complex in areas
where a service can be considered non-economic; raises issues of
coverage by procurement rules as well
• Even if SGEI, growing lack of clarity about the substantive test to
be applied to support for SGEIs
• Altmark Trans, C-280/00, EU:C:2003:415
• Spezzino, C-113/13, EU:C:2014:2440
• Germany v Commission (Zweckverband Tierkörperbeseitigung),
C-446/14 P, EU:C:2016:97
Some suggestions to the EFTA Surveillance Authority 19
16 June 2016

20.
State aid and the provision of
(directly awarded) SGEIs
• Increasing complexity in the assessment of ‘local services’ public
contracts and State aid measures subjected to scrutiny /
procedural requirements
• Opposing approaches to the determination of cross-border effects in
public procurement (Ancona) and in State aid (2016 Notice on the notion
of State aid)
• Mere possibility of cross-border interest (procurement) vs
‘significant probability’ of effect on cross-border trade (State aid)
• Particularly relevant / problematic for (some) EEA States?
Some suggestions to the EFTA Surveillance Authority 20
16 June 2016

21.
Thank you for your attention
Be in touch
a.sanchez-graells@bristol.ac.uk
http://howtocrackanut.com
@asanchezgraells
Some suggestions to the EFTA Surveillance Authority 21
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22.
Further reading –
Competition law and public procurement
• A Sanchez-Graells, Public procurement and the EU competition rules, 2nd end
(Hart, 2015).
• A Sanchez-Graells, ‘Competition Law and Public Procurement’, in J Galloway
(ed), Intersections of Antitrust (OUP, 2016, forthc).
• A Sanchez-Graells, ‘Public Procurement and Competition: Some Challenges
Arising from Recent Developments in EU Public Procurement Law’, in C Bovis
(ed), Research Handbook on European Public Procurement (Edward Elgar,
2016) 423-451.
• A Sanchez-Graells & I Herrera Anchustegui, ‘Revisiting the Concept of
Undertaking from a Public Procurement Law Perspective – A Discussion on
EasyPay and Finance Engineering’ (2016) 37(3) European Competition Law
Review 93-98.
Some suggestions to the EFTA Surveillance Authority 22
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23.
Further reading –
State aid and public procurement
• A Sanchez-Graells, ‘Digging itself out of the hole? A critical assessment of the
Commission’s attempt to revitalise State aid enforcement after the crisis’
(2016) 4(1) Journal of Antitrust Enforcement 157-187.
• A Sanchez-Graells, ‘Competition and State aid implications of the Spezzino
Judgment (C-113/13): the scope for inconsistency in assessing support for
public services voluntary organisations’ (2016) 11(1) European Procurement &
Public Private Partnership Law Review 31-38.
• A Sanchez-Graells, ‘Enforcement of State Aid Rules for Services of General
Economic Interest before Public Procurement Review Bodies and Courts’
(2014) 10(1) Competition Law Review 3-34.
• A Sanchez-Graells, ‘ Public Procurement and State Aid: Reopening the
Debate?’ (2012) 21(6) Public Procurement Law Review 205-212.
Some suggestions to the EFTA Surveillance Authority 23
16 June 2016