Recent Developments February 2017

News Update EU Competition and Procurement Special
28 februari 2017

Recent Developments

Competition law infringement as ground for invalidity of public contracts 

On 3 January 2017 the Court of Appeal in Amsterdam confirmed that a public contract that is rightfully concluded after the decision in first instance, can only be challenged in very strict circumstances. One of those circumstances is nullity of the contract based on Article 3:40 of the Dutch Civil Code. In this case, the claimant stated that the structure of the tender procedure infringed competition law and should therefore result in nullity of the contract that was awarded as a result of that tender procedure to another tenderer. Although the Court of Appeal agrees that infringement of Article 6 of the Dutch Competition Law or Article 101 TFEU would result in such nullity, it holds that this infringement was insufficiently proven by the claimant. With regard to competition law infringements, a great burden of proof lies with the claimant: he has to substantiate his claim with (economical) facts and circumstances. Brief statements regarding the relevant market and supposed market shares do not suffice. 

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Proportionality test not allowed if unforeseen
The European Court of Justice ('ECJ') answered preliminary questions from the Dutch Supreme Court (Hoge Raad) on 14 December 2016. The central issue in this case was whether there is room for a proportionality test if a tenderer is guilty of grave professional misconduct and the tender documents state that such behaviour must result in exclusion. The misconduct in this case resulted from an earlier infringement of competition rules by one of the tenderers, for which it was fined. In its answers, the ECJ held that Member States are allowed to require a contracting authority to assess, in accordance with the principle of proportionality, whether it is in fact appropriate to exclude from a public contract a tenderer which has been guilty of grave professional misconduct. However, at the time of this tender procedure, the proportionality test did not follow from the tender documents or the Dutch procurement rules, but only from the Explanatory Memorandum (Nota van Toelichting). In those circumstances, the tender documents prevail and a proportionality test is therefore not allowed, according to the ECJ. Under the current Dutch (and European) procurement rules, the outcome would be different because a proportionality test is now included in the law itself. However, this test only covers the exclusion grounds that are explicitly stated in the Dutch Procurement Act (such as grave professional misconduct). This means that in case of other reasons for exclusion (e.g. missing documents in the tender), a proportionality test is only allowed if that is explicitly provided for in the tender documents.

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Fine lowered because of recently introduced competition 
The Dutch Competition Authority (ACM) fined two companies for bid rigging in a public tender procedure for home care services. After objections, the ACM considered that the fine should be lowered because the tender followed shortly after the introduction of competition in the market for home care. In appeal, the highest administrative court (College van Beroep voor het bedrijfsleven) stated in its decision of 11 January 2017 that the fine should be decreased even further. One of the reasons was the recently introduced competition in the market. The court held that this introduction required a change of mentality and a more antagonistic approach towards other home care suppliers, which could not be completely made within the short period in which the home care suppliers had to prepare for this first round of tender procedures. 
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Award of national railway concession upheld 
Per 1 January 2015, NS provides the national passenger rail transport in the Netherlands based on a concession from the State. Several competitors objected to the award of this concession. The highest administrative court (College van Beroep voor het bedrijfsleven) dismissed all their claims in its decision of 9 February 2017, including the claim that the concession should not have been awarded directly. The court considered that the European PSO Regulation (1370/2007) allows for direct award of such concessions. This right is not affected by the transparency obligation for concession contracts in the Dutch Procurement Act. Also, the State was allowed to include high speed and (other) cross-border railway services in the concession, as part of a coherent transport system. Another objection was that there should be regulations in the concession to safeguard competition (including to prevent abuse of the concession award). The court held that the awarding authority may only take interests into consideration for which the provision on railway concession awards was designed. Competition interests are however safeguarded by the Competition Act and (partly) the Railway Act, and not by the Act which regulates the award of railway concessions (Wet personenvervoer 2000).

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