Public Procurement and the EU Competition Rules

Public Procurement and the EU Competition Rules

by Albert Sanchez-Graells

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Product Details

ISBN-13: 9781849466127
Publisher: Hart Publishing
Publication date: 05/21/2015
Series: Hart Studies in Competition Law Series
Edition description: Second Edition
Pages: 624
Product dimensions: 6.65(w) x 9.60(h) x 0.78(d)

About the Author

Albert Sánchez Graells is a Senior Lecturer in Law at the University of Bristol.

Table of Contents

Foreword to the Second Edition vii

Foreword to the First Edition xi

Author's Note to the Second Edition xiii

Table of Cases and Opinions xxvii

Table of Legislation xli

Part 1 Introduction 1

1 Introduction and Framework for Analysis 3

I Introduction 3

A The Current Situation from a Competition Law Perspective 7

B The Current Situation from a Public Procurement Law Perspective 10

C Overall Perspective 12

II General Approach to the Interrelationship between Competition and Public Procurement Law 13

III Aim of the Study 14

IV Structure of the Study and General Overview 15

A General Overview 15

B Foundations and Principles: On the Economic and Legal Basics of Public Procurement and Competition Law 15

C General Part: Public Procurement Viewed from a Competition Perspective, and Competition Elements of Public Procurement Rules-The Building Blocks of the Framework for the Competition Analysis of Public Procurement 16

D Special Part: Operationalisation of the General Framework through Current Public Procurement Rules-Proposals for the Further Development of a More Pro-Competitive Public Procurement System 17

E General Conclusions 19

V Methodology: An Eclectic and Heuristic Multi-Disciplinary and Functional Approach to EU Law 19

VI Normative Assumptions 24

VII Delimitation of the Study: Exclusions and Limitations 26

A Exclusions from the Object of Study 27

B Limitations on the Sources Used in the Study 30

Part 2 Foundations and Principles: The Economic and Legal Basics of Public Procurement and Competition Law 35

2 An Economic Approach to Public Procurement and Competition 37

I Introduction 37

II Types of 'Public Procurement Markets' 39

A The Limitations of the 'Public Market' Paradigm 39

B A More Detailed Taxonomy of 'Public Procurement Markets' 41

i The 'Regulatory Situation' of Public Procurement Markets 41

ii The Relative Importance of the Public Buyer in the Market: Exclusive, Dependent, Commercial and Private Markets 43

iii Temporal Considerations of Relevance for Public Procurement Markets 47

iv Relevance of the Geographic Dimension of the Market 49

v Other Considerations: 'Prescriptive Role' of Public Procurement and 'Adjacent' Markets 49

C Preliminary Conclusion as Regards the Proposed Taxonomy of Public Procurement Markets 51

III Economic Dimensions of Public Procurement 52

A Public Procurement as a Public Investment/Public Expense Tool 52

B Public Procurement as a 'Working' Tool for the Public Sector 54

C Public Procurement as a Tool of 'Sectoral' Regulation 56

IV The Role of Public Authorities as Purchasing and Contracting Authorities 56

A Public Buyers as Agents 56

B Public Buyers as Gatekeepers 58

C Public Buyers as Market-Makers 58

V Public Procurement as a Market Failure: Difficulties in Recreating a Competitive Scenario and Competition-Restricting Effects 60

A Public Procurement as a Market-Like Regulatory Instrument 62

B A Model for the Analysis of Public Buyer Behaviour and the Effects of Public Procurement Regulation 65

C Direct Competition-Distorting Effects: Waterbed Effects 69

D Indirect Competition-Distorting Effects: Increased Bidder Collusion and Other Effects of Price Signalling 73

E Other Competition-Distorting Effects 75

VI Conclusions to ibis Chapter 77

3 Basics of Competition and Public Procurement Regulation 79

I Introduction 79

II Principles Common to Competition and Public Procurement Law as Two Sets of Economic Regulation 80

III The Goal(s) of Competition Law 87

A Brief Overview of the Discussion Regarding this Topic 87

B Economic Goals 93

C Social and Political Goals 96

D Creation of the Internal Market, as a Purely European Goal 99

E Preliminary Conclusion regarding the Objective of Competition Law 100

IV Goals of Public Procurement 101

A A More Limited Discussion on the Goals of Public Procurement 101

B Competition (Value for Money, or Best Value) 105

C Efficiency (of Public Procurement Itself) 109

D Transparency (Oversight, Anti-Fraud Objectives) 111

E Market Integration as a Purely (and Transitory) European Goal 112

F Preliminary Conclusion regarding the Objectives of Public Procurement Law 114

V Conclusions to this Chapter: Common Goals of Competition Law and Public Procurement 114

Conclusions to Part Two: Legal and Economic Normative Foundations of a More Competition-Oriented Public Procurement System 116

Part 3 General Part: The Building Blocks of a Framework for the Competition Analysis of Public Procurement 119

4 EU Competition Law and Public Procurement: The Inability of EU Competition Rules to Rein in Anti-Competitive Public Procurement 121

I Introduction 121

II The Inability of Rides on the Grant of State Aid and Special or Exclusive Rights to Tackle Anti-Competitive Public Procurement 123

A The Proper Award of a Public Contract Establishes a Presumption against the Existence of State Aid 124

B The Award of Most Public Contracts Does Not Constitute a Grant of a Special or Exclusive Right to the Government Contractor, except for Concessions 128

i In General: Article 106(1) TFEU 128

ii Different Treatment under Directive 2014/25? 130

iii The Coverage of All Concessions Contracts in Directive 2014/23 131

iv Services of General Economic Interest: Article 106(2) TFEU 132

v Overall, Article 106 TFEU is Largely Irrelevant for the Purposes of Reigning in Anti-Competitive Public Procurement Activities 134

III The Inapplicability of 'Core' EU Antitrust Rules to Public Procurement: A Jurisprudentialiy Created Gap in EU Competition Law 135

A In General, the Concept of 'Undertaking' as the Key Element of Analysis 135

B The Carrying Out of an Economic Activity as the Distinctive Criterion: The General Functional Approach to the Concept of 'Economic Activity' 137

C The Approach to Purchasing Activities As Such: A Departure from the General Functional Approach to the Concept of 'Economic Activity' 140

D The Gap Generated by the Adoption of Too Narrow a Concept of Economic Activity-Which Excludes Procurement Activities As Such 141

IV The Insufficiency of State Action Doctrine to Capture Most of the Anti-Competitive Public Procurement Regulations and Practices 142

A The Potential for Publicly Created Distortions of Competition as the Rationale behind the Development of the State Action Doctrine 142

B A Quick Overview on the Development of the State Action Doctrine 143

C The Current Formulation and Boundaries of the State Action Doctrine 147

D Assessment of the State Action Doctrine under its Current Formulation 149

V Preliminary Conclusions: The Insufficiency of Current Competition Institutions and Potential Improvements to Achieve Better Results 152

VI A Revision of Current Doctrine to Achieve Better Results (1): A More Economic Approach to the Concept of 'Economic Activity' in the Public Procurement Field 156

A The Current Approach: The Analysis of Public Procurement Activities Is Pegged to the Subsequent Use of the Purchased Goods or Services 156

B An Assessment of the Cm-rent Approach in the EU Case law 158

i The FENIN-Selex Doctrine Runs Contrary to Previous Practice in Several Member States 159

ii The FENIN-Selex Doctrine Runs Contrary to Alternative Approaches Previously Suggested to the EU Judicature 161

iii The FENIN-Selex Doctrine Runs Contrary to the General Functional Approach to the Concept of 'Undertaking' 161

iv The FENIN-Selex Doctrine Makes Poor Economic Sense 163

v A Possible Justification to the FENIN-Selex Doctrine: Aiming to Afford a Different Competition Treatment to Social and Other Public Interest Activities 166

C Sketch Proposal for the Review of the Current Case Law 171

D What Scope for a More Stringent Approach by Member States? 172

VII A Revision of Current Doctrine to Achieve Better Results (2): Setting the Proper Bounds to the State Action Doctrine 173

A Tire State Action Doctrine in the US as a Benchmark 173

i Brief Description of the US State Action Doctrine 174

ii Scope for a 'Market Participant Exception' under US State Action Doctrine 176

iii Comparative Assessment of the State Action Doctrine in the US and the EU 177

B Setting the Proper Bounds of the State Action Doctrine (I): Bringing Sovereignty to the Centre of the Doctrine, and Developing a 'Market Participant Exception' 179

i General Approach: 'Sovereignty' and 'Legitimacy' as Ruling Criteria 179

ii Anti-Competitive Public Procurement Legislation and Regulation as Instances of the Exercise of Public Powers or Sovereign Activities 181

iii Anti-Competitive Public Procurement Decisions and Practices as Instances of tire Exercise of Economic Powers or Non-Sovereign Activities by the State 182

iv Excluding Activities with Weak Sovereignty and Legitimacy Implications from the Scope of the State Action Doctrine: the 'Market Participant Exception' 184

C Setting the Proper Bounds to the State Action Doctrine (2): The Complex Issue of Balancing EU and Member States' Conflicting Policies 185

i General Framework 185

ii Criteria for the Balancing of Conflicting Policy Goals and Effects 187

iii The Impact on the Public Procurement Field 191

VIII Conclusions to this Chapter 193

5 The Principle of Competition Embedded in the EU Public Procurement Directives 195

I Introduction 195

II The Competition Principle Embedded in the pre-2014 EU Public Procurement Directives 196

A The Recognition of the Existence of a Competition Principle Embedded in the pre-2014 EU Public Procurement Directives and their Interpreting Case Law 196

B Delimiting the Competition Principle Embedded in the pre-2014 EU Public Procurement Directives 203

C The Link between the Competition Principle Embedded in the pre-2014 EU Public Procurement Directives and General EU Competition Law 206

III The Principle of Competition Consolidated in Article 18(1) of Directive 2014/24: A Critical Assessment of the Interpretative Difficulties it Creates 207

A The Problematic Conflation of Competition and Corruption Issues Related to Unequal Treatment 208

B The Introduction of a Subjective Element of 'Intention' and the Need to 'Objectify' It 210

C Preliminary Conclusion; Towards an Objective Interpretation of the Principle of Competition as Consolidated in Article 18(1) of Directive 2014/24 214

IV Implications of the Competition Principle for the Shaping of Public Procurement Rules by Member States: The General Obligation to Develop a Pro-Competitive Public Procurement Framework 215

A The Competition Principle as a Rule of Self-Construction for EU Public Procurement Directives 216

B The Competition Principle and the Transposition of the EU Directives on Public Procurement by Member States 217

C The Competition Principle and the Consistent Interpretation of Domestic Public Procurement Legislation 218

i Consistent Interpretation as a Rule of Construction of EU Law 218

ii Consistent Interpretation of the EU Public Procurement Directives with the Competition Principle 222

D Extension of the Competition Principle to Procurement Conducted Outside the Blueprint of the EU Directives: Competition as a General Principle 223

E Residual Application of the Principle of Competition 226

V The Principle of Equal Treatment and the Principle of Competition Distinguished 227

A A First Approximation: The Close Links between the Principles of Equal Treatment and Competition 227

B A Closer Look: The Principles Impose Different Requirements, and Competition Concerns should Modulate the Application of the Principle of Equality 228

C Emphasis on the Distinction of both Principles in the Area of Internal Market 232

VI Conclusions to this Chapter 235

Conclusions to Part III: Sketching a Legal Framework to Discipline the Market Behaviour of the Public Buyer and to Guarantee Undistorted Competition in Public Procurement 237

Part 4 Analysis of Competition Distortions Caused by Public Procurement 241

6 A Critical Assessment of the 2014 EU Public Procurement Directives and the Existing Case Law from a Competition Perspective: Preventing Competitive Distortions by the Public Buyer 243

I Introduction 243

II A Competition Appraisal of Potential Distortions Derived from Public Procurement Processes 245

A Assessment of Unnecessary Restrictions of Access to the Procurement Process 247

i Make-or-Buy Decisions and Public-Public Cooperation Mechanisms (or Cooperate-or-Buy Decisions) 248

ii Unnecessary Use of Closed or Non-Competitive Procedures, Particularly In-House Schemes, and the Associated Restrictions on the Publicity of the Procurement Processes 258

iii Sale of Bid Documents as a Barrier to Entry 280

iv Delays and Other Restrictions in the Disclosure of Information Required to Prepare and Submit a Bid 282

v Grounds for Exclusion of Potential Bidders: In General, Establishment of Additional and Excessively Restrictive Disqualification Grounds 284

vi Grounds for Exclusion of Potential Bidders: In Particular, Consideration of Previous Breaches of Competition Law as Offences against Professional Conduct 296

vii Excessive Qualitative Selection Criteria: Early Restriction of Competition 301

viii In Particular, the Use of Previous Experience and Past Performance as Qualification Requirements 306

ix Restrictive or Discriminatory Short-Listing or Invitation of Candidates 312

x More Precise Rules Governing Reliance on the Capacities of Other Entities 315

xi Excessive Documentary Requests for the (Non-)Exclusion and Qualitative Selection of Candidates, and the European Single Procurement Document as an Intended Solution 318

xii More Scope For a Power/Duty to Seek Clarifications and Additional Information from Tenderers at Qualitative Selection Stage 321

xiii Official Lists of Contractors and Certification Systems 323

xiv Excessive Participation Guarantees (Bid Bonds or Bid Deposits) 326

xv Use of Restrictive Technical Specifications 327

xvi Teaming and Joint Bidding: Formation of Bidding Consortia 336

xvii Prohibition on Multiple Bidding 340

xviii Bundling and Aggregation of Contracts 347

xix Induced and Mandatory Subcontracting 353

xx Framework Agreements 355

xxi Dynamic Purchasing Systems 363

xxii Electronic Auctions 366

xxiii Electronic Catalogues 368

B Assessment of Unnecessary Restrictions in the Evaluation of Bids and Award of the Contract 369

i In General, the Adoption of a Neutral and Possibilistic Approach to Bi Evaluation and Contract Award 369

ii Appraisal of Bids Submitted by Advantaged Parties: The Issue of Involvement of Project Consultants 373

iii Selection and Application of Award Criteria 378

iv Treatment of Non-Fully Compliant Bids and, in particular, of Variants 391

v Treatment of Abnormally Low Tenders 400

vi Awarding Constraints 410

vii Path Dependence (or Consolidation of Current Commercial Relationships) 412

viii In Particular, the Problem of Switching Costs in Public Procurement 413

ix Conduct of Renegotiations Prior to or Immediately after Contract Award 418

x Restrictive Cancellation of the Tendering Procedures 421

C Assessment of Unnecessary Restrictions after Award of the Contract 424

i Excessive Guarantees (Performance Bonds) 425

ii Renegotiation of the Main Conditions of the Contract and its Modification 426

iii Extensions and Award of Additional Works 429

iv Termination and Re-tendering 434

v Setting Up Ineffective Bid Protest Mechanisms 438

III Two Examples of Potential Distortions Derived from the Exercise of Public Entities' Market Power 446

A 'Squeezing Public Contractors 447

B Rules on Transmission of Intellectual Property Rights or Know-How Related to or Derived from the Procurement Process 449

IV Conclusions to this Chapter 451

7 Complementary Proposals for the Development of a More Competition-Oriented Public Procurement Framework 459

I Introduction 459

II Complementary Proposals Aimed at Limiting Publicly Created Restraints of Competition 460

A Progressive or Incremental Enhancement of Competition Requirements in Public Procurement 460

B Secondary or Dual Sourcing Policies in Public Procurement 462

C The 'Market Economy Buyer Test' as a Yardstick for the Evaluation of Public Procurement Decisions 466

III Complementary Proposals Aimed at Limiting Privately Created Restraints of Competition 468

A Mandatory Reporting of Suspected Competition Law Violations 469

B Suspension and Debarment of Competition Infringers 470

IV Complementary Measures Aimed, in General, at Strengthening the Relationships between Competition and Procurement Authorities 474

A Appointment of Competition Advocates or Liaison Officers 475

B Granting Competition Authorities Oversight Competences over All or Some Public Procurement Decisions 477

V Conclusions to this Chapter 478

Part V General Conclusions 481

8 Conclusions: Towards a More Competition-Oriented Procurement System 483

References 489

Books 489

Periodical Materials and Contributions to Collective Works 498

Working Papers and Other Academic Works 548

Official Documents and Sectoral Reports 552

European Commission 552

United States 554

OECD 554

Other 554

Index 557

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