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EU Opinion Shines Some Light on Intersection Between Cartel Leniency and Public Procurement
On 16 May 2018, Advocate General Sañchez-Bordona of the Court of Justice of the European Union opined on the ability of Member States to take a harsh stance on the exclusion from Government tenders of companies with a record of past illegality, such as cartel behaviour or bid-rigging. While this is just an opinion and the Court of Justice has still to issue a final judgment, the issues raised are interesting.
Under the spotlight was a German rule requiring a bidder involved in past illegality to cooperate with the contracting authority, as well as with the investigating authority, to show that it has “fully clarified the facts and circumstances” and thus proven rehabilitation. It is important to note that the equivalent EU and Irish law rules require cooperation with the investigating authority only.
The leniency applicant at the centre of this case felt unable to comply with the German rule because it was defending a cartel damages action brought by the same contracting authority with whom the rule obliged it to cooperate, including by providing leniency statements disclosing details of its involvement in illegality. Advocate General Sañchez-Bordona was asked to opine on (i) the compatibility of the German rule with EU law, and (ii) the commencement date of any period of exclusion from Government tenders (which would apply in the absence of cooperation).
On the first issue, he found the German rule to be EU law compliant, on the basis that Member States are free in this instance to introduce stricter rules than what is required under EU law provided that they serve a different purpose.
On the second issue, he found that any exclusion period specified under national law must run from the date of issue of the legal decision finding illegality, this being the “date of the relevant event” as referenced in EU law.
This case indicates that EU law may not come to the aid of a bidder in German tenders who faces the unenviable choice imposed between: (i) cooperating and disclosing its leniency statements with the possible effect of prejudicing its defence of court proceedings and exposing itself to large liabilities, and (ii) not cooperating with the certain effect of tender exclusion and loss of an opportunity to win a valuable contract. This message would likely be a disappointment to Commissioner Vestager, who is currently bemoaning the falling rate of leniency applications to the EU Commission.
Fortunately, Irish law does not impose the above-described unenviable choice on leniency applicants. It will be interesting to see if and when the relevant Irish law comes up for court adjudication.
Case: C 124/17, Vossloh Laeis GmbH & Stadtwerke München GmbH