Public procurement: exclusion of tenderers following antitrust violations

In its latest judgment, the ECJ made important clarifications regarding the possible exclusion of a tenderer from a competitive tendering procedure on grounds of grave professional misconduct.

The goal of a procurement procedure is to entrust a suitable, reliable and efficient tenderer with the provision of the required service. For certain reasons, the contracting authority may exclude a tenderer from the procurement procedure. These include convictions of grave professional misconduct (Art 57 Para 4 lit c Procurement Directive 2014/24/EU). In Austria, this provision has been implemented by Sec 78 Para 1 No 5 Federal Procurement Act 2018 (Bundesvergabegesetz 2018).

Infrigement of Competition Law as “grave misconduct” in terms of Public Procurement Law

In its decision of June 4th 2019, C-425/18, the ECJ has reiterated that an infringement of competition rules must be regarded as a “grave professional misconduct” of a tenderer (cf. C-470/13). It has further clarified that the concept of “professional misconduct” covers all wrongful conduct that has an impact on the operator’s professional credibility, integrity or reliability.

The ECJ has also rejected the view, according to which professional misconduct would only constitute an exclusion ground when the misconduct occurred in the context of the performance of a public contract, and stressed that the term „grave misconduct” should be interpreted broadly. Nevertheless, the ECJ also pointed out that the concept of “grave misconduct” must be understood as referring to conduct by the tenderer which denotes the wrongful intent of negligence of a certain gravity on its part.

However, a violation of competition (or any other) law should not automatically result in the exclusion of the tenderer. Rather, contracting authorities should assess on a case-by-case basis whether or not a tenderer should be excluded.

In a nutshell

This judgment of the ECJ is to be welcomed from the perspective of legal certainty. First, contracting authorities should beware of poorly documented exclusion grounds. Second, tenderers are reminded of the practical importance of compliance programs.

 

Our Public Procurement as well as our Compliance & Internal Affairs Department will be happy to answer any further questions regarding the above.

 

14. October 2019

 

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