29.10.2024
Consultation on possible updates to the EU procurement directives
“As announced in the Political guidelines for the next term 2024-2029, the European Commission is set to launch a comprehensive evaluation of the Public Procurement Directives. This is in line with the requests of the European Court of Auditors (ECA) and the Council to carry out an in-depth analysis of the public procurement legal framework.
Conducting the evaluation, the European Commission will look at several topics identified, such as the level of competition in the EU public procurement market, the simplification of the current mechanisms and the achievement of strategic objectives.
The European Commission will publish the call for evidence and public consultation here. We count on public buyers, businesses, trade unions and civil society to contribute to the process.
To follow all developments relating to the upcoming evaluation of the legislative framework, subscribe to our Newsletter and become of Member of our Public Buyers Community”.
Source: https://public-buyers-community.ec.europa.eu/news/evaluation-public-procurement-directives
23.10.2024
UNCITRAL Colloquium on the Law of International Trade for a Greener Future – Potential updates to the UNCITRAL Model Law on Public Procurement to include “Green Procurement”
https://uncitral.un.org/en/climatechangecolloquium2024
Recordings and PPT slides: https://uncitral.un.org/en/ColloquiumCC2024OCT
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4293959
26.09.2024
“Bribery in the Conduct of Business, Addressing Corruption in Public Procurement, and Laundering and Recovery of Proceeds of Crime: A Study on the Main Areas for Enhanced Cooperation among IPEF Partners” – Report on IPEF Member States’ Anti-Corruption Practices
https://www.unodc.org/roseap/uploads/documents/Publications/2024/IPEF_study.pdf
12.09.2024
International Conference Next Generation Procurement Rome, September 12-13, 2024
9.9.2024
The future of European competitiveness: Report by Mario Draghi
“For instance, we are still not joining forces in the defence industry to help our companies to integrate and reach scale. European collaborative procurement accounted for less than a fifth of spending on defence equipment procurement in 2022. We also do not favour competitive European defence companies. Between mid-2022 and mid-2023, 78% of total procurement spending went to non-EU suppliers, out of which 63% went to the US. Likewise, we do not collaborate enough on innovation, even though public investments in breakthrough technologies require large capital pools and the spillovers for everyone are substantial. The public sector in the EU spends about as much on R&I as the US as a share of GDP, but just one-tenth of this spending takes place at the EU level.
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At the same time, there are other public goods identified in this report – such as defence procurement or crossborder grids – that will be undersupplied without common action. If the political and institutional conditions are met, these projects would also call for common funding.
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the EU should legislate mandatory standards for public sector procurement, thereby levelling the playing field for EU companies against larger non-EU players. Outside of “sovereign” market segments, it is recommended to negotiate a low barrier “digital transatlantic marketplace”, guaranteeing supply chain security and trade opportunities for EU and US tech companies on fair and equal conditions. To make these opportunities equally attractive beyond large tech companies, SMEs on both sides of the Atlantic should benefit from the same easing of regulatory burdens for small companies that is proposed above.
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The report recommends reinforcing joint procurement – at least for LNG – to leverage Europe’s market power and establishing long-term partnerships with reliable and diversified trade partners as part of a genuine EU gas strategy.
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To capitalise on the decarbonisation push, Europe should refocus its support for clean tech manufacturing, focusing on technologies where it either has a lead or where there is a strategic case for developing domestic capacity
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At the national level, to ensure predictable demand for the EU clean tech industry and to offset trade distorting policies abroad, the report recommends introducing an explicit minimum quota for the local production of selected products and components in public procurement and in CfD auctions and other forms of local production offtake. This quota should be combined with criteria established at EU level for orienting local production to the most innovative and sustainable solutions. The approach could be supported by the creation of joint ventures or cooperation agreements for knowledge transfer and sharing between EU and non-EU companies. For “infant industries”, it is recommended that Member States plan upcoming auctions and public procurement procedures to act as a “launch customer” for new technologies.
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To reduce its vulnerabilities, the EU needs to develop a genuine “foreign economic policy” based on securing critical resources [see the chapter on critical raw materials]. In the short term, the EU needs to implement the Critical Raw Materials Act (CRMA) rapidly and fully. The report recommends complementing this Act with a comprehensive strategy covering all stages of the critical mineral supply chain, from extraction to processing to recycling. To strengthen Europe’s position at the procurement stage, it is proposed to create a dedicated EU Critical Raw Material Platform. The platform would leverage Europe’s market power by aggregating demand for the joint purchasing of critical materials (following the model used in South Korea and Japan) and coordinating the negotiation of joint purchases with producer countries.
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For both defence and space industries, insufficient aggregation and coordination of public spending in Europe compounds industrial fragmentation. European collaborative procurement accounted for only 18% of expenditure on defence equipment procurement in 2022, well below the benchmark of 35% agreed upon in the European Defence Agency frameworks. This lack of coordination creates a vicious circle for the EU defence industry. Without demand aggregation among Member States, it is more difficult for the industry to predict longer-term needs and increase supply, in turn decreasing its overall capacity to meet demand and depriving the industry of orders and opportunities. As a result, defence procurement is diverted outside of the EU. Between June 2022 and June 2023, 78% of procurement spending went to non-EU suppliers, out of which 63% went to the US. At the same time, when EU Member States organise and cooperate, the results are positive. One such example is the A330 Multi-Role Tanker Transport, which was developed through a collaborative project allowing participating countries to pool resources and share operation and maintenance costs. The European space sector is likewise hindered by insufficient demand aggregation and investment coordination among Member States. Furthermore, the European Space Agency (ESA) operates based on the principle of “geographical return”, meaning that it invests in each of its member countries through industrial contracts for space programmes an amount which is similar to the country’s financial contribution to the agency. This principle leads to an inevitable fragmentation of supply chains, the unnecessary duplication of capacities in relatively small markets and a mismatch between the most competitive industrial actors and the actual allocation of resources.
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In the absence of common European spending, policy actions for the defence sector need to focus on aggregating demand and integrating industrial defence assets [see the chapter on defence]. In the short term, the swift implementation of the European Defence Industrial Strategy and the related European Defence Industry Programme is needed. In particular, it is essential to increase substantially the aggregation of demand between groups of Member States, at least among those who opt to do so, and to raise the share of joint defence procurement. The report recommends further steps to develop a medium-term EU Defence Industrial Policy which can support the structural cross-border integration of defence assets and the selective integration and consolidation of EU industrial capacity, with the explicit aim of increasing scale, standardisation and interoperability. EU competition policy should enable such consolidation when increased scale would deliver efficiencies or allow the realisation of globally competitive investments. In addition, as EU defence spending rises, defence industrial consolidation, integration and technological innovation should be supported by reinforced European preference principles in procurement, ensuring that a minimum share of this rising demand is concentrated on European companies rather than flowing overseas.
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The European space sector would benefit from updated governance and investment rules, and greater coordination of public spending in a true Single Market for space. The report recommends progressively removing the ESA’s geographical return principle. The ESA’s procurement rules should reflect the outcome of industrial competition and the choice of the best providers, and resources should be concentrated on projects that demonstrate the potential for significant scientific or technological advancement, regardless of the location of the participating entities. This process should be accompanied by the establishment of a functioning Single Market for space, with common standards and the harmonisation of licensing requirements (in line with the planned EU Space Law). It is also proposed to establish a multi-purpose Space Industrial Fund that would allow the European Commission to act as an “anchor customer” to jointly purchase space services and products and fund critical technologies, helping the EU industrial base to increase its capacity. Similarly, joint strategic priorities for space research and innovation should be supported by increased coordination, funding and the pooling of resources for the development of new large EU joint programmes. Finally, as for the defence sector, the growth of innovative EU space SMEs, start-ups and scale-ups should be enabled by improved access to finance and the introduction of targeted European preference rules.
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Some joint funding of investment at the EU level is necessary to maximise productivity growth, as well as to finance other European public goods. The more that governments implement the strategy laid out in this report, the greater the increase in productivity will be, and the easier it will be for governments to bear the fiscal costs of supporting private investment and of investing themselves. Joint funding for specific projects will be key to maximise the productivity gains of the strategy, such as investing in breakthrough research and infrastructures to embed AI into the economy. At the same time, there are other public goods identified in this report – such as investing in grids and interconnectors, and financing the joint procurement of defence equipment and defence R&I – that will be undersupplied without common action and funding. Finally, for Member States to converge more closely in their policies – be it the Single Market or more generally in the policies described in this report such as climate, innovation, defence, space and education – both regulation and incentives will be required. Incentives will also require common funding. However, if the strategy is not fully implemented and productivity growth does not pick up, a broader issuance of public debt may be needed to make the funding of the transitions a more realistic proposition.
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Finally, the EU should move towards regular issuance of common safe assets to enable joint investment projects among Member States and to help integrate capital markets. If the political and institutional conditions are in place as outlined above, the EU should continue – building on the model of NGEU – to issue common debt instruments, which would be used to finance joint investment projects that will increase the EU’s competitiveness and security. As several of these projects are longer-term in nature, such as financing R&I and defence procurement, common issuance should over time produce a deeper and more liquid market in EU bonds, allowing this market to progressively support the integration of Europe’s capital markets. At the same time, together with the above reforms, to finance a variety of programmes focused on innovation and on raising productivity, Member States could consider increasing the resources available to the Commission by deferring the repayment of NGEU”.
11.07.2024
‘Interplay between the Deforestation Regulation (EUDR) and Public Procurement in the EU’ – European Procurement & Public Private Partnership Law Review
https://sapiensnetwork.eu/towards-deforestation-free-public-procurement-new-publication/
10.07.2024
‘Empowering Small Businesses: The Impact of Reserved Contracts in U.S. Federal Procurement’ – SAPIENS Working Paper July/2024
09.07.2024
Moldova signs the EU’s Joint Procurement Agreement to deepen health cooperation with the EU
Today, Moldova became the 38th country to sign the Joint Procurement Agreement in the area of health, during an official visit to Chisinau by Commissioner for health and food safety, Stella Kyriakides. Moldova is now the 6th EU candidate country to become part of the Agreement.
The Joint Procurement Agreement is a legal and operational mechanism which enables participating countries to join forces in the face of a serious health threat and to jointly purchase essential supplies, such as medicines and medical equipment. For example, during the COVID-19 pandemic, it allowed participating countries to acquire personal protective equipment, needles and syringes for COVID-19 vaccination, ventilators and medicines under equal conditions.
Participation in the Joint Procurement Agreement allows a country to benefit from the combined purchasing power of EU Member States and participating countries, enabling improved access and greater security of supply for medical countermeasures in a health emergencythrough pooling needs and creating economies of scale. The Joint Procurement Agreement also improves participating countries’ preparedness for serious cross-border diseases, by having contracts for essential medical countermeasures in place before major outbreaks occur.
Most recently, the Commission signed a joint procurement framework contract to supply up to 665,000 doses of the zoonotic influenza (avian flu) vaccine from Seqirus, with an option for an additional 40 million doses. This contract, aimed at preventing avian flu, ensures that participating countries have access to medical countermeasures if needed.
The Commission – via its Health Emergency Preparedness and Response Authority (HERA) – manages the procurement procedures under the Joint Procurement Agreement in close collaboration with the participating countries. These countries can then purchase the contracted products as needed, using their national budgets.
For More Information
2014 Joint Procurement Agreement Decision
JPA : participating countries
01.07.2024
Keynote speech by Executive Vice-President Šefčovič at the Jacques Delors Agora event
“In the EU, we spend something like 2 trillion euros a year through public procurement.
But we still put an overwhelming emphasis on price.
We want our companies to have a sustainable approach, lowering their carbon footprint while treating their employees well, with the fair wages they deserve.
And I think we should reward those companies by including such factors in public procurement”.
https://ec.europa.eu/commission/presscorner/detail/en/speech_24_3585
23.06.2024
Sustainable Public Procurement – SAPIENS Policy Brief
20.06.2024
https://ec.europa.eu/commission/presscorner/detail/en/ip_24_3683
Commission launches new public procurement portal
The new tool serves as a public procurement knowledge hub, with easy-to-access information on the rules governing public procurement for contracting entities in the EU Member States.
‘Procurement for Buyers’ will help EU contracting entities to find out which bidders are eligible to participate in public procurement procedures in EU member states, based on the provisions of the WTO Government Procurement Agreement (GPA) and bilateral EU trade agreements. It also provides other important parameters, such as applicable requirements regarding the origin of goods and services that may be offered.
This new initiative expands the existing public procurement section of Access2Markets, which already features the ‘Procurement for Suppliers’ tool.
‘Procurement for Suppliers’ helps European companies to find out whether they are eligible to bid for procurement contracts in third countries on an equal footing with local companies. It is currently available for Canada, Japan and the United States, with further trading partners to be added in the future.
13.05.2024
Statement by Commissioner Breton on withdrawal of LONGi Solar Technologie GmbH and Shanghai Electric from public procurement following the Commission’s opening of an investigation under the Foreign Subsidies Regulation
The Commission takes note of the withdrawal of two companies for a public procurement procedure concerning the construction of a photovoltaic park in Romania. The two companies involved are ENEVO, which includes LONGi Solar Technologie GmbH, as well as Shanghai Electric UK Co. Ltd. and Shanghai Electric Hong Kong International Engineering Co. Ltd.
The withdrawal follows the European Commission’s announcement on 3 April 2024 that it would open an in-depth investigation under the Foreign Subsidies Regulation . As a result of the withdrawal, the Commission will close its in-depth investigation.
These investigations concern a procedure carried out by a Romanian contracting authority (Societatea PARC FOTOVOLTAIC ROVINARI EST S.A.) for the design, construction and operation of a photovoltaic park in Romania with a capacity of 454.97 MW, partly financed by the European Union. The estimated value of this contract is around €375 million.
The first consortium consists of ENEVO Group and LONGi Solar Technologie GmbH. ENEVO Group, the consortium leader, is a Romanian-based engineering and consulting services provider. LONGi Solar Technologie GmbH is a German subsidiary wholly owned and controlled by LONGi Green Energy Technology Co, Ltd, a leading photovoltaic company listed on the Hong Kong Stock Exchange.
The second consortium consists of Shanghai Electric UK Co. Ltd. and Shanghai Electric Hong Kong International Engineering Co. Ltd. Both companies are wholly owned and controlled by Shanghai Electric Group Co. Ltd, a Chinese state-owned enterprise specialising in multinational power generation and electrical equipment manufacturing.
Solar power is vital for Europe’s economic security. We are massively investing in the installation of solar panels to decrease our carbon emissions and energy bills – but this should not come at the expense of our energy security, our industrial competitiveness and European jobs. The Foreign Subsidies Regulation is ensuring that foreign companies which participate in the European economy do so by abiding to our rules on fair competition and transparency.
https://ec.europa.eu/commission/presscorner/detail/en/statement_24_2570
26.04.2024
Foreign Subsidies Regulation (‘FSR’) – EU Competition Day: competition and competitiveness in uncertain geopolitical times – Speech by EVP
“The Digital Markets Act and the Foreign Subsidies Regulation were designed to protect fair competition within the Single Market. They address two novel risks.
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Another new tool is the Foreign Subsidies Regulation – which I know is a hot topic!
With the Foreign Subsidies Regulation, we address another dimension. We address an external challenge to our competitiveness and resilience. Activities or acquisitions in Europe infused by distortive subsidies impair our markets’ competitiveness. They destroy the level playing field. And they weaken our economic security.
We are committed to an open Single Market. But business in the European Union must be based on fair competition, reciprocity and a level playing field. I think that the events of the last weeks have shown that we will defend those principles vigorously.
We have launched a series of investigations, in quick succession. We already closed our investigation into the Chinese train manufacturer CRRC after it withdrew from a Bulgarian public procurement procedure in Bulgaria. But we continue to investigate bids by Chinese companies in public procurement for solar parcs in Romania. Now, we are also investigating subsidies in wind energy projects in the EU. And a couple of days ago we carried out the first surprise inspections under the Foreign Subsidies Regulation in the security equipment sector in several Member States.
I think we have made it clear that we will protect the Single Market. We will tackle distortive subsidies from wherever in the world they arise. But we will only act on the basis of clear evidence and in full respect of our international engagements and commitments.
We are very focused on enforcement measures. But I would also recognize the positive attitude that we see from companies and stakeholders. These new tools do foster compliance. And compliance directly achieves the goals that we have set for ourselves.
- The DMA entered into force after months of engagement with gatekeepers. Many important announcements have been made that already bring concrete and tangible benefits. Today, your phone allows you to do things that you could not do yesterday. It is easier to get rid of apps you don’t want, to choose your preferred default setting. You also have better control over your data. All of that is new.
- For the Foreign Subsidies Regulation, I will admit that it brought us a bit more notifications than we initially expected. But our practice shows that this is not a tool to discourage investment in the EU. Investors initially feared that we would create too much red tape. But companies that have gone through the notification system have found a very swift and clear outcome”.
https://ec.europa.eu/commission/presscorner/detail/en/speech_24_2324
30.04.2024
Webinar: Joint U.S.-EU Catalogue of Best Practices on Green Public Procurement
https://publicprocurementinternational.com/webinar-joint-us-eu-green-procurement/
25.04.2024
Stockholm Public Procurement Conference 2024 – U.S./EU Convergence on Debarment and Beyond
24.04.2024
International Procurement Instrument (‘IPI’): first investigation into Chinese medical devices
“Today, the European Commission has initiated for the first time an investigation under the International Procurement Instrument (IPI), in response to measures and practices in the Chinese procurement market for medical devices which discriminate unfairly against European companies and products. Evidence gathered by the Commission indicates that China’s procurement market for medical devices has gradually become more closed for European and foreign firms, as well as for products made in the EU. This is due to measures introduced by China that differentiate between local and foreign companies, and between locally produced and imported medical devices. Having previously raised its concerns directly and repeatedly with Chinese authorities, and in the absence of satisfactory replies or actions, the Commission has decided to address this issue through the IPI Regulation.
The EU is a strong advocate of a level playing field in international procurement markets. In this context, the first aim of an IPI investigation is to foster dialogue between competent authorities on removing discrimination in public procurement, for the benefit of all. Only if dialogue fails to deliver an equitable agreement will the Commission consider imposing IPI measures.
Executive Vice-President and Commissioner for Trade Valdis Dombrovskis said: “The International Procurement Instrument is a powerful new mechanism to support our European companies in markets that are less open than ours. It also aims to promote open public procurement markets globally. Openness is vital for businesses to thrive, for consumers, and to spur innovation worldwide. We are launching this investigation with China so that we can achieve a level playing field in our procurement markets for producers of medical devices, on both sides. Regrettably, our repeated discussions with China on this trade irritant have been fruitless. We trust that this IPI investigation will galvanise our dialogue and help us find mutually agreeable solutions.”
“The European Commission has decided on its own initiative to initiate, pursuant to Article 5(1) of Regulation (EU) 2022/1031, an investigation into alleged measures and practices of the People’s Republic of China (‘PRC) resulting in a serious and recurrent impairment of access of Union economic operators, goods and services to the PRC’s public procurement market for medical devices.
At the same time, the PRC is invited to enter into consultations with the European Commission in order to eliminate or remedy the alleged measures and practices.
Member States and interested parties are invited to participate in the investigation and provide relevant information, within 30 calendar days from the date of initiation of the investigation”.
https://ec.europa.eu/commission/presscorner/detail/en/ip_24_2044
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:C_202402973
24.04.2024
Infringement procedures – The Commission urges BULGARIA, SPAIN and ROMANIA to comply with the public procurement legislation
The European Commission decided to open an infringement procedure by sending a letter of formal notice to Romania (INFR(2023)2114) and to issue reasoned opinions concerning Bulgaria (INFR(2018)2268) and Spain (INFR(2021)2171) for failing to comply with the public procurement legislation. The rules covering public contracts and concession contracts (Directive 2014/23/EU, Directive 2014/24/EU and Directive 2014/25/EU) had to be transposed by Member States into domestic law by 18 April 2016. By requiring Member States to follow impartial and transparent procedures, these directives aim to open public markets to genuine competition between companies across the EU and to ensure the best value for money for public purchases. The Commission is addressing the countries over various issues relating, among others, to restrictions of operators’ rights in the case of Romania and exclusion of private hospitals from EU public procurement rules even when they are partly financed through public funds in the case of Bulgaria. The Spanish legislation does not respect in particular the scope of application of the Directives regarding the type of contracting authorities, contracts and contract modifications that must be covered.
Bulgaria, Spain and Romania now have two months to respond and address the shortcomings raised by the Commission. In the absence of a satisfactory response the Commission may decide to issue a reasoned opinion to Romania and to refer Bulgaria and Spain to the Court of Justice of the European Union.
24.04.2024
Infringement procedures – The Commission asks SPAIN and HUNGARY to comply with rules on motorway concession contracts
The European Commission decided to open an infringement procedure by sending a letter of formal notice to Hungary (INFR(2024)4006) and an additional letter of formal notice to Spain (INFR(2021)4052) for failing to comply with rules on motorway concession contracts. Both letters aim to ensure the respect of EU rules on concessions, which provide for the equal treatment of economic operators interested in participating in procurement procedures and the respect of the obligation of transparency. The Commission is addressing various issues related to those contracts. It considers that Hungary’s 35-year concession lacked transparency in estimated value, failed to transfer sufficient operating risk, and was extended for an unduly long period without justification, violating EU law. Spain extended the duration of two motorway concessions without properly applying tender procedures, breaching EU rules.
Spain and Hungary now have two months to respond to the arguments put forward by the Commission. Otherwise, the Commission may decide to send them a reasoned opinion.
https://ec.europa.eu/commission/presscorner/detail/en/inf_24_1941
05.04.2024
Green Public Procurement (‘GPP’) – Joint Statement EU-US Trade and Technology Council of 4-5 April 2024 in Leuven, Belgium
“The European Union and the United States underscore that, by achieving a common understanding on green public procurement practices, we can accelerate the uptake of more sustainable and greener solutions to achieve our common environmental and climate goals.
To this end, we have issued a Joint EU-US Catalogue of Best Practices on Green Public Procurement. It will contribute to advancing sustainability objectives by identifying and promoting policy tools for accelerating the deployment of publicly financed sustainability projects in the European Union and the United States.
The Joint Catalogue presents a collection of policies, practices, and actions used across all stages of the procurement process, from the strategic planning to pre-procurement, procurement, and post-contract award stage, and addresses all types of environmental and climate challenges, such as reduction of greenhouse gas emissions, energy efficiency or promoting circular economy approaches. It can serve as an inspiration for policymakers and suppliers, as well as provide ideas for the uptake of green solutions in public procurement globally.
The European Union and the United States will continue to work together on how to use the Joint Catalogue and maximise its impact”.
05.04.2024
“Today, the EU and the United States held the sixth meeting of the EU-US Trade and Technology Council (TTC) in Leuven, Belgium. The meeting allowed ministers to build on ongoing work and present new deliverables of the TTC after two and a half years of cooperation.
Promoting easier, more sustainable and more secure trade on the transatlantic marketplace
Promoting sustainable trade as part of the green transition is a priority for both parties and the TTC remains a key forum for the EU and the US to cooperate on this. Both sides reaffirmed the importance of the Transatlantic Initiative on Sustainable Trade (TIST), which since its inception in 2022 frames the TTC’s work in this regard. At today’s meeting, ministers took stock of the work taking place under TIST including on conformity assessment, to facilitate trade in goods and technologies that are vital for the green transition. They agreed to publish a Joint Catalogue of Best Practices on Green Public Procurement to help accelerate the deployment of publicly financed sustainability projects, and to advance their cooperation on solar supply chains”.
https://ec.europa.eu/commission/presscorner/detail/en/ip_24_1827
03.04.2024
Foreign Subsidies Regulation (‘FSR’) – Commission opens two in-depth investigations in the solar photovoltaic sector
“Today, the Commission launched two in-depth investigations under the Foreign Subsidies Regulation. The investigations relate to the potentially market distortive role of foreign subsidies given to bidders in a public procurement procedure. The Commission will assess whether the economic operators concerned did benefit from an unfair advantage to win public contracts in the EU.
The investigations launched today follow notifications submitted by on the one hand the ENEVO Group including LONGi Solar Technologie GmbH, and on the other hand Shanghai Electric UK Co. Ltd. and Shanghai Electric Hong Kong International Engineering Co. Ltd. The relevant public procedure was launched by a Romanian contracting authority (Societatea PARC FOTOVOLTAIC ROVINARI EST S.A.) for the design, construction and operation of a photovoltaic park in Romania, with an installed power of 454.97 MW*. This project is partially financed by the EU Modernisation Fund.
According to the Foreign Subsidies Regulation, companies are obliged to notify their public procurement tenders in the EU when the estimated value of the contract exceeds €250 million, and when the company was granted at least €4 million in foreign financial contributions from at least one third country in the three years prior to notification.
Following its preliminary review of all the submissions, the Commission considered it justified to open an in-depth investigation for two bidders, since there are sufficient indications that both have been granted foreign subsidies that distort the internal market.
During the in-depth investigation, the Commission will further assess the alleged foreign subsidies and obtain all the information required to establish whether they may have allowed the companies to submit an unduly advantageous offer in reply to a tender. Such an offer could cause other companies participating in the public procurement procedure to potentially lose sales opportunities.
In line with the provisions of the Foreign Subsidies Regulation, at the end of its in-depth investigation the Commission may (i) accept commitments proposed by the company if they fully and effectively remedy the distortion, (ii) prohibit the award of the contract, or (iii) issue a no-objection decision.
Both consortia submitted a complete notification on 4 March 2024. The Commission now has 110 working days as of that date to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
Companies
The first investigated consortium is composed of the ENEVO Group and LONGi Solar Technologie GmbH. ENEVO Group, the consortium leader, is a Romanian-based provider of engineering and consulting services. LONGi Solar Technologie GmbH is a newly established, fully owned and fully controlled German subsidiary of LONGi Green Energy Technology Co., Ltd, which is a major supplier of solar photovoltaic solutions, listed on the Hong Kong Stock Exchange. Both LONGi Solar Technologie GmbH and LONGi Green Energy Technology Co., Ltd. are active in the development, manufacturing and servicing of solar wafers, cells and modules.
The second investigated consortium is composed of Shanghai Electric UK Co. Ltd. and Shanghai Electric Hong Kong International Engineering Co. Ltd. Both companies are 100% owned and controlled by Shanghai Electric Group Co. Ltd, a State Owned Enterprise of the People’s Republic of China. It is ultimately owned and controlled by the Shanghai State-owned Industry Supervision and Management Committee, a state-owned entity that is subordinate to the China Central People’s Government. Shanghai Electric UK Co., Ltd. and Shanghai Electric Hong Kong International Engineering Co., Ltd. are leading global suppliers of industrial-grade solutions of energy, manufacturing and the integration of digital intelligence. They provide services on wind, solar and hydrogen storage, as well as an integrated process of generation, grid, load, and storage.
Procedural background
The Foreign Subsidies Regulation (‘FSR’) started to apply on 12 July 2023. This new set of rules enables the Commission to address distortions caused by foreign subsidies, and thereby allows the EU to ensure a level playing field for all companies operating in the internal market while remaining open to trade and investment.
In recent years, foreign subsidies appear to have distorted the EU’s internal market, including by providing their recipients with an unfair advantage to acquire companies or obtain public procurement contracts in the EU to the detriment of fair competition. The FSR addresses such distortions and closes a regulatory gap. It gives the EU new tools to effectively tackle foreign subsidies that cause distortions and undermine the level playing field in the internal market which is based on a competitive social market economy.
The FSR introduces three procedures:
- Two notification-based procedures to (i) investigate concentrations as well as (ii) bids in public procurement procedures involving financial contributions granted by non-EU governments. The notification obligations apply to economic operators since 12 October 2023.
- An ex officio procedure to investigate all other market situations, where the Commission can start a review on its own initiative.
The Commission will publish a non-confidential version of today’s decision, as well as the future final decision, after adoption, in the Official Journal of the European Union”.
Foreign Subsidies Regulation (‘FSR’) – Withdrawal by CRRC Qingdao Sifang Locomotive Co., Ltd. from public procurement following the Commission’s opening of an investigation – Statement by Commissioner Breton
“The Commission takes note of the withdrawal by CRRC Qingdao Sifang Locomotive Co., Ltd. from a public procurement tender organised by the Bulgarian Ministry of Transport and Communications. The withdrawal follows the Commission’s announcement of an in-depth investigation under the Foreign Subsidies Regulation. As a result of the withdrawal, the Commission will close its in-depth investigation.
The public procurement tender concerns the purchase of 20 electric “push-pull” trains, as well as their maintenance over 15 years. The estimated value of the contract is around BGN 1.2 billion (€ 610 million).
CRRC Corporation Limited (known as CRRC) is a Chinese state-owned rolling stock manufacturer. It is the world’s largest rolling stock manufacturer in terms of revenue. Rolling stock manufacturers produce the locomotives and carriages used by railway operators, as well as subways, trams and other railway vehicles”.
“In just a few weeks, our first investigation under the Foreign Subsidies Regulation has already yielded results. Our Single Market is open for firms that are truly competitive and play fair. We will continue to take all necessary measures to preserve Europe’s economic security and competitiveness – with assertiveness and speed”.
https://ec.europa.eu/commission/presscorner/detail/en/statement_24_1729
23.02.2024
State aid rules on Public Service compensation: Commission opens in-depth State aid investigation into French compensation to maritime transport companies
“The European Commission has opened an in-depth investigation to assess whether the public service compensation granted to Corsica Linea and La Méridionale for the provision of maritime transport services to Corsica between 2023 and 2030 is in line with EU State aid rules.
The Commission’s investigation
In December 2022, France awarded to Corsica Linea and La Méridionale (individually, or jointly as Groupement Corsica Linea-La Méridionale) five contracts for the provision of maritime transport services for passengers and freight between Marseille and five Corsican ports (Ajaccio, Bastia, Propriano, L’Île Rousse and Porto-Vecchio) for the period 2023-2030.
France notified the Commission compensation to Corsica Linea and La Méridionale of €853,6 million for the provision of these services.
At this stage, based on its preliminary assessment, the Commission considers that additional information is necessary to determine whether the public compensation paid to Corsica Linea and La Méridionale is in line with EU State aid rules, and in particular with the 2012 Service of General Economic Interest (‘SGEI’) Framework.
For this reason, the Commission has decided to open an in-depth investigation to assess whether:
- The inclusion of transport of towed freight and truck drivers in the contracts is justified by a public service need, given the presence on the market of a commercial offer developed from the neighboring port.
- The volume of freight traffic to be transported pursuant to the contracts does not exceed the public service need identified by the French authorities.
In addition, additional clarifications are needed to conclude that the contracts comply with EU rules on public procurement.
The Commission will now investigate further. The opening of the in-depth investigation gives France and other interested parties the opportunity to submit their comments. It does not prejudge the outcome of the investigation.
Background
Under the EU State aid rules on public service compensation, companies can be compensated for the extra cost of providing a public service, subject to certain criteria. This enables Member States to grant State aid for the provision of public services whilst, at the same time, making sure that companies entrusted with such services are not overcompensated. This minimises distortions of competition and ensures an efficient use of public resources.
The non-confidential version of the decision will be made available under the case number SA.101557 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News”.
Foreign Subsidies Regulation (‘FSR’) – Commission opens first in-depth investigation
“Today, the Commission is launching its first in-depth investigation into the potentially market distortive role of foreign subsidies, exercising its powers under the Foreign Subsidies Regulation. This investigation relates to a public procurement procedure. It shows the Commission’s determination to preserve the internal market’s integrity by ensuring that recipients of foreign subsidies cannot benefit from an unfair advantage to win public contracts in the EU, to the detriment of fair competition.
The investigation launched today follows a notification submitted to the Commission by CRRC Qingdao Sifang Locomotive Co., Ltd., a subsidiary of CRRC Corporation, a Chinese state-owned train manufacturer. It concerns a public procurement procedure launched by Bulgaria’s Ministry of Transport and Communications, relating to the provision of several electric “push-pull” trains as well as related maintenance and staff training services.
According to the Foreign Subsidies Regulation, companies are obliged to notify their public procurement tenders in the EU when the estimated value of the contract exceeds €250 million, and when the company was granted at least €4 million in foreign financial contributions from at least one third country in the three years prior to notification.
Following its preliminary review of the notification received from CRRC Qingdao Sifang Locomotive, the Commission considered it justified to open an in-depth investigation, since there are sufficient indications that this company has been granted a foreign subsidy that distorts the internal market. For this, the Commission had to assess whether the foreign financial contribution constitutes a subsidy that directly or indirectly confers a selective benefit to the company; and whether this allows the company to submit an unduly advantageous tender.
During the in-depth investigation, the Commission will further assess the alleged foreign subsidies and obtain all the information required to establish whether they may have allowed CRRC Qingdao Sifang Locomotive to submit an unduly advantageous offer in reply to a tender. Such an offer could cause other companies participating in the public procurement procedure to potentially lose sales opportunities.
In line with the provisions of the Foreign Subsidies Regulation, at the end of its in-depth investigation the Commission may (i) accept commitments proposed by the company if they fully and effectively remedy the distortion, (ii) prohibit the award of the contract, or (iii) issue a no-objection decision.
CRRC Qingdao Sifang Locomotive submitted a complete notification on 22 January 2024. As of that date, the Commission has 110 working days, until 2 July 2024, to take a final decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.
Companies and products
CRRC Corporation Limited (known as CRRC) is a Chinese state-owned rolling stock manufacturer. It is the world’s largest rolling stock manufacturer in terms of revenue. Rolling stock manufacturers produce the locomotives and carriages used by railway operators, as well as subways, trams and other railway vehicles.
The Bulgarian Ministry of Transport and Communication public procurement tender is for 20 electric “push-pull” trains, as well as their maintenance over 15 years. The estimated value of the contract is around BGN 1.2 billion (€610 million).
Procedural background
The Foreign Subsidies Regulation (‘FSR’) started to apply on 12 July 2023. This new set of rules enables the Commission to address distortions caused by foreign subsidies, and thereby allows the EU to ensure a level playing field for all companies operating in the internal market while remaining open to trade and investment.
In recent years, foreign subsidies appear to have distorted the EU’s internal market, including by providing their recipients with an unfair advantage to acquire companies or obtain public procurement contracts in the EU to the detriment of fair competition. The FSR addresses such distortions and closes a regulatory gap. It gives the EU new tools to effectively tackle foreign subsidies that cause distortions and undermine the level playing field in the internal market which is based on a competitive social market economy.
The FSR introduces three procedures:
- Two notification-based procedures to (i) investigate concentrations as well as (ii) bids in public procurement procedures involving financial contributions granted by non-EU governments. The notification obligations apply to economic operators since 12 October 2023.
- An ex officio procedure to investigate all other market situations, where the Commission can start a review on its own initiative.
The Commission will publish a non-confidential version of today’s decision, as well as the future final decision, after adoption, in the Official Journal of the European Union”.
14.02.2024
EU Defense Procurement and the European Court of Justice – Professor Andrea Sundstrand – Stockholm University -GW Law School, 2000 H Street NW, Washington DC – Stockton 306
07.02.2024
Defence Procurement – The Commission calls on Czechia to comply with the Defence Procurement Directive
“Today, the Commission decided to open an infringement procedure by sending a letter of formal notice to Czechia (INFR(2023)4017) for a breach of its obligations under Directive 2009/81/EC (the ‘Defence Procurement Directive’) and under the Treaty of the Functioning of the European Union (TFEU) in relation to the procurement of military helicopters.
The Defence Procurement Directive aims at enhancing transparency and openness within the European Defence Equipment Market (EDEM) and at providing a level playing field for European companies while ensuring that the security interests of the Member States are protected. The Commission considers that the procurement procedure and conditions applied by Czechia to award the contract did not comply with the Defence Procurement Directive and with Treaty-based principles. The breach relates to the circumvention of the Defence Procurement Directive on the organisation of competitive tendering, by misusing the exemption on government-to-government contracts provided in that Directive. The direct award of the contract also breaches the Treaty principles of non-discrimination, equal treatment, and transparency by depriving EU companies from the possibility to submit offers and effectively compete for the contract. The breach also relates to the Czech authorities’ request for industrial participation of Czech companies in the contract. Restrictive measures imposing obligations on foreign suppliers to cooperate only with domestic companies breach basic principles of the Treaty. It discriminates against economic operators, goods and services from other Member States and impedes the free movement of goods and services and/or the right of establishment in the internal market. The Commission is therefore sending a letter of formal notice to Czechia, which now has two months to respond and address the shortcomings raised by the Commission. In the absence of a satisfactory response, the Commission may decide to issue a reasoned opinion”.
https://ec.europa.eu/commission/presscorner/detail/en/inf_24_301
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