Can an undertaking which has breached national competition law in the past be excluded from a public tendering procedure ?
Yes, answers the Court of Justice in its recent judgment in Generali-Providencia Biztositò Zrt, Case C-470/13, EU:C:2014:2469.
That is an interesting enough point, of course. The judgment is also of interest because the Court seems to take a softer line than usual concerning the admissibility of the question and the lack of cross-border interest in the case as present by the national court.
The Hungarian Competition Authority found that Generali, an insurance company, had breached Hungarian competition law by concluding a number of illicit agreements with motor vehicle dealerships (see Allianz Hungária Biztosító and Others C‑32/11, EU:C:2013:160 – Disclaimer : I was co-agent in that case before the Court of Justice, representing the EFTA Surveillance Authority). Some time later the Hungarian tax and customs authority published a contract notice for the provision of insurance services. Generali submitted a tender. The Tax and customs authority notified Generali that it had decided to exclude it from the award procedure because of its infringement of the national competition rules. General challenged that exclusion before the Hungarian courts which then asked the Court of Justice whether such an exclusion was compatible with EU law and in particular with Article 45 of Directive 2004/18 an Articles 49 an 56 TFEU.
First, though, an issue of the jurisdiction of the Court of Justice and the admissibility of the preliminary reference came up.
Admissibility of the question – Cross border
It became clear that the contract in issue in the national proceedings did not fall within the scope of Directive 2004/18 as its value was below the threshold fixed in that Directive. Both Generali and the Commission pointed out, however, that the Hungarian legislation transposing Directive 2004/18 applies both to contracts which attain the thresholds laid down and those which do not. Consequently, they observed that the Court has held that it has jurisdiction to rule on requests for a preliminary ruling concerning provisions of an EU act in situations where the facts of the main proceedings were outside the scope of that act, but where those provisions had been rendered applicable by domestic law by virtue of a reference made by that law to the content of those provisions (judgments in Dzodzi, C‑297/88 and C‑197/89, EU:C:1990:360, paragraph 36, and Nolan, C‑583/10, EU:C:2012:638, paragraph 45 – Disclaimer : I was co-agent in that case before the Court of Justice, representing the EFTA Surveillance Authority).
The Court of Justice distinguished the present case from those cases cited by Generali and the Commission.
It held that it is true the Court has already held that the interpretation of provisions of an EU measure in situations outside that measure’s scope is justified where those provisions have been made applicable to such situations by national law directly and unconditionally in order to ensure that internal situations and situations governed by EU law are treated in the same way (judgment in Nolan, EU:C:2012:638, paragraph 47 and the case-law cited).
The present case was different, however.
The Court held that it is not apparent either from the order for reference or from the file submitted to the Court that there is a provision of Hungarian law which makes Directive 2004/18 directly and unconditionally applicable to public contracts the value of which falls below the relevant threshold laid down in Article 7 of that directive. Thus, the Court does not need to provide the national court with an interpretation of the provisions of Directive 2004/18 mentioned in the preliminary questions in order for that national court to resolve the dispute in the main proceedings.
That was not the end of the matter however. The Court observed that, where a public contract does not come within the scope of Directive 2004/18, because it falls below the relevant threshold of that directive, that contract is subject to the fundamental rules and general principles of that treaty, provided that it is of certain cross-border interest in the light, inter alia, of its value and the place where it is carried out (see, to that effect, judgments in Ordine degli Ingegneri della Provincia di Lecce and Others, C‑159/11, EU:C:2012:817, paragraph 23, and Consorzio Stabile Libor Lavori Pubblici, C‑358/12, EU:C:2014:2063, paragraph 24).
The referring court had not established the facts needed to enable the Court of Justice to verify whether, in the case at issue in the main proceedings, there is certain cross-border interest. As is clear from Article 94 of the Rules of Procedure of the Court, in the version which came into force on 1 November 2012, the Court must be able to find in the request for a preliminary ruling an account of the facts on which the questions are based and, in particular, the link between those facts and those questions. Accordingly, it is necessary to establish the facts needed to verify the existence of certain cross-border interest and, in general, make all the findings which the national courts are required to make, and on which the applicability of an act of EU secondary legislation and EU primary law depends, before any referral is made to the Court (Azienda sanitaria locale No 5 ‘Spezzino’ and Others, C‑113/13, EU:C:2014:2440, paragraph 47).
Nevertheless, the Court of Justice decided to provide the national court with an answer. It held that in view of the spirit of judicial cooperation which governs relations between national courts and the Court of Justice in the context of preliminary ruling proceedings, the fact that the referring court did not make those initial findings relating to the possible existence of certain cross-border interest does not mean that the request is inadmissible if, in spite of those deficiencies, the Court, in the light of the information contained in the court file, considers that it is in a position to provide a useful answer to the referring court. That is particularly the case where the decision to refer contains sufficient relevant information for the assessment of the possible existence of such an interest. Nevertheless, the response provided by the Court takes effect only if it is possible for the referring court to establish certain cross-border interest in the case at issue in the main proceedings, on the basis of a detailed assessment of all the relevant facts in the case in the main proceedings (judgment in Azienda sanitaria locale No 5 ‘Spezzino’ and Others, EU:C:2014:2440, paragraph 48 and the case-law cited). It is subject to that proviso that the Court gave a substantive answer to the referring court.
The answer on the substance
The Court held that Articles 49 TFEU and 56 TFEU apply to a contract such as that at issue in the main proceedings, provided that that contract is of certain cross-border interest. Consequently, the contracting authorities are required to abide by the prohibition on discrimination on the grounds of nationality and the obligation for transparency which arise under those articles (judgment in Wall, C-91/08, EU:C:2010:182, paragraph 33 and the case-law cited).
The Court found that there was no hint that the exclusion of Generali might constitute even indirect discrimination on the grounds of nationality or infringe the obligation of transparency.
The Court held that Article 45(2)(d) of Directive 2004/18 makes it possible to exclude any operator who ‘has been guilty of grave professional misconduct proven by any means which the contracting authorities can demonstrate’.
The concept of ‘professional misconduct’, for the purposes of that provision, covers, according to the Court, all wrongful conduct which has an impact on the professional credibility of the operator at issue and not only the infringements of ethical standards in the strict sense of the profession to which that operator belongs (judgment in Forposta and ABC Direct Contact, C-465/11, EU:C:2012:801, paragraph 27). In those circumstances, the commission of an infringement of the competition rules, in particular where that infringement was penalised by a fine, constitutes a cause for exclusion under Article 45(2)(d) of Directive 2004/18.
The Court went on that if such a cause for exclusion is possible under Directive 2004/18, it must a fortiori be regarded as justified in relation to public contracts which fall short of the threshold of that directive and which are consequently not subject to the strict special procedures laid down in that directive (judgment in Consorzio Stabile Libor Lavori Pubblici, EU:C:2014:2063, paragraph 37).