EIC and FIEC welcome proposed new Regulation on Market Access in Public Procurement
The EU Commission presented its Proposal for a new Market Access Instrument on Public Prcourement.
EIC appreciates that the European Commission has eventually chosen to opt for the strongest possible course of action, namely a Proposal for a Regulation, and has provided with the Article 8 et seq. for a mechanism which would authorise the industry itself to take the initiative and lodge a complaint with regard to market access barriers to public procurement in third countries.
According to the EU Commission, the purpose of the proposal is twofold: On the one hand, the Commission aims to create a level playing-field in which EU businesses can compete in third countries’ public procurement markets, whilst, on the other hand, the Commission propose a clear legal framework for the EU Contracting Authorities. From the EIC perspective, the following text passages are particularly noteworthy:
- The proposed Regulation comprises two different approaches, namely a “European tool” and an “international tool”.
- According to the “European tool”, as described in Article 6, Contracting Authorities of EU Member States will be permitted to reject tenders or contracts of an estimated value of 5 million € or above and consisting of more than 50% of goods or services not subject to the EU's international procurement commitments. The Contracting Authorities will need to notify the Commission about their intention to reject an offer. The Commission will have two months time (which can be prolonged for another two months) to assess the existence of substantial reciprocity in the country in question and whether or not to approve such an exclusion.
- According to the “international tool”, as described in the Articles 8 et seq, the European Commission, in the event of repeated and serious discrimination against European suppliers in other countries, will have the power to conduct investigations into possible discriminatory procurement practices in the foreign country concerned and to start consultations with the country concerned to solve those market access problems and to take, if necessary, measures restricting the access to the EU's market. The restrictive measures would be targeted, e.g. by excluding tenders originating in a non-EU country from a particular sector or imposing a price penalty on the non-EU bids.
- A most interesting new aspect has been introduced with respect to the question of determining the nationality of the bidder or the origin of the service: For services provided by a legal person with a commercial presence within the EU, the origin will be according to Article 3 paragraph 2 lit. (b) / (2) the Member State where the person is established and in which territory it is engaged in “substantive business operations”, i.e. it has a direct and effective link with the economy of that Member State. Hence, a service offered by an EU subsidiary of a foreign company will be considered as European, as long as the subsidiary has “substantive business operations” in the EU. This excludes (only) post box companies that would be set up for the purpose of the tender and that otherwise have no business operation in the EU.
- The Commission will base its decision with respect to a potential exclusion of third country goods or services or the launch of bilateral consultations with a third country on the existence of "substantial reciprocity". The Commission will assess the question of reciprocity according to the following parameters:
- The degree to which public procurement laws of the country concerned ensure transparency in line with international standards in the field of public procurement and preclude any discrimination against EU goods, services and economic operators; and
- The degree to which public authorities and/or individual procuring entities of the non-EU country maintain or adopt discriminatory practices against EU goods, services and economic operators. When the assessment shows that EU suppliers, goods or services are subject to serious and persistent discrimination in foreign markets, the Commission will presume that a lack of substantial reciprocity exists in the country concerned.
Please note that FIEC and EIC have issued a joint Press Release on this subject in which the Commission’s Proposal is considered as a good first step in the right direction.