Certain third country competitors barred from equal access and protection in EU public procurement

Certain third country competitors barred from equal access and protection in EU public procurement

On 22 October 2024, the Court of Justice of the European Union (CJEU) ruled on a preliminary question from the Croatian High Administrative Court in the Kolin case (C‑652/22). This precedent-setting judgement mainly concerns the treatment, in the EU, of economic operators from third countries which are not party to the General Procurement Agreement (GPA) or any other international agreement with similar effects.

The CJEU deemed it necessary to clarify that such third country economic operators cannot invoke the provisions of Directive 2024/25 on sectoral public procurement and are therefore not entitled to demand equal access to sectoral public procurement procedures within the EU and, when admitted, the right to ‘no less favorable treatment’. Furthermore, the CJEU reconfirmed the exclusive competence of the EU to legislate on any matter involving the participation of economic operators from third countries that have not concluded a relevant international agreement with the EU guaranteeing equal and reciprocal access.

The CJEU also left the door wide open for these findings to be applied to the general public procurement procedures covered by Directive 2014/24.

Facts and main proceedings

In 2020, Kolin, a company governed by Turkish law, participated in a Croatian public tender procedure for the construction of  railway infrastructure. HŽ Infrastruktura, the contracting authority, decided to award the contract to an EU based competitor, the Strabag group. Kolin repeatedly challenged the award decision, eventually filing for annulment with the Croatian High Administrative Court. Kolin argued that allowing the Strabag group to submit an additional list of works and certificates after the first award decision altered their tender and violated the principle of equal treatment, rendering the award decision unlawful. 

In the light of Articles 36 and 76 of Directive 2014/25, the Croatian High Administrative Court doubted whether a contracting authority can take into account additional documents relating to the technical and professional capacity of a tenderer that were not included in the initially submitted tender.

It is at this point the Croatian High Administrative Court decided to stay the proceedings and ask preliminary questions to the CJEU. As the domestic dispute concerned a public tender in the transport sector, the questions rely on the interpretation of Directive 2024/25 concerning sectoral public procurement (water, energy, transport and postal services).

The questions and their admissibility

The Croatian High Administrative Court essentially asked the CJEU, in 3 separate questions, whether articles 36 and 76 of Directive 2014/25 permit a contracting authority to request and subsequently take into account additional documents that were not part of the original tender. 

The CJEU deemed necessary to examine whether the EU law provisions to which the questions relate were applicable to the dispute in the main proceedings. 

Instead of answering the preliminary questions, the CJEU assessed whether an action brought before a Member State court by a third country economic operator (such as Kolin) had to be examined in the light of EU procurement rules, such as articles 36 and 76 of Directive 2014/25 or the national provisions transposing this Directive, on which Kolin relies in the present case.

In essence, the question boils down to whether economic operators from third countries which have not concluded an international agreement with the EU guaranteeing equal and reciprocal access (e.g. the GPA) can enjoy the protection given to EU and other third country competitors with an agreement when it comes to sectoral public procurement procedures within the EU.

The Court answers in strong fashion

The CJEU ruled on this new and reformulated question of admissibility by answering two sub questions. 

Third country operators without an agreement cannot rely on (transposed) Directive 2014/25 provisions

The CJEU first examined whether economic operators from third countries which have not concluded an international agreement with the EU guaranteeing equal and reciprocal access can rely on Directive 2014/25 or national provisions transposing this Directive. The CJEU stressed that economic operators of those third countries, even when admitted to a tender procedure in the EU, cannot rely on Directive 2014/25 and thus cannot require their tender to be treated equally to those submitted by tenderers from EU Member States or from third countries with an agreement. After all, to grant these economic operators similar rights of access and equal treatment as the economic operators from countries party to the GPA or any similar agreement concluded with the EU, would defeat the purpose of these agreements.

While the Court did not mention this, it is worth noting that Directive 2014/24 on general public procurement contains article 25 which is identical to article 43 of the Directive at hand. The possibility of comparable interpretation for the purpose of general public procurement seems wide open. 

The EU’s exclusive competence

The question remained whether any Member State legislation that confers guaranteed access or equal treatment rights in public tenders to economic operators from third countries which have not concluded an international agreement with the EU is in breach of EU law. 

The CJEU ruled that only the EU has competence to adopt an act of general application concerning access, within the EU, to public procurement procedures for economic operators of a third county which has not concluded such an international agreement with the EU.

The Court also stressed that, in the absence of acts adopted by the EU in this regard, it is for the contracting authority to assess whether such economic operators should be admitted to an EU public procurement procedure and, if so, whether provisions should be made for an adjustment of the result arising from a comparison between the tenders submitted by those operators and those submitted by other operators. Where appropriate, it is up to the contracting authority to set out, in the procurement documents, arrangements intended to reflect the objective difference between the legal situation of those operators, on the one hand, and that of economic operators of the EU and of third countries with an agreement, on the other hand. (Article 43 of Directive 2014/25)

In any case, if economic operators of third countries without an agreement are admitted by a contracting authority to participate in an award procedure for an EU public contract, national authorities cannot interpret that national provisions transposing Directive 2014/25 apply to such operators in disregard of the exclusive nature of the European Union’s competence.

Conclusion and take-aways

The impact of the Kolin judgment cannot be underestimated. With this firm and precedent-setting ruling, the CJEU clarifies for the first time that, in the absence of an international agreement with the EU guaranteeing equal and reciprocal access, economic operators from third countries cannot be guaranteed access and participation in EU public tender procedures on equal terms with economic operators established in the EU or from third countries bound by such an agreement.

Furthermore, the CJEU ruled that domestic legislation is pre-empted by the EU’s exclusive competence to adopt an act of general application concerning access to public procurement within the EU. This leaves the door open for contracting authorities to decide, on a case-by-case basis, to specify, in the procurement documents, arrangements for treatment intended to reflect the objective difference in the legal situation of economic operators protected by the provisions of the procurement Directives and non-protected economic operators from third countries. However, the CJEU leaves it up to the Member States to assess this objective difference.

Finally, it remains to be seen whether the Kolin ruling will have an impact on the planned revision of the procurement Directives, possibly resulting, for example, in an explicit prohibition of economic operators in third countries which have not concluded an international agreement with the EU guaranteeing equal and reciprocal access.