On 15 February 2005 the European Court of Justice (the "EJC") delivered its judgment on the long running Tetra Laval case. The EJC dismissed the European Commission's (the "Commission") appeal against the judgment of the European Court of First Instance (the "CFI"). However, there was some satisfaction for the Commission in relation to the standard of evidence required to enable the Commission to prohibit a merger under the EC Merger Regulation.

The Tetra Laval saga began in 2001 when the Commission issued a decision prohibiting
the merger of Tetra Laval (which belongs to a group which has a dominant position
in the market for carton drinks packaging) and Sidel (which is the leading
company in the production of equipment for plastic drinks packaging). Tetra
appealed the Commission decision to the CFI and in 2002 the CFI annulled the
Commission's decision. The Commission then cleared the merger deal after carrying
out an investigation recommended by the CFI but at the same time appealed the
CFI's judgment.

There were several grounds of appeal including standard of evidence required
and definition of markets. The ECJ dismissed each ground but did agree with
the Commission that it would be too onerous for the Commission to examine,
for each proposed merger, the extent to which incentives to adopt anti-competitive
conduct would be reduced or even eliminated by the unlawfulness of the conduct
in question. This does not, however, invalidate the CFI's judgment.

Fabricom SA Procurement Decision Issued

The European Court of Justice ('Court') has published a highly significant
judgment on procurement matters - Fabricom SA v Belgium (Judgment Joined Cases
C-21/03, C-34/03, 3 March 2005). The decision relates to the interpretation
of both the classic (public sector) and the utilities public procurement directives.

Fabricom SA is a contractor which regularly submits tenders for public contracts
in the water, energy, transport and telecoms sectors. The Court was asked by
the Belgian national court whether it was in accordance with the procurement
directives for Belgian law to prohibit persons who have carried out preparatory
research or works from subsequently submitting a tender for the main works.

The Court agreed that a person who has been instructed to carry out preparatory
research or works relating to a public contract could be at an advantage in
formulating a tender given that he may have additional information or experiences
from carrying out such preparatory works that will not be not available to
other tenderers. All tenderers must have equality of opportunity. Such a person
may also suffer from a conflict of interests in that, even unintentionally,
he might influence the conditions imposed upon the contract in a manner favourable
to himself. This in itself could distort competition.

However, the Court noted that the relevant Belgian law contains an absolute
prohibition on involvement in the tender process for a party which has carried
out preparatory works. The Court held that this was a disproportionate method
of attaining the objective of equal treatment of tenderers. The Court instead
looked favourably at national laws which allow such a person an opportunity
to demonstrate that the experience which he has acquired is not capable of
distorting competition between tenderers.

The Court also held that the procurement directives preclude the contracting
entity - once it has all of the necessary information to make a decision -
from refusing to make, or stalling, the decision on whether a person involved
in the preparatory work (or a third party connected to that person) can participate
in the tender process until near the end of the tender evaluation procedure.
In other words, the contracting authority should not stall the decision until
it is too late for the person affected to seek an effective remedy for an infringement
by the contracting authority of the national procurement rules.

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