I just found out yesterday (thanks @Detig) about the London Criminal Courts Solicitors' Association (LCCSA) campaign to boycott on-going legal aid reforms (ie cuts to legal aid). In a nutshell, the LCCSA is asking its members to exchange information about their willingness to withdraw the bids they submitted to the Legal aid crime tender 2015.
The LCCSA intends to use the information to inform their ongoing engagement with the Ministry of Justice (ie, put pressure and stop the cuts). Generally, this could be seen as a worthwhile act of protest against a policy that will deepen inequality in access to justice. However, the way they are implementing it is deeply concerning from a competition and public procurement perspective.
Similarly to past action from the Bar (see @AngusMacCulloch's good piece here), this is a textbook cartel (see also @PublicProcure additional remarks here). Independent firms are exchanging confidential commercial information in a way that is not required by their activity in the market. This is prohibited by the relevant UK and EU rules, as interpreted by the Court of Justice of the EU (CJEU) in several cases. Most recently, in MasterCard (C-382/12, EU:C:2014:2201, para 62), the CJEU stressed that
Without prejudice to the right of economic operators to adapt themselves intelligently, but independently, to the existing or anticipated conduct of their competitors (see judgments in Suiker Unie and Others v Commission, 40/73 to 48/73, 50/73, 54/73 to 56/73, 111/73, 113/73 and 114/73, EU:C:1975:174, paragraph 174; Ahlström Osakeyhtiö and Others v Commission, C‑89/85, C‑104/85, C‑114/85, C‑116/85, C‑117/85 and C‑125/85 to C‑129/85, EU:C:1993:120, paragraph 71; and Asnef-Equifax and Administración del Estado, C‑238/05, EU:C:2006:734, paragraph 53 and the case-law cited), Article [101 TFEU] catches all forms of cooperation and of collusion between undertakings, including by means of a collective structure or a common body, such as an association, which are calculated to produce the results which that provision aims to suppress (see, to that effect, judgments in Nederlandse Vereniging voor de fruit en groentenimporthandel and Frubo v Commission, 71/74, EU:C:1975:61, paragraph 30; van Landewyck and Others v Commission, 209/78 to 215/78 and 218/78, EU:C:1980:248, paragraph 88; and Eurofer v Commission, C‑179/99 P, EU:C:2003:525, paragraph 23).
Regarding the prohibition to exchange information in itself, in Asnef-Equifax (C-238/05, EU:C:2006:734, paras 51-52), the Court very clearly stressed that
According to the case-law on agreements on the exchange of information, such agreements are incompatible with the rules on competition if they reduce or remove the degree of uncertainty as to the operation of the market in question with the result that competition between undertakings is restricted (John Deere v Commission, paragraph 90, and Case C-194/99 P Thyssen Stahl v Commission [2003] ECR I-10821, paragraph 81).In effect, it is inherent in the Treaty provisions on competition that every economic operator must determine autonomously the policy which it intends to pursue on the common market. Thus, according to that case-law, such a requirement of autonomy precludes any direct or indirect contact between economic operators of such a kind as either to influence the conduct on the market of an actual or potential competitor or to reveal to such a competitor the conduct which an operator has decided to follow itself or contemplates adopting on the market, where the object or effect of those contacts is to give rise to conditions of competition which do not correspond to the normal conditions of the market in question, taking into account the nature of the products or the services provided, the size and number of the undertakings and also the volume of the market (see Commission v Anic Partecipazioni, paragraphs 116 and 117, as well as the case-law cited).
Thus, there is no doubt that LCCSA's activity is in contravention of the applicable competition law provisions. It is true that the LCCSA is trying to create some safeguards on the circulation of that information. According to their 'invitation to indicate a willingness to de-tender':
This information will be held on a confidential basis, with responses sent to and collated by one named solicitor member of the LCCSA committee who will not disclose the names of the firms submitting information to anyone including officers and any other committee members of the LCCSA unless and until that firm’s consent has been obtained for their name to be released to the LCCSA officers and committee.
The solicitor holding the information (who is from a firm not submitting any tender) would be able to provide to the President and the Vice President of the LCCSA committee the number of responses received, the numbers bidding, the numbers not bidding, the numbers indicating a willingness to refuse an offer if made or withdrawing a bid and the areas involved.
However, these safeguards are insufficient to ensure that (with the consent of the participating firms), the information will not end up in the hands of their competitors. Moreover, the aim of the exchange of information is to boycott the Legal aid crime tender 2015, which in my view is a clear anti-competitive agreement prohibited because its object is to restrict or distort competition, so the actual effects of the exchange of information need not be proved.
Moreover, it is taking place in a public procurement scenario, which can have further implications in terms of future debarment of these firms if found guilty [for discussion, see here and A Sanchez Graells, "Exclusion, Qualitative Selection and Short-listing in the New Public Sector Procurement Directive 2014/24" in F Lichere, R Caranta and S Treumer (ed) Novelties in
the 2014 Directive on Public Procurement, vol. 6 European Procurement
Law Series, (Copenhagen, Djøf Publishing, 2014)].
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| Photograph: Sean Smith for the Guardian
Sean Smith/Guardian |
Could it be justified?
Despite the clear prohibition of the conduct in which LCCSA has engaged, given that it pursues a declared worthwhile objective and, in any case, could be seen as a manifestation of (informal) collective labour action and/or a right to demonstrate against the government, it is relevant to assess whether the invitation to indicate a willingness to de-tender campaign could be justified.
In my view, the possibility to justify it under Art 101(3) TFEU is very slim, if there is any. As stressed in Asnef-Equifax (para 65),
The applicability of the exemption provided for in Article [101(3) TFEU is subject to the four cumulative conditions laid down in that provision. First, the arrangement concerned must contribute to improving the production or distribution of the goods or services in question, or to promoting technical or economic progress; secondly, consumers must be allowed a fair share of the resulting benefit; thirdly, it must not impose any non-essential restrictions on the participating undertakings; and, fourthly, it must not afford them the possibility of eliminating competition in respect of a substantial part of the products or services in question (see, to that effect, Joined Cases 43/82 and 63/82 VBVB and VBBB v Commission [1984] ECR 19, paragraph 61, as well as Remia and Others v Commission, paragraph 38).
And the application of the second condition requires that 'objective economic advantages might be such as to offset the disadvantages of such a possible restriction' (para 67), which is a very difficult test to apply in this case, particularly in view of the undertain outcome of LCCSA's campaign and the ensuing regulatory response by the Ministry of Justice, if any.
A longer shot would be to try to apply the doctrine of the CJEU regarding infringements of EU law based on the exercise of fundamental rights--as discussed in Schmidberger (C-112/00, EU:C:2003:333, paras 80 and ff). In that situation, which concerned a restriction of free movement of goods and not a competition infringement (and this, in itself, creates significant uncertainty as to the possibility of extrapolating the argument without more),
neither the freedom of expression nor the freedom of assembly ... appears to be absolute but must be viewed in relation to its social purpose. Consequently, the exercise of those rights may be restricted, provided that the restrictions in fact correspond to objectives of general interest and do not, taking account of the aim of the restrictions, constitute disproportionate and unacceptable interference, impairing the very substance of the rights guaranteed (see, to that effect, Case C-62/90 Commission v Germany [1992] ECR I-2575, paragraph 23, and Case C-404/92 P X v Commission [1994] ECR I-4737, paragraph 18).In those circumstances, the interests involved must be weighed having regard to all the circumstances of the case in order to determine whether a fair balance was struck between those interests.The competent authorities enjoy a wide margin of discretion in that regard. Nevertheless, it is necessary to determine whether the restrictions placed upon intra-Community trade are proportionate in the light of the legitimate objective pursued, namely, in the present case, the protection of fundamental rights.
In a case involving similar acts of demonstration (albeti with use of force) for the purpose of forcing engagement with negotiations (Laval un Partneri, C-341/05,
EU:C:2007:809), the assessment of proportionality of the boycott was strict and the CJEU determined that EU law prevented 'a trade union ... from
attempting, by means of collective action in the form of a blockade
(‘blockad’) of sites ... to
force a provider of services ... to
enter into negotiations with it'. Thus, this potential justification also seems unlikely to cover LCCSA's campaign.
What then?
Given that LCCSA's 'invitation to indicate a willingness to de-tender' and, generally, its attempts to boycott the MoJ's Legal aid crime tender 2015 run against competition law and they cannot be justified or exempted from the prohibition, the association may want to desist from this course of action and think about more creative (legal) ways of opposing the policy of cuts in this area. Otherwise, their efforts will be in vain and their main goal of positively influencing a system that ensures access to justice will be further diminished in case the LCCSA is found in breach of competition law and forced to pay penalties.