General Court forced to engage in 'law & language' analysis... Everything is relative... (T-722/14)

In its Judgment of 4 February 2016, PRIMA v Commission, T-722/14, EU:T:2016:61 (not available in English), the General Court (GC) was required to address a tricky (not to say risible) argument based on the language versions of the different rules applicable to procurement procedures carried out by the EU Institutions and, in particular, linguistic divergences in some versions of the Financial Regulation and its Implementing Regulation. 

In short, a Bulgarian disappointed tenderer complained that, despite having been debriefed by the European Commission as contracting authority on the reasons for the award of the contract to a different tenderer, it had not received an explicit detailed account of the 'relative advantages' of the chosen tender. The argument ultimately rested on the fact that
in Bulgarian, which is the language of the proceedings, the term "сравнителните предимства" ("sravnitelnite predimstva", that is to say "comparative advantages") is used in the Financial Regulation, while the term "относителните предимства" ("otnocitelnite predimstva", that is to say "relative advantages") is used in the Implementing Regulation; while in other languages​​, the terms used are "relative advantages", as in French or English, or the term "advantages", as in German or Italian. ... in several other languages, depending on whether it is contained in the Financial Regulation or the Implementing Regulation, the reference is to either the term "advantages" or the terms "relative advantages" (T-722/14, para 26, own translation from French).
The issue, in the end, is whether having been given reasons of the advantages of the tender chosen for the award of the contract suffices to meet the requirements to indicate relative advantages or comparative advantages in the debriefing documentation (I am not kidding...). The GC's analysisis as follows:
31 For the purposes of this interpretation, it is necessary to consider the various language versions of Article 113, paragraph 2, first paragraph, of the Financial Regulation and Article 161, paragraph 3, third paragraph, of the Implementing Regulation. These show some formal heterogeneity ...: in French, the terms "relative advantages" ["avantages relatifs"] are in both provisions. The English language version uses the same adjective in the Financial Regulation (relative advantages) and the Implementing Regulation (relative merits). In many other languages, the adjective "relative" is used in only one of those acts: in Spanish, in the Implementing Regulation (ventajas relativas), in Dutch, in the Financial Regulation (relatieve voordelen) and in Swedish, in the Implementing Regulation (relativa fördelar[na]). Several language versions only mention the term "advantages": it is, in particular, the German version (Vorteile), Spanish - for the Financial Regulation - (ventajas), Italian (vantaggi), and the Netherlands - for the Implementing Regulation - (voordelen). It should be added that the Swedish version of the Financial Regulation uses the relative proposition "fördelar som kännetecknar" (advantages that characterize). As for the Bulgarian versions of these acts, they use two different adjectives that have been mentioned in paragraph 26 above.
33 ... it is necessary to engage in both a literal and teleological interpretation of the term "advantages" as used, depending on the several cases, alone, or with the adjectives "relative" or "comparative".
34 From a literal point of view, it is essential to emphasize that the noun "advantage" in fact, is sufficient in itself. There can be no advantage other than within the framework of or, at least, in the context of a comparison. The expression "comparative advantages", used in the Bulgarian version of the Financial Regulation is redundant, and the language versions that only utilise the word "advantage" seem therefore legally more rigorous. The notion of relative advantages could, in turn, be of some use if the adjective "relative" could be opposed to the adjective "absolute". Nevertheless, it is clear that there is no "absolute advantage" in connection with the award of a public contract to the best bidder, which necessarily implies, firstly, the use of a range of criteria and, secondly, the lack of a systematic correspondence between the offer of the lowest price and contract award. Therefore it is necessary to interpret the adjective "relative" in its meaning signifying that "which exists only in relation to something else" or "which is not independent". This leads to the conclusion that, ultimately, there is no semantic divergence between the language versions set out in paragraph 31 above, so that the objective of a uniform interpretation of Union acts with different language versions is achieved in this case (see, to that effect, Judgments of 29 April 2010, M e.a., C-340/08, ECR, EU:C:2010:232, paragraph 44, and 26 April 2012, Able UK, C- 225/11, ECR, EU:C:2012:252, paragraph 13 and the case law cited therein).
35 The contracting authority is only required to inform the unsuccessful tenderer having made a request in writing for additional information of which advantages the offer of the successful tenderer had in relation to his (T-722/14, paras 31-35, own translation from French).
The GC could have dispensed with all this linguistic analysis, particularly because, after engaging with the teleological analysis (para 36), it concludes that 'given the constraints, primarily of time, inherent in public procurement procedures, it is sufficient for the contracting authority to forward to the unsuccessful tenderer, in addition to the name of the awardee, the respective scores of their offers under each of the award criteria and the comments underpinning those ratings, so as to allow said tenderer to understand what were the strengths and weaknesses of its offer and how the awardee's offer supplanted (sic?) his' (para 37, own translation from French). 

In my view, all of this is an unfortunate exercise in futility, because the GC insists in a line of case law that imposes excessive transparency in public procurement debriefing processes, allows disappointed tenderers excessive detail of the winning bid and, in the long run, not only creates risks for the competitive tension for future contracts, but also runs important risks of technical levelling and undue constraint on bidders' choices [see A Sanchez-Graells, 'The Difficult Balance between Transparency and Competition in Public Procurement: Some Recent Trends in the Case Law of the European Courts and a Look at the New Directives' (November 2013)]. Everything is relative...

Recent CJEU and GC views on the "economic advantage" element in State aid cases (C-559/12 and T-150/12)

In two recent cases, the Court of Justice of the EU (CJEU) and the General Court (GC) have reassessed the element of "economic advantage" required in the prohibition of State aid in Art 107(1) TFEU in connection with State guarantees in France and Greece. The element of advantage has ranked rather high in the list of issues recently submitted to public consultation by the European Commission as part of the forthcoming new Notice on the concept of State aid. Hence, it seems interesting to have a look at these cases.


Firstly, in its Judgment of 3 April 2014 in case C-559/12 France v Commission (La Poste), the CJEU assessed the Commission's previous findings regarding the existence of an unlimited guarantee granted by the French State to its postal operator (La Poste) as part of its status as an establishment of an industrial and commercial character (établissement public à caractère industriel et commercial, ‘EPIC’)--which entails a number of legal consequences, including the inapplicability of insolvency and bankruptcy procedures under ordinary law--and which ultimately constituted State aid within the meaning of Article 107(1) TFEU. The Commission's assessment had been endorsed by the GC (see comment here). The CJEU concurs with the substantive assessment of both the Commission and the GC in an interesting reasoning (and after having addressed a number of issues concerning the burden of proof that, in the end, remain largely marginal in view of the consolidation of a presumption of advantage in the case of unlimited State guarantees):
94 [...] it must be borne in mind that the concept of aid embraces [...] measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, therefore, without being subsidies in the strict sense of the word, are similar in character and have the same effect [...] Also, State measures which, whatever their form, are likely directly or indirectly to favour certain undertakings or are to be regarded as an economic advantage which the recipient undertaking would not have obtained under normal market conditions, are regarded as aid [...].
95 Since State measures take diverse forms and must be analysed in terms of their effects, it cannot be ruled out that advantages given in the form of a State guarantee can entail an additional burden on the State [...].
96 As the Court has already held, a borrower who has subscribed to a loan guaranteed by the public authorities of a Member State normally obtains an advantage inasmuch as the financial cost that it bears is less than that which it would have borne if it had had to obtain that same financing and that same guarantee at market prices [...].
97 From that point of view, moreover, the Commission Notice on the application of Articles [107 and 108 TFEU] to State aid in the form of guarantees specifically provides[...] that an unlimited State guarantee in favour of an undertaking whose legal form rules out bankruptcy or other insolvency procedures grants an immediate advantage to that undertaking and constitutes State aid, in that it is granted without the recipient thereof paying the appropriate fee for taking the risk supported by the State and also allows better financial terms for a loan to be obtained than those normally available on the financial markets.
98 It is apparent, [...] a simple presumption exists that the grant of an implied and unlimited State guarantee in favour of an undertaking which is not subject to the ordinary compulsory administration and winding-up procedures results in an improvement in its financial position through a reduction of charges which would normally encumber its budget.
99 Consequently, in the context of the procedure relating to existing schemes of aid, to prove the advantage obtained by such a guarantee to the recipient undertaking, it is sufficient for the Commission to establish the mere existence of that guarantee, without having to show the actual effects produced by it from the time that it is granted (C-559/12 at paras 94 to 99, emphasis added). 
Secondly, in its Judgment of 9 April 2014 in case T-150/12 Greece v Commission (aid to cereal production), the GC has also assessed a Greek guarantee scheme to cereal producers and has upheld the Commission's view whereby the conditions attached to such guarantee--i.e. initially, the acceptance of crops as collateral (although the existence of the guarantee rights and the conditions for their execution were not automatic) and later the potential charge of a 2% premium (again, which charge was not automatic)--did not dissipate the existence of an economic advantage for the beneficiaries of the guarantee scheme. The reasoning of the GC (in French) in paras 82 to 97 is interesting to grasp the unconditionality required of any measures intended to eliminate the (presumed) advantage that State guarantee schemes provide.
In my view, both Judgments are in line with the content of the Commission's Draft Notice on the concept of State aid (and, in particular, paras 111 to 117) and it seems now clear that unlimited State guarantees or State guarantees without actual (automatic) conditions (such as collateral and premia to be paid by the beneficiaries) will be ruled as being against Art 107(1) TFEU as a result of the iuris et de iure presumption of their conferral of an advantage.

Bankruptcy-proofness as a (new) source of (illegal) State aid: GC backs the Commission in T-154/10

In its Judgment of 20 September 2012 in case T‑154/10 French Republic vs. European Commission, the General Court of the EU (GC) has established a new test of "bankruptcy-proofness" as an advantage contrary to Article 107(1) TFEU that may generate a significant shake up in the control of State aid granted (implicitly) to establishments of an industrial and commercial character (EICC, or EPIC in their French acronym)--ie legal entities governed by public law which have distinct legal personality from the State, financial independence and certain special powers, including the performance of one or more public service tasks.

In a nutshell, the controversy concerned the Commission's position that there is (illegal) State aid where the legal form and status of EICCs shield them from general rules on bankruptcy and winding up under the relevant national legislation (in the case, French law). Indeed, in the view of the Commission as summarised by the GC,

[the EICC concerned (La Poste)] was not subject to the ordinary law rules governing the administration and winding-up of firms in difficulty and that, according to point 1.2, second paragraph, fourth indent of the 2008 Notice [on the application of Articles 87 [EC] and 88 [EC] to State aid in the form of guarantees (OJ 2008 C 155, p. 10)], there is aid in the form of a guarantee where more favourable credit terms are obtained by undertakings whose legal status rules out bankruptcy or other insolvency procedures (T-154/10, at para. 23, emphasis added).

In short, the GC concurred with the Commission and found that, where a given entity is shielded from general bankruptcy procedures, there is an (implicit advantage) that can constitute State aid. Therefore, a new test of bankruptcy-proofness has been instituted by the GC and this may have deep and far-reaching implications in the control of State aid control to EICCs.

However, the detail of the reasoning is worth reading, since there is a number of elements to take into consideration in the analysis whether a given entity is subjected or excluded from the scope of 'regular' bankruptcy and winding up procedures. In the reasoning of the GC:

79 The French Republic considers that, contrary to the view put forward by the Commission, the inapplicability of insolvency and bankruptcy procedures under ordinary law [...] does not mean that La Poste cannot go bankrupt or find itself in a situation of insolvency. The French Republic observes that specific procedures, which do not give creditors any guarantee that they will recover all of their claims, are applicable to [EICCs] [...] the primary objective of which was to regulate situations in which public entities, although solvent, refused to honour certain debts, established a scheme of enforcement remedies, which give the governing body the power to substitute itself for the executive of a publicly-owned establishment so as to release the ‘necessary credits’ – and not State resources – in that establishment’s budget, with a view to satisfying potential creditors. That law, however, confers no authority and even less the obligation on the State, whose role can be compared to that of an ad hoc legal representative, to release State resources for the benefit of potential creditors of publicly-owned establishments. [...] Lastly, the existence of the programmes [...] allowing advances to be made to organisations distinct from the State that manage public services, do not mean that an implied guarantee mechanism has been established.
80 In that regard, the Court observes that the parties agree that [French bankruptcy law] excluded from its scope all public entities, in particular [EICCs]. Under [...] that law [...] ‘[r]ecovery and judicial winding-up shall be applicable to all traders, all persons registered in the business directory, all farmers and all legal entities governed by private law’. The corresponding provision in force on the date of adoption of the contested decision provides, in the same vein, that ‘[t]he safeguard procedure shall be applicable to all persons pursuing commercial activities or crafts, all farmers, all other natural persons pursuing independent professional activity, including the liberal professions subject to legislative or regulatory status or whose title is protected, and also to all legal entities governed by private law’. Moreover, it is apparent from the case-law [...] that the legislation indicated ‘that property not belonging to private persons shall be administered and alienated according to the specific rules applicable to them; that, in respect of property belonging to public entities, even those pursuing industrial and commercial activities, the principle of non-seizability of that property precludes recourse to private-law enforcement remedies; that only the creditor who has obtained an enforceable favourable judicial decision having acquired the force of res judicata and ordering a public entity to pay, even provisionally, an amount of money, may have enforced the specific rules [applicable].
81 The parties disagree, however, as the inferences to be drawn from the inapplicability of ordinary law rules governing compulsory administration or winding-up to [EICCs] with a view to determining whether there is a State guarantee in favour of La Poste.
82 It should be noted at the outset that [...] the Commission took the view that, in order to establish whether there was a guarantee for individual claims, it was appropriate, after examining the national legislation and case-law (see first part of the second plea above), to begin by considering whether, in order to determine whether the procedure followed by a creditor of [the EICC] in order to settle its claim in the event of [the EICC] being in financial difficulty was comparable to that followed by the creditor of an undertaking subject to commercial law. Contrary to the impression the French Republic’s line of argument might give, the Commission’s approach was not aimed at finding that an [EICC], by virtue of the fact that it was subject to the application of ordinary law rules governing compulsory administration or winding-up, could not go bankrupt.
83 In the event, the Commission reached the conclusion that the creditors of [EICCs] were in a more favourable situation than private creditors on the ground that, contrary to what happened under the application of ordinary law rules governing compulsory administration or winding-up, the creditor of a publicly-owned establishment did not run the risk of seeing his claim cancelled because of a judicial winding-up procedure being triggered (see recital 150 of the contested decision).
84 This conclusion is to be endorsed. [French bankruptcy law] provides for a mechanism that is different from that established under ordinary law procedures governing compulsory administration or winding-up. That law and the legislation adopted to give it effect implement a claims recovery procedure which, unlike a winding-up procedure under ordinary law, does not, when triggered, extinguish claims but at the most postpones the payment of them. Thus, the creditors of publicly-owned establishments are necessarily in a more favourable situation than creditors of persons coming within the scope of  [general French bankruptcy law] which, in the event of insufficient assets on the part of the debtor person or entity, may see their claim cancelled.
85 As shown by the description of the procedures applicable to [EICCs] [...] in the event of an [EICC] having insufficient assets, the payment of claims will be postponed or the competent governing body will release resources in order to honour the claims. It follows that creditors of publicly-owned establishments are necessarily in a more favourable situation than creditors of persons governed by private law.
86 Moreover, although [French bankruptcy law] does not provide explicitly that the State is bound to release State resources in order to enforce a judicial decision [...] the Commission made no error in asserting that, once a defaulting publicly-owned establishment’s own resources have been exhausted, State funds will in all likelihood be used to honour the debts of the publicly-owned establishment debtor.
87 Nor did the Commission make an error of assessment in referring [...] to certain financial tasks and programmes with a view to highlighting the existence of State resources which might be used in the event of an [EICC] defaulting and, therefore, an indication of the effectiveness of the implied State guarantee in favour of [EICCs].
88 In the light of the foregoing, the conclusions [...] as to the consequences [... of] indicia of the existence of an unlimited State guarantee in favour of [EICCs], must be endorsed. (T-154/10, at paras. 79 to 87, emphasis added).

It will be interesting to see the reaction of Member States to this Judgment of the GC, but it seems difficult to anticipate a general submission of EICCs (whichever the specific legal configuration in any given Member State) to general bankruptcy procedures, or the disregard of the (general) principle of non-seizability of public assests. most likely, the discussion will continue before the CJEU, where the hight of the interests at stake will be easier to measure.