Developments in tendering law

Article on collusive tendering - judgement in the Taxi case

Lawyer Ellen Tangen Eilerås has written an article about the judgement handed down by the Supreme Court this summer in the so-called «Taxi case». Three taxi companies submitted a single bid in a tender for the purchase of taxi services for patient journeys. The Authority found that the co-operation restricted competition in an unlawful manner and fined the companies a total of NOK 2,850,000. 2 850 000,-.

The assessment for the Supreme Court was whether the collaboration meant that the companies« combined behaviour "has as its object or effect the prevention, restriction or distortion of competition». This was further clarified to a question about whether the collaboration was «sufficiently harmful to competition». The decisive factor for the Supreme Court was that the companies could have submitted bids alone. When they instead submitted bids together, they removed the «concurrent pressure», and the collaboration was assessed as «harmful to competition».

New opinion from the EFTA Court - lower threshold for compensation?

In a recent opinion from the EFTA Court on 31 October 2017, case E-16/16, the EFTA Court issued an opinion at the request of Frostating Court of Appeal in the case between Fosen-Linjen AS and AtB AS.

The issue to be assessed is what is needed to fulfil the requirements for a basis for liability in an action for damages, in this case compensation for positive contract interest. Compensation for positive contract interest means that the supplier, in the event of a mistake made by the contracting authority, receives compensation so that the supplier is put in the same financial situation as if the contract had been correctly fulfilled.

As a matter of principle, it is up to national rules to establish terms in the law of damages. Traditionally in Norway, both tenderers and suppliers have relied on statements made by the Supreme Court in the Nucleus judgement from 2001. In the Nucleus judgement, the Supreme Court stated that there must be some room for error when evaluating tenders, without this providing grounds for compensation for positive contract interest. It was further stated that there may be grounds for such compensation where the public sector has committed «Significant errors».

In the EFTA Court's opinion, the Court addressed precisely this issue. The questions were, among other things, whether there is a requirement for particularly reprehensible behaviour on the part of the contracting authority: for example, whether there must be a certain element of culpability before a wrongfully rejected supplier can assert a claim for positive contract interest. In relation to this, the Court writes in paragraph 82 that damages under Article 2(1)(c) of the Remedies Directive are not conditional on the existence of culpability or behaviour that deviates markedly from prudent conduct in the event of a breach of the procurement rules. Quite the contrary: «A single breach of the public procurement rules is in itself sufficient to trigger the contracting authority's liability under Article 2(1)(c) of the Remedies Directive to compensate an aggrieved person for the damage suffered, provided that the other conditions for awarding damages are met, in particular that there must be a causal link.»

When the EFTA Court finds that «a simple breach of regulations is in itself enough» to fulfil the requirements for grounds for liability, this is a significantly lower threshold than the Supreme Court's constructed condition that «Significant errors».

In its argumentation, the EFTA Court emphasises that it is important that the Enforcement Directive must be interpreted so that the rules provide an effective legal remedy, including that the threshold for claims for compensation is not set unnecessarily high. The statement has just been issued, and Frostating Court of Appeal has not yet given its judgement. It will be interesting to see how the Court of Appeal deals with this in its judgement, and also what this means for possible further actions for damages in the future.