Foreign companies may be excluded from the EU procurement treasury

Foreign companies may be excluded from the EU procurement treasury

Companies from countries that are not part of the European Union cannot participate in European public procurement if there is no international agreement signed with Brussels. This is the lapidary judgment that comes today from the European Court of Justice, after the case that exploded over the public procurement procedure relating to the construction of a railway network to connect two cities in Croatia. European tenders are a rich source of income for foreign companies, which aim to make themselves known in the EU market. Suffice it to say that in the European Union, public procurement amounts to over 2 trillion euros a year, approximately 14 percent of the GDP of the 27 member states.

Türkiye vs Croatia

Let’s take a step back. A company from Turkey, Kolin Inșaat Turizm Sanayi ve Ticaret (Kolin), had contested the legitimacy of the decision to award the contract to another bidder, the Croatian company HZ Infrastruktura (case C-652/22). The Croatian High Administrative Court then turned to the European Court of Justice to clarify the circumstances in which, after the deadline for submitting tenders has expired, contractors can ask tenderers to make corrections or clarifications.

In other words, the Luxembourg-based court was called upon to rule on two issues. First of all, can companies from non-EU countries, with which the European Union has not signed a public procurement agreement, participate in public tenders in the 27 EU member states? And again, is it up to the countries of the EU bloc to establish the conditions under which non-European companies can participate in public procurement tenders?

What the European Court decided

These are the questions answered by the European Court of Justice, which ruled on the interpretation of Directive 2014/25/EU, i.e. that relating to procurement by entities operating in the water, energy, transport and of postal services.

The Court based in Luxembourg therefore established that companies from non-EU countries which, such as Turkey, have not concluded an international agreement with the Union cannot participate in a public tender, claiming equal treatment with respect to companies of the member states or those of the countries that have signed an agreement with Brussels (which has exclusive competence). Therefore, the European Court specified, the lawsuit brought by the Turkish Kolin does not exist.

Are other countries outside the Union also excluded?

The judgment of the European Court of Justice may also fall on other non-EU countries, not just Turkey. China, in fact, ended up in the Commission’s sights for having participated in public tenders in several member states, submitting a lower offer than the auction price. As happened with Nuctech, the Chinese-owned company, which in the last five years has been awarded 95% of customs supplies for the control of goods on European and also Italian territory.

China has its hands on the security of Italian ports and airports