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European Court of Justice (ECJ) strengthens the position of local cartel plaintiffs

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Germany

Within the framework of self-purification under public procurement law (Section 125 GWB), public purchasers are entitled to demand active cooperation from cartel members, such as the issuing of notices of fines. According to the ECJ, if a damages action is pending between the parties, the bidder cannot contest the demand for restitution. In its decision of October 24, 2018 (Case C-124/17, Vossloh Laeis GmbH v Stadtwerke München), the ECJ received a preliminary ruling from the Procurement Chamber of Southern Bavaria on Directive 2014/25/EU (Utilities Directive). Vossloh Laeis, which was fined by the Bundeskartellamt for its participation in the 2011 rail cartel, had participated in an invitation to tender issued by Stadtwerke München. The latter doubted the effectiveness of the self-cleaning measures taken by Vossloh Laeis and demanded that the fine be imposed. Since the bidder refused to do so, she was excluded from the proceedings on the basis of § 124, Subsection 1, Nos. 3 and 4 GWB, and proceeded against it by initiating review proceedings.
 
Public contracting authorities may demand evidence despite cooperation in the fine proceedings
 
The ECJ has now strengthened the position of the contracting authorities in its decision.
 
If there is a relevant reason for exclusion (such as in the case of participation in an anti-competitive agreement, Section 124 (1) no. 4 GWB) and the tenderer nevertheless wishes to prove his reliability, he is obliged to cooperate effectively with the contracting authority. It is not sufficient in the context of self-purification that he has already cooperated with cartel authorities in the fine proceedings.
 
However, the contracting authority must allow itself to be limited to what is "absolutely necessary" to achieve the objective of the reliability test. In any case, this includes the presentation of the cooperation with the cartel authorities as well as the disclosure of the fine notice.
 
Also possible in the case of pending compensation proceedings
 
If an antitrust damages action is already pending between the parties, the tenderer may not refuse to provide "essential" documents by referring to the pending action, even if this facilitates the action of the contracting authority. Rather, the ECJ expressly stated that part of the measures to be taken for effective self-purification is also proof that the tenderer has paid compensation for any damage caused by his criminal offence or misconduct or has undertaken to pay his compensation.
 
In addition, the contracting authority may also request "factual evidence" from the tenderer which proves that the compliance measures taken are indeed suitable to prevent further infringements. The bidder cannot rely on the fact that he has already submitted documents by way of cooperation with the antitrust authorities as against the contracting authority.
 
Duration of the exclusion
 
The ECJ's decision also clarifies the question of the period of time within which exclusion for participation in an anti-competitive agreement may take place. According to this ruling, contracting authorities may exclude bidders participating in a cartel for up to three years, calculated from the time of the official decision - not from the end of the cartel.
 
Practical note
 
The decision of the ECJ is likely to provide public purchasers with a better means of claiming damages for antitrust violations in the future. The (threatened) exclusion also from future award procedures for up to three years after the decision of the authorities has proved to be an effective means of exerting pressure and should encourage cartel members to compensate for damages incurred. For municipal plaintiffs in antitrust damages proceedings, the decision not only provides additional leverage in negotiations but also the opportunity to use evidence received to examine and enforce their own claims for damages.
 
European Court of Justice, ruling of 24 October 2018, Case C- 124/17 EuGH, Urteil vom 24. Oktober 2018, Rs. C- 124/17

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Antitrust