MJ Hojgaard A/S, Zublin A/S v Banedanmark (C-396/14)

This case involved a change in the make-up of a consortium that bid for a construction contract in Denmark. Following the pre-qualification stage in the tender process, one member of a two member consortium was declared insolvent.

The contracting entity informed all tenderers of its decision to permit the surviving consortium member (Per Aarsleff) to continue in the procurement process by itself and explained that decision by stating that Per Aarsleff was the leading contracting company in Denmark in terms of turnover and satisfied the conditions required for participation in the procedure, even in the absence of the technical and financial capabilities of its former consortium member. In addition, Per Aarsleff had taken over the contracts of more than 50 salaried staff of its former consortium member including the individuals who were key to the implementation of the project concerned.

Following the award of the contract to Per Aarsleff, one of the unsuccessful consortia then commenced proceedings seeking an annulment of that award decision, on the basis that the contracting entity was in breach of the principles of fair treatment and transparency.

Decision

The European Court of Justice (the “ECJ”) ruled that the principle of equal treatment, read together with Article 51 of Directive 2004/17/EC did not prohibit a contracting entity from permitting a member of a bidding consortium to replace that consortium (following its dissolution) and to tender in its own name provided that economic operator by itself meets the requirements laid down by the contracting entity and, second, that the continuation of its participation in that procedure does not mean that other tenderers are placed at a competitive disadvantage.

Comment

This is a very practical judgment which will likely be very relevant to consortiums participating in tender processes.