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FAVOURING SLOVENIAN ORIGIN IS CONTRARY TO EU LAW

July 2017

On the 8th of June, 2017, the Court of Justice of the European Union (CJEU) reached an important decision in the case Medisanus d.o.o. v General Hospital Murska Sobota (C-296/15) concerning public procurement procedures. The judgement is relevant from both the procedural aspect - since the National Review Commission (DKOM) was acknowledged for the first time as a “national court” for the purposes of Article 267 of the Treaty on the Functioning of the European Union (TFEU), as well as from the substantive point of view – due to the emphasis on the principle of equal treatment and the prohibition of discrimination within public procurement procedures.

Disputed Public Procurement

General Hospital Murska Sobota reached a decision, on public procurement in 2015, concerning the purchase of two types of drugs derived from plasma. The tender documentation specified as a technical prerequisite that these drugs have to be obtained from Slovenian plasma. This prerequisite was included in the tender documentation based on the provision of the Law on Medicinal Products,[1] which stipulates that supplies must come as a matter of priority from medicinal products manufactured from plasma collected in Slovenia.[2] According to the opinion of the contracting authority, this should not be contravening EU primary law, since deviation from Article 34 of TFEU may be justified on the grounds of public health protection. Consequently, such a provision of the Law on Medicinal Products contributes to the national self-sufficiency by encouraging Slovenian citizens to make voluntary blood donations.

The only contractor that could fulfil such a prerequisite was the Institute for Transfusion Medicine of the Republic of Slovenia. The company Medisanus d.o.o., which was offering drugs of the same type but from foreign plasma, after the rejection of its tender application, challenged the decision before DKOM. The procedure was subsequently stalled by the DKOM, since it made a request for a preliminary ruling before the CJEU. Namely, whether the request for a plasma of Slovenian origin is in accordance with the Public Procurement Directive.[3]

DKOM is Entitled to Request a Preliminary Ruling before the CJEU

For the first time in DKOM’s existence, the CJEU had the opportunity to assess whether the DKOM could be considered as the “national court” for the purposes of Article 267 TFEU. Considering the established case law on similar national revision bodies in member states,[4] the CJEU ruled that the DKOM fulfils all relevant criteria for the obtainment of such status which entitles the DKOM to request preliminary rulings. The DKOM has, namely, no connection with contracting authorities whose decisions it reviews, its members enjoy the same safeguards as judges in relation to their appointment, term of office and the grounds for removal. Its members are, furthermore, independent and the jurisdiction of the DKOM is mandatory and permanent. Also, the DKOM is established pursuant to a special law and the procedure is inter partes.

Prerequisite on National Origin of Plasma is Contrary to EU Law

The CJEU established that the drugs derived from human blood or plasma are “goods” in terms of Article 34 TFEU, and are as well “products” under the Public Procurement Directive. CJEU furthermore states that the prerequisite for a national origin falls under the scope of Article 34 TFEU, which prohibits obstacles to the free movement of goods. This prohibition covers both the quantitative restrictions, as well as measures that are capable of hindering, directly or indirectly and actually or potentially, imports between member states.[5] This prohibits all discriminatory practices that limit the free movement of goods within the EU.

The paramount conclusion of the CJEU is that the prerequisite on national origin of plasma is discriminatory per se, since it does not allow companies that collect plasma from other countries to successfully participate in the tender procedures. It is true that the Public Procurement Directive itself enabled references to certain origin, however only if this is justified by the subject matter of the procurement and such reference is only exceptional. It also derives from the CJEU case law that in such cases a specific source stated in the tender documentation has to be accompanied by the words “or equivalent” in order for the tender to be in compliance with EU law.[6] There was no such wording in the case at hand.

Pursuant to the fact that it is possible to deviate from the principle of the free movement of goods in certain exceptional cases, the CJEU deliberated whether such deviation is justified. The sole reason for justification could only be based on the grounds of public health protection.[7] The CJEU did note that the prerequisite for a national origin of plasma pursues a legitimate objective. However, the priority principle for medicinal products manufactured industrially from Slovenian plasma does not contribute decisively to encouraging the Slovenian population to make voluntary blood donations. Thus, the CJEU held that the priority principle is disproportionate.

Conclusion

The most important conclusion for the practice on public procurements will be the fact that neither the Public Procurement Directive nor the primary EU law forbid tender documentation provisions which would require that drugs are derived from Slovenian plasma, even if national legislation requires such a provision. A decision like that, which further limits the scope of potential deviations from the free movement of goods, will be beneficial for public procurement procedures, since such practices are not uncommon. In light of enhancing the professionalism of the DKOM, the decision on admissibility of its request should be welcomed. Thus, we can anticipate further activity from parties which will surely more often propose to DKOM to request preliminary ruling in cases where ambiguous legal provisions are at play.

[1] Official Gazette of the Republic of Slovenia, no. 17/14.

[2] The legal basis for this is Article 6 (71) of the Law on Medicinal Products.

[3] Although the Directive 2004/18/EC was repealed by Directive 2014/24/EU on the 18th of April, 2016, the same legal reasoning applies also under the new Directive.

[4] For example, the judgement in case Consorci Sanitari del Maresme dated 6th of October, 2015 (C-203/14) and there stated case law.

[5] For example the judgement in case Deutsche Parkinson Vereinigung dated 19th of October, 2016 (C-148/15), and there stated case law.

[6] Judgement in case Commission v Ireland dated 17 June 1981 (45/87).

[7] Article 36 TFEU. 

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