Wednesday, 10 February 2016

Announcing event on public procurement, competition, conflicts of interest and NHS commissioning (Bristol, 23.06.16)

 (c) Dominic Lipinski/PA, via Guardian.
I am organising the event "Taking stock of NHS governance after the 2013 reforms: Public procurement, competition and conflicts of interest in NHS commissioning". It will be held by the University of Bristol Law School on 23 June 2016 in the interesting premises of OpenSpace, with the generous sponsorship of PolicyBristol and Bevan Brittan. Registration is now open here.

This event has two main objectives. First, it intends to bring together Clinical Commissioning Groups (CCGs), NHS Trusts, legal practitioners and academics, so that we can collectively take stock of this aspect of the new NHS governance framework almost 3 years after its adoption. Secondly, and more specifically, it aims to explore issues of interaction between public procurement and competition rules in relation to potential conflicts of interest in NHS commissioning. This exploration should allow for the emergence of some initial lessons-learned, as well as help shape research agendas in this area of public governance, which will undoubtedly gain relevance over the coming years.

The panel of academic and practitioner experts that will participate in the event include:
Through interaction of experts and participants, in particular, the event aims to:
  1. Assess how the sectoral rules created by the National Health Service (Procurement, Patient Choice and. Competition) (No. 2) Regulations 2013 compare with general regimes applicable to conflicts of interest under public procurement and competition law.
  2. Explore the implications for CCGs and NHS Trusts of any potential discrepancies between the sectoral regime and general public procurement and competition rules, with a particular focus on the remedies that can be enforced against them, which in turn determine their operational risks and potential liabilities.
  3. Assess the need for any further reforms of the system once the Public Contracts Regulations 2015 become applicable to health care sector in April 2016.
Thus, this event aims to clarify the current and future public procurement and competition law constraints on NHS commissioning activities, as well as to facilitate knowledge exchange between CCGs, NHS Trusts, academics and legal practitioners in this field of economic law of increasing relevance.

The event is divided in two parts. The morning sessions, consisting presentations be leading academics and solicitors, are open to all, and in particular to academics, PhD students and legal practitioners. The afternoon sessions are reserved for a workshop on practical issues and future challenges is reserved to CCG and NHS Trust members only. This workshop follows up on the discussions held in the morning sessions. It is intended to provide a time for CCG and NHS Trust practitioners to brainstorm and exchange ideas on the main practical issues and future challenges for NHS Commissioning under the combined application of2013 Regulations 2013 and the PCR 2015 to the tendering of NHS contracts.

Overall, then, this event aims to facilitate knowledge exchange between CCGs, NHS Trusts, academics and legal practitioners in this field of economic law of increasing relevance. If you are interested, please register here. For further details, please contact me: a.sanchez-graells@bristol.ac.uk.

Tuesday, 9 February 2016

General Court forced to engage in 'law & language' analysis... Everything is relative... (T-722/14)

In its Judgment of 4 February 2016, PRIMA v Commission, T-722/14, EU:T:2016:61 (not available in English), the General Court (GC) was required to address a tricky (not to say risible) argument based on the language versions of the different rules applicable to procurement procedures carried out by the EU Institutions and, in particular, linguistic divergences in some versions of the Financial Regulation and its Implementing Regulation

In short, a Bulgarian disappointed tenderer complained that, despite having been debriefed by the European Commission as contracting authority on the reasons for the award of the contract to a different tenderer, it had not received an explicit detailed account of the 'relative advantages' of the chosen tender. The argument ultimately rested on the fact that
in Bulgarian, which is the language of the proceedings, the term "сравнителните предимства" ("sravnitelnite predimstva", that is to say "comparative advantages") is used in the Financial Regulation, while the term "относителните предимства" ("otnocitelnite predimstva", that is to say "relative advantages") is used in the Implementing Regulation; while in other languages​​, the terms used are "relative advantages", as in French or English, or the term "advantages", as in German or Italian. ... in several other languages, depending on whether it is contained in the Financial Regulation or the Implementing Regulation, the reference is to either the term "advantages" or the terms "relative advantages" (T-722/14, para 26, own translation from French).
The issue, in the end, is whether having been given reasons of the advantages of the tender chosen for the award of the contract suffices to meet the requirements to indicate relative advantages or comparative advantages in the debriefing documentation (I am not kidding...). The GC's analysisis as follows:
31 For the purposes of this interpretation, it is necessary to consider the various language versions of Article 113, paragraph 2, first paragraph, of the Financial Regulation and Article 161, paragraph 3, third paragraph, of the Implementing Regulation. These show some formal heterogeneity ...: in French, the terms "relative advantages" ["avantages relatifs"] are in both provisions. The English language version uses the same adjective in the Financial Regulation (relative advantages) and the Implementing Regulation (relative merits). In many other languages, the adjective "relative" is used in only one of those acts: in Spanish, in the Implementing Regulation (ventajas relativas), in Dutch, in the Financial Regulation (relatieve voordelen) and in Swedish, in the Implementing Regulation (relativa fördelar[na]). Several language versions only mention the term "advantages": it is, in particular, the German version (Vorteile), Spanish - for the Financial Regulation - (ventajas), Italian (vantaggi), and the Netherlands - for the Implementing Regulation - (voordelen). It should be added that the Swedish version of the Financial Regulation uses the relative proposition "fördelar som kännetecknar" (advantages that characterize). As for the Bulgarian versions of these acts, they use two different adjectives that have been mentioned in paragraph 26 above.
33 ... it is necessary to engage in both a literal and teleological interpretation of the term "advantages" as used, depending on the several cases, alone, or with the adjectives "relative" or "comparative".
34 From a literal point of view, it is essential to emphasize that the noun "advantage" in fact, is sufficient in itself. There can be no advantage other than within the framework of or, at least, in the context of a comparison. The expression "comparative advantages", used in the Bulgarian version of the Financial Regulation is redundant, and the language versions that only utilise the word "advantage" seem therefore legally more rigorous. The notion of relative advantages could, in turn, be of some use if the adjective "relative" could be opposed to the adjective "absolute". Nevertheless, it is clear that there is no "absolute advantage" in connection with the award of a public contract to the best bidder, which necessarily implies, firstly, the use of a range of criteria and, secondly, the lack of a systematic correspondence between the offer of the lowest price and contract award. Therefore it is necessary to interpret the adjective "relative" in its meaning signifying that "which exists only in relation to something else" or "which is not independent". This leads to the conclusion that, ultimately, there is no semantic divergence between the language versions set out in paragraph 31 above, so that the objective of a uniform interpretation of Union acts with different language versions is achieved in this case (see, to that effect, Judgments of 29 April 2010, M e.a., C-340/08, ECR, EU:C:2010:232, paragraph 44, and 26 April 2012, Able UK, C- 225/11, ECR, EU:C:2012:252, paragraph 13 and the case law cited therein).
35 The contracting authority is only required to inform the unsuccessful tenderer having made a request in writing for additional information of which advantages the offer of the successful tenderer had in relation to his (T-722/14, paras 31-35, own translation from French).
The GC could have dispensed with all this linguistic analysis, particularly because, after engaging with the teleological analysis (para 36), it concludes that 'given the constraints, primarily of time, inherent in public procurement procedures, it is sufficient for the contracting authority to forward to the unsuccessful tenderer, in addition to the name of the awardee, the respective scores of their offers under each of the award criteria and the comments underpinning those ratings, so as to allow said tenderer to understand what were the strengths and weaknesses of its offer and how the awardee's offer supplanted (sic?) his' (para 37, own translation from French). 

In my view, all of this is an unfortunate exercise in futility, because the GC insists in a line of case law that imposes excessive transparency in public procurement debriefing processes, allows disappointed tenderers excessive detail of the winning bid and, in the long run, not only creates risks for the competitive tension for future contracts, but also runs important risks of technical levelling and undue constraint on bidders' choices [see A Sanchez-Graells, 'The Difficult Balance between Transparency and Competition in Public Procurement: Some Recent Trends in the Case Law of the European Courts and a Look at the New Directives' (November 2013)]. Everything is relative...

Friday, 5 February 2016

Creating reliable econometric models of the CJEU case law: a response to criticisms (by Arrebola, Mauricio & Jimenez)

One of the most satisfactory activities in academia is to engage in debate and discussion. Only by subjecting ideas to tough scrutiny can we advance in our knowledge. Thus, I am extremely pleased that Carlos Arrebola, Julia Mauricio and Hector Jimenez have reacted so quickly to my criticism of their recent paper (here) and come back with a thoughtful and forceful rebuttal. I am posting it below. You will see that there are important points of disagreement that will probably require two (or more) follow-up studies in the future. Seems like I need to brush up my econometrics...

Creating reliable econometric models of the CJEU case law:
a response to Sanchez-Graells’ criticisms

by Carlos Arrebola, Julia Mauricio and Hector Jimenez


In a recent study, we used econometric methodology to quantify the degree of influence of the Advocate General on the Court of Justice. Based on data collected from 20 years of actions for annulment, we concluded that the Court is 67% more likely to annul an act if the Advocate General suggests so in her opinion. In a post last Tuesday, Sanchez-Graells examined our paper. As he said, our conclusion is ‘bold [...] and controversial [for its] implications’, and as such it should be subject to ‘tough scrutiny’. We most definitely agree on both the importance of our claim and the need to test it rigorously. As we stated in our paper, if the conclusions are true, the role of the Advocate General within the Court might need to be reconsidered in order to secure judicial independence.

However, Sanchez-Graells voiced several criticisms regarding our econometric model that prevent him from accepting the validity of our results. We greatly welcome the debate, and appreciate the comments in his post, although we ultimately disagree. While we acknowledge that quantitative methodology is not perfect, we argue that our results are a reliable estimation of the influence of the Advocate General (hereinafter, “AG”) on the Court. If not in the specific number of 67% increased probability of a judicial outcome, our results are at least an indication that the influence relationship is positive, as it is shown by the six different econometric models estimated in our study. In the spirit of discussion and debate of this blog, we address Sanchez-Graells’ criticisms along with several other factors that, in our opinion, should have been taken into account when assessing our paper’s reliability.

1. The impossibility of using Randomised Controlled Trials

In his post, Sanchez-Graells suggests that we were too quick to discard the possibility of testing the hypothesis of the influence of the AG on the Court using Randomised Controlled Trials (“RCTs”). For a layperson, RCTs are the type of scientific methodology used in many areas of science to study causality. One of the main examples where RCTs are used is medicine. In order to prove the validity of a new drug, several groups of patients with similar features are randomly selected. Normally, one of those groups would be the control group. The control group would receive a placebo, instead of the actual drug. In this way, the researchers can easily infer whether the health outcome is caused only by the drug. If both the group taking the placebo and the group taking the drug had the same reaction, it would be clear that some external factor other than the drug had caused it. If, on the other hand, the group taking the drug and the placebo group reacted differently (for example, in the case of an illness, if the group taking the drug was the only one to recover), it could be said with certain confidence that the drug caused the recovery.

In our paper, we suggested that RCTs are not a possibility because it would require using the Court of Justice as a laboratory, experimenting with cases, judges and AGs. Nevertheless, Sanchez-Graells argued that we should have considered those cases in which the AG does not participate as our “control group”. This is a misconception about how RCTs are designed. A vital feature in the design of RCTs is making sure that the observations that included in the sample are randomly drawn. This is because, ideally, you would like every observation to be identical, so that the only factor that affects it is the treatment that you are examining in the experiment. In the case of medicine-related RCTs, you want patients with the same characteristics, symptoms, etc., so that whatever happens after taking the drug can only be traced back to the drug. In our study, we would need the same case to be repeated several times, with the same legal problem to be solved by the same judges, having access to the same amount of precedent, lawyers with the same ability to plead cases, etc. Only having that could we then observe what would happen if we took the element of the Advocate General out of the equation. However, cases are never the same. Unlike illnesses, where patients tend to have the same symptoms, cases are much more complex. Legal problems rarely have the same surrounding circumstances.

So, if we followed Sanchez-Graells’ suggestion, we would be ignoring a set of external factors that actually affect the outcome of a case. We would be wrongly attributing it to the Advocate General’s intervention, when actually it could be something else. That is, if we had two cases, one with an AG’s opinion, and one without, in which the Court reached different results, we could not say that the Advocate General caused that different result. It could be that the case had different facts, and that is why the Court decided differently. Or, it could well be that the judges were presented with different arguments by the parties, and it was the lawyers, and not the AGs, who persuaded the Court. Furthermore, Sanchez-Graells’ suggestion is unfeasible because there is a clear bias. As he explained, the cases in which the CJEU considers that there are not going to be problematic legal issues, they decide not to have an AG opinion. It means that from the very beginning of the case they are sensing that it might have an easy or clear legal solution. In other words, Sanchez-Graells is suggesting that we compare in our analysis a simple cold, with a more complicated condition, such as cancer, and that we can thus establish whether radiotherapy has any impact on health. The outcome to such a query would have a misleading result, because the colds would have a rate of recovery close to 100%, whether the cancer would be lower. However, that would not tell us anything about the effectiveness of radiotherapy. In the same way, if a case deals with unproblematic legal issues, the opinion of the AG will probably not do much to affect the Court, because the Court would have come to that conclusion by itself without any external influence. We cannot simply compare those two scenarios without losing information. After all, there would not be any “random” selection of groups, clearly not fulfilling the requirements to conduct a RCT.

For that reason, the only way to approximately estimate causality is to use regressions, in which you can account for as many variables as possible that may influence the Court, including the Advocate General, and including variables that will account for how easy it is to solve a case or clear a case is. That way we will know the exact magnitude of the variable AG on the Court.

2. Designing a reliable regression

Once we establish that the most accurate measure is a regression model accounting for variables that affect the outcome of the Court, the difficulty arises in deciding which variables to include and how to code them. It is in this respect that we think Sanchez-Graells raises his most valid criticism of our study. We acknowledge that our variables are not perfect. We will never be able to establish causality without a shadow of a doubt. This is simply because, as we said, we will always miss variables that affect the case that we will not be able to track, codify and insert in our database. Taking this to an extreme and absurd example, we will never be able to verify whether the judge in the deliberating room had a headache and wanted to go home soon, rushing her decision. However, the fact that we will always miss variables does not mean that our model cannot be reliable. We still include a number of important variables that can explain a substantial amount of what goes on in the courtroom. There are different ways in econometrics to determine the extent to which a model, albeit missing variables, is an accurate depiction of reality. For our study, these measures suggest that the model is indeed reliable. We will come back to this in a moment.

Another aspect of coding variables is, as Sanchez-Graells comments, the oversimplification. In our study, we used actions for annulment, where the outcomes of a case can be (i) annulment, (ii) partial annulment, (iii) dismissal of the case, or (iv) inadmissibility of the case. We decided to simplify this variable by looking only at whether the Court decided to annul (in any of its forms) or not. But, the oversimplification is necessary to make it more reliable, because in order to have a dataset capable of yielding significant results, we need to have a representative sample. In our case, we only had data for a very small number of partial annulments. Including them as a separate variable from total annulment would have only created “noise” in our model, making the results less significant, statistically speaking.

Sanchez-Graells especially criticises our grouping of dismissal and inadmissibility cases together, because he says that dismissing a case and declaring it inadmissible are very different things. However, that discussion in his post is unnecessary, because as he himself notes later on, our results ‘cannot be interpreted regarding inverse AG recommendations (ie recommendations to inadmit/dismiss)’. Our results are only relevant for decisions to annul or partially annul; we do not make any claim about other type of cases, which Sanchez-Graells also criticises.

However, the fact that we decided to look at the question in terms of what happens if the AG suggests to annul the act, rather than if she suggests to dismiss it or declare it inadmissible, does not affect the reliability of our results. In fact, the only thing that Sanchez-Graells is postulating is a new hypothesis. He is saying that, in his opinion, we would have got other results if we had constructed the model differently. That is a point that we cannot falsify without fiddling for a few more weeks with our data in the econometrics software. But, we invite people, and we ourselves may do it in the future, to carry out other studies, with the same or different data to check that the results are not affected if we look at things in a different way; by, for example, looking at what happens if the AG suggests dismissal, or what happens if we gather data from other periods of time. Nonetheless, the reliability of the results that we presented is a separate issue.

So, if we have acknowledged that we are not going to be able to include every variable, and that our data is only a sample, why are we confident in our results? In the paper we explain it more technically, but, basically, there are econometric measures that indicate that the model that we have created is accurate when the estimation that we get from the model is compared with actual data from reality. That is the reason why we know it is a fairly reliable model.

3. Final caveat

Whilst reading Sanchez-Graells’ words, we could not avoid feeling something we felt many times before. Lawyers are more comfortable sticking to arguing with words.  We feel somehow threatened by this terra incognita called econometrics. There seems to be a certain reticence to attempting to use mathematics to help us in our enquiries. It is worth saying that we are not accusing Sanchez-Graells of not wanting to engage with quantitative methodology. In fact, we know that he has used some statistics previously, and we would not expect a “more economic approach” type of person to disregard this evidence-based methodology.

We want to end this post with a final note about quantitative methodology. We want to say that although judicial proceedings and legal arguments cannot always be equated to numbers, and other methodologies are extremely valuable to legal research questions, quantitative analysis can help elucidate complex legal questions. As many other subjects in social sciences did before us, statistics can become a tool at the service of legal researchers. In this sense, it is worth reminding the readers that, a few centuries ago, economics was equally a merely discursive subject, and anyone who has read the Wealth of Nations can be a witness to that.  But, now, economics and mathematics cannot be separated. Therefore, we would encourage researchers to embrace statistics and econometrics, and see how they can help with their enquiries. Quantitative analysis tries to be evidence-based and objective. Therefore, anyone who believes in the benefits of science will prefer a claim based on quantitative methodology to a hypothesis made, to follow the words of Sanchez-Graells, on the basis of ‘anecdotal impression’.

Excellent @E15Initiative Think Piece on Competition, Corruption and Trade dimensions of Public Procurement Regulation (Anderson, Kovacic and Müller: 2016)

The E15Initiative jointly implemented by the International Centre for Trade and Sustainable Development (ICTSD) and the World Economic Forum aims to generate strategic analysis and recommendations for government, business, and civil society geared towards strengthening the global trade and investment system for sustainable development. One of their great initiatives is to publish 'think pieces' to stimulate a more informed debate about how trade policy and institutions can best be adapted to the highly interconnected global economy of the 21st century.

One of these first think pieces is Anderson, Kovacic and Müller, Promoting Competition and Deterring Corruption in Public Procurement Markets: Synergies with Trade Liberalisation (Feb 2016). In this well-thought and persuasive piece, the authors expand on their previous thoughts in this area [“Ensuring integrity and competition in public procurement markets: a dual challenge for good governance,” in Arrowsmith & Anderson (eds), The WTO Regime on Government Procurement: Challenge and Reform (Cambridge University Press, 2011) 681-718] and make a compelling case for the careful integration and balancing of competition, corruption and trade considerations in public procurement regulation. Their abstract is as follows:
Efficient and effective government procurement markets are critical to economic growth, development, and the welfare of citizens. Yet, two very serious challenges bear on the performance of these markets: (i) ensuring integrity in the procurement process (preventing corruption on the part of public officials); and (ii) promoting effective competition among suppliers. Typically, these challenges are viewed as separate and distinct: the former (corruption) is treated primarily as a principal-agent problem in which the official (the “agent”) enriches himself/herself at the expense of the government or the public (the “principal”); while the latter (promoting competition) involves preventing collusive practices among potential suppliers and removing barriers that impede participation in relevant markets. This think-piece demonstrates that these two problems often overlap, for example where public officials are paid to turn a blind eye to collusive tendering schemes or to release information that facilitates collusion. As well, while transparency requirements are often central to efforts to eradicate corruption, such measures can, if not properly tailored, facilitate collusion and thereby undermine efforts to strengthen competition. Thus, careful coordination of measures to deter corruption and to foster competition is needed. Further, the think-piece argues that participation in the WTO Agreement on Government Procurement (GPA), or in similar regional arrangements, can play an important role both in promoting competition and in deterring corruption. The GPA enhances possibilities for healthy competition in relevant markets through participation by foreign-based or affiliated contractors. It helps to prevent corruption by requiring adherence to appropriate (tailored) transparency measures, and by exposing procurement activities to checks and balances including domestic review (“bid protest” or “remedy”) systems and international scrutiny.
Focusing on my pet topic of transparency in public procurement regulation and how this can affect competition in markets where public procurement is an important demand component, I am thrilled to read that Anderson, Kovacic and Müller stress that:
... increasingly, some challenges in the design of appropriate levels of transparency at the different stages of the procurement process have been recognised in both the procurement and competition communities. The OECD (2007) points out that: 
Governments need to find an adequate balance between the objectives of ensuring transparency, providing equal opportunities for bidders, and other concerns, in particular efficiency. The drive for transparency must therefore be tempered by making transparent what sufficiently enables corruption control. 
Indeed ... certain kinds of transparency measures can clearly facilitate collusion and, consequently, are problematic from a competition policy point of view (Marshalland Marx 2012; Sanchez Graells 2015A). While, for example, there may be no way around the need for publication of award criteria and technical specifications in public procurement if responsive tenders are to be solicited, their usefulness as tools for facilitating inter-supplier agreement needs to be recognised. Similarly, the publication of procurement outcomes, while enabling monitoring by the public as the “principal,” can also serve cartel participants in policing anti-competitive agreements and thereby enhancing cartel stability. Sanchez Graells (2015B) discusses specific possible concerns regarding transparency measures that may be associated with centralised procurement registers. 
A further complication is that optimal transparency levels may differ from country to country. “Solutions” that are potentially workable in some contexts may be highly problematic in others. For example, in jurisdictions where outright corruption problems are believed to be minimal, some lessening of transparency measures might be considered, for the sake of preventing collusion. On the other hand, in economies where corruption is rampant, any lessening of transparency measures may be a recipe for disaster. This explains why the very high priority that is given to transparency in public procurement processes in some countries in Eastern Europe may, in fact, be appropriate notwithstanding possible collusion facilitation concerns, at least as an interim measure. In any case, as explained below, both competition law enforcement and competition advocacy are clearly part of the solution (pp.9-10).
Of course, I am really thankful that they picked up on some of my recent research and I hope that their think piece will help disseminate these insights, which I consider extremely important for the proper design of public procurement rules in a way that is socially advantageous [for further discussion, see A Sanchez-Graells, 'The Difficult Balance between Transparency and Competition in Public Procurement: Some Recent Trends in the Case Law of the European Courts and a Look at the New Directives' (November 2013)].

Thursday, 4 February 2016

Some thoughts on the European Commission's revised proposal for regulation on third-country access to public procurement

The European Commission has recently published a revised version of the proposed regulation on the access of third-country goods and services to the Union’s internal market in public procurement and procedures supporting negotiations on access of Union goods and services to the public procurement markets of third countries [for discussion of the initial proposal and its implications, see K Dawar, 'The Proposed "Buy European" Procurement Regulation: An Analysis'].

As the Commission stresses, nothing in the revision of the instrument has altered the fact that
The new Instrument would allow the Commission to initiate public investigations in cases of alleged discrimination of EU companies in procurement markets. In case such an investigation would find discriminatory restrictions vis-à-vis EU goods, services and/or suppliers, the Commission will invite the country concerned to consult on the opening of its procurement market. Such consultations can also take place in the form of negotiations on an international agreement. As a last resort, the Commission could, after consultation with EU Member States, apply the new tool. This means that bids consisting of goods and services from the country concerned would, while compared to other bids, be considered as offering a higher price than the one they have put forward, thus providing European and non-targeted countries' goods and services a competitive advantage. To avoid the application of this tool, third countries have only to stop such discriminatory practices (see press release).
This is clearly an instrument of trade policy and, in my view, it is not much more than the stick the Commission is trying to get itself to be able to reinforce its push for international procurement agreements (notably, the GPA) in case some trading partners are not persuaded by the carrot of having enhanced access to the EU market. I am sceptical about the likely effectiveness of the instrument, or whether it actually adds anything in terms of the EU's external foreign (trade) policy, other than the possibility of imposing compliance with retaliatory trade measures internally, on Member States that may have different views, or simply want to benefit from cheaper or more competitive offers coming from blacklisted countries with which their 'own domestic' suppliers do not trade intensely. Oddly, the proposed regulation may have more teeth from this internal perspective than outwardly. 

What troubles me is the possibility that this trade instrument, if approved and implemented, triggers litigation from foreign non-GPA covered litigants in three fronts. First, regarding investment protection claims against the EU and its Member States by tenderers from countries that find themselves unable to continue tendering for contracts in the internal market due to the Commission's imposition of retaliatory measures under the proposed regulation. Second, regarding challenges in front of the Court of Justice of the European Union on the basis of Art 263(4)III TFEU and the negative impact that the European Commission's decision to blacklist countries create [in a similar fashion as recent cases such as Council v Manufacturing Support & Procurement Kala Naft, C-348/12 P, EU:C:2013:776], which will trigger disputes as to the locus standi of these companies. And third, regarding litigation in front of the national courts, both if the foreign companies are subjected to the price discrimination mechanisms or, counter-intuitively, even if they are not.

Overall, I am not sure that it is a good idea for the European Commission to be pushing for an instrument that is very likely to judicialize trade disputes. At the same time, if the instrument is as ineffective as I am inclined to think, maybe those risks are simply theoretical and not worth worrying after all. Which strengthens the doubts about the utility of the instrument even further...

Tuesday, 2 February 2016

The difficulties in an econometric analysis of CJEU case law -- a propos Arrebola, Mauricio & Jiménez Portilla (2016)

Carlos Arrebola and Ana Julia Mauricio (PhD students at the University of Cambridge), together with  Héctor Jiménez Portilla (of the Overseas Development Institute (ODI)) have published an interesting and thought-provoking  paper (*) where they try to measure the influence of the Advocate General (AG) on the Court of Justice of the European Union (CJEU) [for a short summary of their paper, see here]. This is an area where EU law scholars have been struggling to find an objective way to measure/prove/dimiss any claim of AG influence over the CJEU--as Arrebola et al clearly stress in their excellent literature review.

In a nutshell, Arrebola et al claim that their 'findings suggest that the CJEU is approximately 67 percent more likely to annul an act (or part of it) if the AG advises the Court to annul than if it advises the Court to dismiss the case or declare it inadmissible. In their view, these results raise several questions as regards judicial independence and the relevance of the figure of the Advocate General, providing a grounded basis for future discussions and judicial reform.'

Their claim is as intuitively appealing as it is bold (and controversial, in terms of the implications they derive) and, in my view, it deserves a tough scrutiny of the way they reached this conclusion. The following are some of the doubts that I have had while reading the paper, which I am limiting to the three main doubts I am struggling with. Overall, these doubts leave me with the impression that, unfortunately, the paper does not actually deliver on its main goal of contributing 'to a more comprehensive understanding of the role of the Advocate General in the makeup of the Court of Justice of the European Union'.

Their model in a nutshell
Let me frame my doubts in an stylised summary of their econometric model. In short, they have looked at 'data from 20 years of actions for annulment procedures before the Court of Justice. Every case from January 1994 to January 2014 has been included, with the exception of appeals from the General Court and those cases that do not have an AG opinion. We collected a total of 285 observations. For these cases, we have examined the behaviour of the Court and the Advocate General as regards to their decision to annul or not to annul the legal act in question' (p. 15). 

They have coded these cases to examine the relationship between two main variables: the recommendation of the AG and the final decision of the CJEU. There are other variables they take into account, but those do not affect my analysis, so I am sticking to the two main variables for simplicity of argument. They explain why they have chosen annulment cases in the following terms: 'we have created two dichotomous (also called dummy or binary) variables: ECJannulment and AGannulment. ECJannulment is the one that we have considered as the dependent variable. It takes the value of 1 if the Court decided to annul or partially annul an act, and 0 if it dismissed the case or deemed it inadmissible. AGannulment is the variable that we have considered independent. It takes the value of 1 if the Advocate General issued an opinion recommending the Court to annul or partially annul an act, and 0 if it recommended dismissing the case or declaring it inadmissible' (p. 15). 

With this information, they have run a 'probit model [which] is a regression that explains the predicted probability of the dependent variable adopting the value 1. In our case, it outputs the predicted probability of the Court annulling an act, subject to the value given to the other variables included. Therefore, the probit model provides a simple way to interpret the results in terms of predicted probability from 0 to 1. Instead, if we had chosen a linear regression model, the result would not be enclosed between 0 and 1, making the interpretation impossible, as it could yield some predicted probabilities to be negative or above the unit' (p. 25). This is what allows them to reach their main finding that 'when the Advocate General recommends annulment, the Court is 67 per cent more likely to annul' (p. 30).

My main doubts
Firstly, I am not sure that the model the authors use is the best suited to the analysis of such a complex issue as the influence of the AG on the CJEU. One of the reasons (probably the main reason) why the authors decide to use a probit model is that they consider that it is not possible to establish a group of annulment cases that can work as a control (ie what they call the impossibility of conducting a randomised controlled trial). They consider that this would be the best way to avoid selection bias, but that in their study 'it is not possible to create a randomised controlled trial to define the causal effect of the AG opinion on the Court of Justice. This would require having the ability to design empirical experiments using the Court of Justice as a laboratory, which is unfeasible in practice' (p. 13, with more details in fn 54).

I disagree with their view about the impossibility to use a randomised controlled trial. There is a group of annulment procedures where no AG Opinion was submitted, and this could be used as a control group. It is important to note that, according to the Statute of the CJEU, '[w]here it considers that the case raises no new point of law, the Court may decide, after hearing the Advocate General, that the case shall be determined without a submission from the Advocate General' [Art 20(5)]. 

This is organised according to the Rules of Procedure of the CJEU, according to which 'The preliminary report shall contain proposals as to whether particular measures of organisation of procedure, measures of inquiry or, if appropriate, requests to the referring court or tribunal for clarification should be undertaken, and as to the formation to which the case should be assigned. It shall also contain the Judge-Rapporteur’s proposals, if any, as to whether to dispense with a hearing and as to whether to dispense with an Opinion of the Advocate General pursuant to the fifth paragraph of Article 20 of the Statute. The Court shall decide, after hearing the Advocate General, what action to take on the proposals of the Judge-Rapporteur' [Art 59(2) and (3)].

Therefore, the annulment cases where there is no AG Opinion are an important instrument for potential control tests. These cases only come to be decided without an AG Opinion because both the CJEU (rectius, the Judge-Rapporteur) and the AG agreed that the case raised no new point of law. Thus, there is no indication that the AG can influence the CJEU on any other point than the existence or not of new issues to be considered. Admittedly, there could already be scope for some indication of the AG (and the CJEU's) position on the substance of the case in this first judgement. However, I would think that running controls on the basis of these cases could be useful.

In these cases, the CJEU (at least formally), decided whether to admit or dismiss, annul (totally or partially) the case without submission of the AG. If there was a significant divergence of the probability of annulment between these two groups of cases, the argument that the author's raise in the paper would be strengthened. On the contrary, if the CJEU showed the same likelihood of annulling/dismissing regardless of the existence or not of an AG Opinion, the claim would be significantly weakened. I do not imagine this to the ultimate test for the arguments raised in the paper, but I would see it as an important one.

Secondly, I am skeptical of the way in which the authors simplify the setting for annulment procedures. They construct them as binary: that is, the only options available to the AG and the CJEU are to either declare the case inadmissible/dismiss it (0) or annul the provision in question totally/partially (1). I understand the need to simplify decisions to annul grouping together full and partial annulments (which they explain in p. 17). I remain unconvinced by their arguments regarding declarations of inadmissibility and dismissals. They simply indicate that 'inadmissibility and dismissal are sometimes used as interchangeable terms, although technically the substance of the case is not analysed in cases of inadmissibility, whilst it is in cases that are dismissed' (p. 17). However, they do not consider this a major issue and proceed with the grouping of both types of results as a single outcome of the case.

The difficulty I have with this strategy is that the rules on admissibility/inadmissibility are procedural in nature and they set up a first filter for cases to come to a full analysis. It can also be argued that they are much simpler than the rules applicable to the potential annulment of the challenged provisions, which depend on much more complex assessments of both procedural and substantive EU law. Thus, grouping decisions on (procedural) inadmissibility with those on dismissal of the annulment claim after a full analysis seems to create a significant conceptual problem. At this point, it may be worth stressing that the authors had mentioned that 
we have decided to estimate regressions including other variables that could potentially be biasing the results if we only looked at what the Advocate General said and whether the Court followed the Advocate General’s position. In particular, one of the bias factors is the clarity of the law in a given case. For example, the Court and the Advocate General could reach the same result in a case not because the Court decided to follow the AG opinion, but because the law was clear on what the outcome should be, and there was no room for different interpretations. Therefore, not accounting for the clarity of the case could overestimate our measure of the influence of the Advocate General (pp. 14-15, emphasis added). 
My problem is that the authors seems to have forgotten to include this very bias-check in the way they have constructed their variables. By grouping (relatively simpler) procedural checks with (relatively more complex) full assessments, they have created a variable that is very hard to reconcile with reality outside of their model.

Thirdly, even within the context of their model, I am not sure what to make of their results. Their findings indicate that, when the AG recommends the annulment of an act, the CJEU is almost 67 per cent more likely to annul the act than if the AG had not proposed its annulment (ie, had she advocated for either inadmissibility or dismissal). I have trouble interpreting this number due to the conceptual issue mentioned above (ie, conflation of inadmission and dismissal), which makes the recommendation of the AG (as coded) ambiguous. This makes me wary of the claim that 'even if the number of 67 per cent of increased probability is called into question, it is difficult to deny that there is some level of influence' of the AG on the CJEU (p. 34, emphasis added), and that 'our analysis shows that there is some component in the making of a decision that is simply attributed to what the Advocate General recommended' (p. 35, emphasis added).

From the numbers in the paper, I have been unable to work out the effect that an AG recommendation to inadmit/dismiss has on the CJEU's willingness to do so. Intuitively, I would expect that, if by itself the Opinion of the AG is such a relevant factor as the paper claims, then the CJEU should also be more inclined to inadmit/dismiss when the AG submitted such a recommendation. However, in that case, I would not necessarily find the causal explanation between the AG recommendation and the CJEU's decision persuasive. An alternative interpretation not linked to the influence of the AG over the CJEU would need to be dispelled: ie the zeal with which the CJEU keeps control of its docket. The intuition would be that the CJEU may be engaged in an interpretation of inadmissibility rules that prevents a floodgate of claims, which could well override whatever position the AG decides to take. In my personal opinion, and based on anecdotal impression, this is what has been happening regarding annulment procedures promoted by unprivileged applicants (with all the issues that the Plaumann, UPA, Inuit, saga have created; see here).

In the end, the difficulty I have is that their results do not necessarily make a lot of intuitive sense because they cannot (or at least not immediately) be interpreted regarding inverse AG recommendations (ie recommendations to inadmit/dismiss) and their effect on the CJEU. Somehow, there seems to be an implicit assumption that 'influence' of the AG is stronger if it prompts the CJEU to annul than if it prompts the CJEU to inadmit/dismiss. If all of this is incorrect, then my only residual criticism is that the paper could have been made more accessible for non-statisticians.

Conclusion
Overall, I remain unconvinced that the results of Arrebola et al significantly contribute 'to a more comprehensive understanding of the role of the Advocate General in the makeup of the Court of Justice of the European Union'. Thus, I am not prepared to engage with the implications in terms of judicial independence and potential (further) reform of the CJEU that they draw (pp. 34-38). Given the disagreement with their methodology and the diversity of views as to how to interpret their results, I have contacted Carlos Arrebola and offered him to reply to my criticisms in a guest post. He has kindly accepted. Keep an eye out for it in the coming days.

(*) The full reference for the paper is: C Arrebola, AJ Mauricio and H Jiménez Portilla, 'An Econometric Analysis of the Influence of the Advocate General on the Court of Justice of the European Union' (January 12, 2016). Cambridge Journal of Comparative and International Law, Vol. 5, No. 1, Forthcoming; University of Cambridge Faculty of Law Research Paper No. 3/2016. Available at SSRN: http://ssrn.com/abstract=2714259.

Monday, 1 February 2016

CJEU pushes for flexibility for teaming agreements under EU public procurement rules: what implications for the interpretation of Arts 19 & 63 Dir 2014/24? (C-234/14)

In its Judgment of 14 January 2016 in Ostas celtnieks, C-234/14, EU:C:2016:6, the Court of Justice of the European Union (CJEU) stressed the flexibility that the EU public procurement rules on teaming and reliance on third party capacity impose on contracting authorities. 

In the case at hand, the Latvian municipality of Talsi had approved tender documents requiring tenderers relying on the capacities of other contractors to 'mention all those contractors and provide evidence that it has the necessary resources at its disposal. If that tenderer is to be awarded the contract, it must have concluded a cooperation agreement with the contractors concerned before the award and forwarded this to the contracting authority'. One of the main obligations under such agreement would have been to include 'a clause stipulating that each party is to be jointly and severally liable for the performance of the contract'.  The requirement for a pre-award agreement was challenged.

In an unsurprising decision, the CJEU stressed that the relevant rules (then Arts 47 and 48 Dir 2004/18), precluded a contracting authority from imposing on a tenderer which relies on the capacities of other entities the obligation, before the contract is awarded, to conclude a cooperation agreement with those entities or to form a partnership with them. Indeed, the CJEU recalled that it is settled case law that 'Articles 47(2) and 48(3) of Directive 2004/18 recognise the right of every economic operator to rely, for a particular contract, upon the capacities of other entities, "regardless of the nature of the links which it has with them", provided that it proves to the contracting authority that it will have at its disposal the resources necessary for the performance of the contract' (para 23, with reference to Swm Construzioni, C-94/12, EU:C:2013:646; see here). The CJEU stressed that such 'interpretation ... is consistent with the aim of the widest possible opening-up of public contracts to competition pursued by the relevant directives to the benefit not only of economic operators but also of contracting authorities. In addition, that interpretation also facilitates the involvement of small- and medium-sized undertakings in the contracts procurement market' (para 24).

This was clearly set out in the pre-existing case law of the CJEU and therefore, hardly deserves any comment. However, in proceeding with its reasoning, the Court engaged in a clarification that can raise significant doubts as to the interpretation of the new rules on teaming and group bidding in Arts 19 and 63 of Dir 2014/24. The CJEU stressed that 'the tenderer is free to choose ...the legal nature of the links it intends to establish with the other entities on whose capacities it relies in order to perform a particular contract and, on the other, the type of proof of the existence of those links' (para 28, emphasis added). 

On the basis of this freedom of organisation recognised by the CJEU (which rings of the freedom to conduct a business under Art 16 of the EUCFR, even if it is not mentioned), the CJEU determined that '[i]n the present case, ... the contracting authority requires a tenderer ... which relies on the capacities of other entities for the performance of the contract concerned, to establish links of a precise legal nature with those entities, so that only those particular links are capable, in the eyes of the contracting authority, of proving that the contract does in fact have the resources necessary to perform that contract ... a rule such as that ... of the tender specifications manifestly deprives the provisions of Articles 47(2) and 48(3) of Directive 2004/28 of their effectiveness' (paras 30 and 33, emphasis added).

The reason I find the Judgment in Ostas celtnieks troubling for the interpretation of Arts 19  and 63 of Dir 2014/24 is that, going beyond the requirements and limits of Arts 47 and 48 Dir 2004/18, a new provision in Art 63 Dir 2014/24 now establishes that despite the fact that groups of economic operators, including temporary associations, may participate in procurement procedures and they shall not be required by contracting authorities to have a specific legal form in order to submit a tender or a request to participate [Art 19(2)],  and that contracting authorities may require groups of economic operators to assume a specific legal form only once they have been awarded the contract, and to the extent that such a change is necessary for the satisfactory performance of the contract [Art 19(3)], Art 63(1) in fine Dir 2014/24 foresees that '[w]here an economic operator relies on the capacities of other entities with regard to criteria relating to economic and financial standing, the contracting authority may require that the economic operator and those entities be jointly liable for the execution of the contract.'

In view of the Judgment in Ostas celtnieks, it seems clear that either the enforcement of Art 63 Dir 2014/24 will require a change of tack in the development of the flexible case law applicable to teaming agreements, or Art 63 Dir 2014/24 will trigger a potential nightmare of legal discussion about the limits of the possibility to request assurances to guarantee that the economic operator and those entities on which financial and economic capacities it relies be jointly liable for the execution of the contract, while not forcing it to 'establish links of a precise legal nature with those entities, so that only those particular links are capable, in the eyes of the contracting authority, of proving that the contract does in fact have the resources necessary to perform that contract'.

This builds up on my previous criticism of the liability requirement created by Art 63 Dir 2014/24, which was along different lines:
... the ... requirement of joint liability for the execution of the contract can make it very difficult to reach subcontracting agreements or similar arrangements for the reliance on third parties for the partial execution of a minor part of the contract. Moreover, it can result in complicated structures of side letters of indemnity that raise the legal costs linked to participation. In my opinion, in relation to both requirements, the contracting entity should be satisfied with the liability of the main contractor and, if need be, ‘self-protect’ through requirements for adequate professional risk indemnity insurance under article 58(3) of Directive 2014/24. Therefore, a pro-competitive interpretation of these rules requires subjecting their use to very strict proportionality tests in order to avoid unnecessary restrictions of the ability of tenderers to rely on third party capacities in ways that fall short of teaming and bidding jointly for contracts [ A Sanchez Graells, Public procurement and the EU competition rules, 2nd edn (Oxford, Hart, 2015) 317-18].
In my view, the Judgment in Ostas celtnieks strengthens the argument for a very exceptional use of Art 63(1) in fine Dir 2014/24 by contracting authorities.

Friday, 29 January 2016

Some thoughts on the principle of competition's direct and indirect effects in public procurement from 18 April 2016

It was a pleasure to speak at Upphandlings Dagarna 2016 in Stockholm on the principle of competition enacted in Article 18(1) of Directive 2014/24 and Article 36(1) of Directive 2014/25 [for background reading, see here]. The recording of the livestreaming is available here (starts at 1:30, main remarks after 8:00).

One of the issues that featured prominently in the discussions with my panellists is the legal value of the principle under EU law, and how to make it effective in case Member States do not transpose it (or are late in the transposition, which will certainly be a common situation for a while). 

In my view, and in simplified terms, there are two main routes that EU law provides for the enforcement of the principle regardless of the transposition decisions the Member States adopt. Firstly, the principle can be given direct effect. And, secondly (and probably with greater practical relevance), the principle must be given indirect effect. I develop these ideas for the enforcement of the principle of competition, particularly through indirect effect or interpretation conforme, in Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 215-227, available here.

Direct effect can be given to the presumption in Art 18(1) Dir 2014/24 / Art 36(1) Dir 2014/25 that 'Competition shall be considered to be artificially narrowed where the design of the procurement is made with the intention of unduly favouring or disadvantaging certain economic operators'. In my view, this provision sets out a clear, precise and unconditional individual right for candidates and tenderers not to be unduly disadvantaged, which therefore meets the requirements for direct effect as per Van Duyn (C-41/74, EU:C:1974:133). It will be particularly relevant to coordinate any legal claims with the clear push for effectiveness of the EU public procurement rules in the Remedies Directive.

Indirect effect must be given to the broad principle of competition in Art 18(1) Dir 2014/24 / Art 36(1) Dir 2014/25 that 'The design of the procurement shall not be made with the intention ... of artificially narrowing competition.' This is not only a clear general principle of EU law (which could also engage Mangold, C-144/04, EU:C:2005:709), but a fundamental pillar of the procurement system and, in particular, of the system created by the 2014 new public procurement Directives. The Commission could not have stressed this more clearly in the recent strategy for the Upgrade of the Single Market, where it highlighted that 'In 2014, the EU adopted a major overhaul of the EU procurement framework .... This was aimed at making public procurement more efficient and strategic, fulfilling the principles of transparency and competition to the benefit of both public purchasers and economic operators, in particular SMEs' (emphasis added). Overall, the obvious and pervasive pro-competitive orientation of the 2014 Directives and the explicit consolidation of the principle of competition triggers an obligation to interpret any domestic procurement rules in light of the principle of competition under as per Von Colson (C-14/83, EU:C:1984:153).

In short, even if Member States did not transpose (in time, or at all) the principle of competition in Art 18(1) Dir 2014/24 / Art 36(1) Dir 2014/25, EU law requires national administrative bodies, review bodies and courts to give it full effectiveness, both under  the direct and indirect effect doctrines. This obligation kicks in on 18 April 2016 at the latest (although arguments for an already existing obligation to do so have been on the table since, at least, 2011). This is likely to spur an initial wave of litigation likely to result in references to the CJEU for clarification of the content, meaning and extent of the principle of competition. I for one will keep a close look at these developments.

Wednesday, 23 December 2015

What an amazing year 2015 has been. Thank you [and hiatus]

2015 has been an amazing for the blogger and open access enthusiast in me. Thank you all for your over 160,000 visits to the blog, over 4,000 SSRN downloads, all comments and engagements. Thanks also to Dr Pedro Telles for our 6-month long procurement tennis, which represented our first incursion into endurance blogging (more on that project in the new year, thanks to the support of the Society of Legal Scholars).

It has also been quite an intense year for the academic in me, including the move from Leicester to Bristol, as well as the appointment to the European Commission's Stakeholder Expert Group on Public Procurement

Quite frankly, after all this and the work required to cover all these fronts, I need a bit of a break. First, to relax. And later to catch up with some projects that need some attention. 

Thus, the blog is going on hiatus until February 2016. I hope you will have some excellent holidays and a happy new year in the meantime.


Sunday, 20 December 2015

CJEU: companies cannot mislead consumers under their 'freedom of expression' (C-157/14)

In its Judgment of 17 December 2015 in Neptune Distribution, C-157/14, EU:C:2015:823, the Court of Justice of the European Union (CJEU) addressed whether companies making potentially misleading claims about their products could be protected under a right to 'freedom of expression and information'. In short, the CJEU assessed whether companies could issue commercial statements apt to mislead consumers and still be protected under that type of 'corporate human right'. 

This is a global issue, and the relevance of this problem has been picked by mainstream media, such as John Oliver's piece on an episode of HBO's Last Week Tonight in 2014. Interestingly, the CJEU ended up rejecting the idea of affording protection to companies that potentially mislead consumers in breach of EU foodstuffs law, but only after assessing their claims under a strict proportionality test. Its reasoning, which falls quite short from resolving the issue once and for all, deserves some analysis.

In Neptune Distribution, the contested claims concerned the presentation of carbonated water as low or very low in salt or in sodium in a manner contrary to Art 9(1), 9(2) and Annex III of Directive 2009/54 on the exploitation and marketing of natural mineral waters, when read together with the annex to Regulation No 1924/2006 on nutrition and health claims made on foods. The main issue was that, in the way they were advertised (eg per comparison to milk, or by establishing claims as to the different effects of sodium chloride and sodium bicarbonate), the mineral water products sold by Neptune could be perceived by consumers as '(very) low salt/sodium' despite actually (significantly) exceeding the the limits for the amounts of sodium or the equivalent value for salt laid down by the relevant EU legislation.

Remarkably, Neptune claimed that its marketing statements were protected by freedom of expression and information under Art 11 of the Charter of Fundamental Rights of the EU and corresponding rules under the European Convention on Human Rights (ECHR, Art 10). The CJEU does not disagree with this general approach. The CJEU indeed recognises that there is significant scope for protection of corporate claims, including marketing claims, under their right to freedom of expression and information. As the CJEU stresses, the freedom of expression and information enshrined in Art 11 of the Charter 'applies, inter alia, as is clear from the case-law of the European Court of Human Rights, to the circulation by an entrepreneur of commercial information in particular in the form of an advertising slogan' (para 64). 

Therefore, Art 11 Charter protection can be claimed in relation to 'the use by a business, on packaging, labels and in advertising for natural mineral waters, of claims and indications referring to the sodium or salt content of such waters' (para 65). This results in the fact that '[t]he prohibition on the displaying on the packaging, labels and in the advertising for natural mineral waters of any claim or indication referring to the fact that such waters have a low sodium content which may mislead the consumer as to that content is an interference with the freedom of expression and information of the person carrying on that business and with his freedom to conduct that business' (para 67, emphasis added). 

Even if technically correct de lege data, I find this approach criticisable in itself because it recognises a type of strong 'corporate human right' to freedom of expression and information that seems unwarranted in view of the extremely weak (if not inexistent) link between the development of commercial activities and the exercise of (properly understood) civil and political liberties [see  the main arguments in A Sanchez-Graells and F Marcos, "'Human Rights' Protection for Corporate Antitrust Defendants: Are We Not Going Overboard?", in P Nihoul and T Skoczny (eds), Procedural Fairness in Competition Proceedings (Cheltenham, Edward Elgar, 2015) 84-107]. 

However, in a line of argument that clearly restricts the general approach outline above, the CJEU also recognises that such interference with corporate freedom of expression can be compatible with the applicable rules under the Charter and the ECHR if it serves a valid social purpose, not least because 'the freedom to conduct a business ... must be considered in relation to its social function' (para 66). In that regard, the CJEU considers that 'While those freedoms may nevertheless be limited, any limitation on their exercise must ... be provided for by law and respect the essence of those rights and freedoms. Furthermore ... subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others' (para 68).

In the assessment of the proportionality of the measure restricting Neptune's right to make any claims whatsoever about its products, the CJEU focusses on three aspects. First, that the restriction is created by law. Second, that 'the freedom of expression and information of the person carrying on the business is not affected by those provisions, since they merely make the information which may be communicated to the consumer regarding the sodium or salt content of natural mineral waters subject to certain conditions' (para 70). And, third, that 'far from prohibiting the production and marketing of natural mineral waters, the legislation at issue ... merely controls, in a very clearly defined area, the associated labelling and advertising. Thus, it does not affect in any way the actual content of the freedom to conduct a business' (para 71). This comes to establish that, provided that the restriction is not absolute and that it derives from a legal source, then a claim under Art 11 Charter is unlikely to prosper. However, this will not always be the case and, in particular for products other than foodstuffs, compliance with all these conditions may be difficult to achieve--particularly if the products are totally unregulated, which makes the first condition difficult to achieve unless general consumer protection or unfair competition rules fill that possible regulatory gap.

Further to these general considerations, the CJEU also assesses the purpose and proportionality of the restrictions. In that regard, it gives particular weight to several factors related to the fact that the 'limitations on the use of the claims and indications ... aim to ensure a high level of consumer protection, to guarantee adequate and transparent information for the consumer relating to the sodium content of drinking water, to ensure fair trading and to protect human health' (para 72), In particular,
75 ... the determination of the validity of the contested provisions must be carried out in accordance with the need to reconcile the requirements of the protection of those various fundamental rights protected by the EU legal order, and striking a fair balance between them ...
76 With regard to judicial review of the conditions of the implementation of the principle of proportionality, the EU legislature must be allowed a broad discretion in an area such as that involved in the present case, which entails political, economic and social choices on its part, and in which it is called upon to undertake complex assessments ...
77 ... even if a claim or indication referring to the sodium content of natural mineral waters associated with chloride ions can be regarded as being substantively correct, the fact remains that it is incomplete if it suggests that the waters are low in sodium whereas, in reality, their total sodium content exceeds the limits provided for by EU legislation ... 
78 In such a situation, the information displayed on the packaging, labels and in advertising containing that claim or indication may mislead the consumer as to the sodium content of the mineral waters ... (C-157/14, paras 75-78, references omitted).
There is a final step in the analysis concerning certain claims of Neptune that EU legislation was unnecessarily restrictive, which the CJEU sorts out by deferring to the EU legislator's action under the precautionary principle. Thus, overall, the CJEU has no qualms in restricting the previously recognised corporate right to freedom of expression and information on the basis of a pretty straightforward analysis of the labelling requirements coupled with a high degree of deference on the basis of the precautionary principle.

Overall, the outcome of the case must be welcome (and follows some other positive developments in EU food law). However, in my view, the trouble is in the process that the CJEU had to follow before upholding the restrictions on labelling of mineral waters for consumer protection health-related reasons. It would seem to me that these issues would be better reconducted under a standard case of judicial review of the administrative action and the underpinning legal rules imposing labelling requirements. In that regard, it seems quite clear that Neptune would not have had legal standing to challenge the European rules on mineral water labelling. However, it managed to trigger the same level of judicial review through a claim of corporate human rights (certainly artificially overblown). Is it time to reconsider, once and seriously, a change in the rules for judicial review of EU acts, or are we better off by indulging endlessly in this ridiculous discussion on corporate human rights?