Varec ruling values confidentiality ahead of transparency in tendering

The conflict between maintaining the confidentiality of industrial data and facilitating open competition for public contracts lay at the heart of last week's European Court of Justice ruling in Case C-450/06 Varec SA v Belgium, Diehl Remschied GmbH & Co intervening (click here for the IPKat's note on the Advocate General's Opinion in this case).

Right: for the not-so-tender -- real leopard tracks

To summarise the issue: back in December 2001 the Belgian government invited tenders for the supply of track links for Leopard tanks for which Varec and Diehl both submitted bids. Belgium didn't think Varec's bid met its technical selection criteria and also thought it unlawful. Diehl's bid, however, was unobjectionable, well priced and fitted all the criteria. Unsurprisingly the contract went to Diehl. In Belgian proceedings to annul the award of the contract, Varec wanted to see the details of Diehl's submission and was told it couldn't because that information was confidential. The trial court stayed the proceedings and asked the European Court of Justice a question for a preliminary ruling on whether the provisions of EU law relating to public tenders required the relevant authority to ensure confidentiality and observance of the business secrets contained in the files communicated to it by the parties to the case, including the contracting authority, while being entitled to appraise itself of such information and take it into account.

The European Court of Justice ruled as follows:

"[The law] must be interpreted as meaning that the body responsible ... must ensure that confidentiality and business secrecy are safeguarded in respect of information contained in files communicated to that body by the parties to an action, particularly by the contracting authority, although it may apprise itself of such information and take it into consideration.

Right: another Belgian phenomenon -- Leopold tracks

It is for that body to decide to what extent and by what process it is appropriate to safeguard the confidentiality and secrecy of that information, having regard to the requirements of effective legal protection and the rights of defence of the parties to the dispute and, in the case of judicial review or a review by another body which is a court or tribunal within the meaning of Article 234 EC, so as to ensure that the proceedings as a whole accord with the right to a fair trial".

The IPKat notes that the European Court of Justice appears to value the confidentiality of information ahead of the entitlement to disclosure in the interests of open competition and fair play, whereas Advocate General Sharpston, while recognising the need for confidentiality, appeared to give it a more subservient role as against the entitlement of bidders for a contract to see that competing offers are fairly evaluated. Merpel says, yes but where does this leave the unsuccessful bidder who has been rejected on technical grounds that it may believe are open to challenge?

How the leopard got his spots here
The IPKat's favourite Belgian tank here
Varec ruling values confidentiality ahead of transparency in tendering Varec ruling values confidentiality ahead of transparency in tendering Reviewed by Jeremy on Tuesday, February 19, 2008 Rating: 5

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