The Regulation of Public Procurement as a Key Element of European Economic Law

• Date: 01 June 1998
• DOI: http://doi.org/10.1111/1468-0386.00050
• Published date: 01 June 1998

The Regulation of Public Procurement

as a Key Element of

European Economic Law

Christopher Bovis

Abstract:This article aims to investigate the regulation of public purchasing from an

interdisciplinary perspective. It endeavours to provide its audience with the broad

framework of the function of public procurement and public purchasing in the common

market and the Member States, as well as the legal and socio-economic parameters

which determine this newly regulated field. It also intends to enable its readers to

understand and appreciate the impact of the liberalisation of public markets on the

whole process of European integration, as it places the regulation of public

procurement within the framework of the four freedoms, as well as within the EU’s key

policies.

I Public Sector Regulation and the European Integration Process

The Rome Treaty and the amending TEU have envisaged the creation and functioning

of a common market.

1

The European Integration process is primarily an economic

one, with clear political spillover effects from its accomplishment. Not only free and

unobstructed mobility of factors of production (labour and capital),

2

but also the

creation of a single currency and the adoption of a common economic and monetary

policy

3

are required by the Treaties for the accomplishment of their aims. European

integration is based upon a customs union, which will gradually become an economic,

monetary and, finally, a political union. Clearly, the tool for such transformation is

economic integration through the approximation of Member States’ economic policies

and abolition of obstacles to trade. The level of success of economic integration in

Europe will determine the level of success in political integration, as the ultimate

objective stipulated in the Treaties.

As European integration and the establishment and functioning of a genuinely

common market have materialised, the focus of attention of policy and law makers at

both centralised and national levels has concentrated on eliminating non-tariff

barriers that still exist and pose obstacles to the operation of the common market. The

elimination of non-tariff barriers has been the target of European institutions over the

* Deputy Director, Institute of European Public Law, University of Hull. Visiting Professor, Queen’s

University of Belfast.

1

Article 2 EC.

2

Articles 48 and 67 EC respectively.

3

Article 102a EC.

European Law Journal, Vol. 4, No.2, June 1998, pp. 220–242

© Blackwell Publishers Ltd. 1998, 108 Cowley Road, Oxford OX4 1JF, UK

and 350 Main Street, Malden, MA 02148, USA

Bovis 6 18/8/98 1:18 pm Page 220

past decade, particularly with reference to the completion of the single market project

4

at the end of 1992. European integration, as an economic exercise which was based

upon the concept of a customs union,

5

could only succeed if non-tariff barriers were

abolished. Such responsibility lies predominately in the hands of the Member States,

where, through harmonisation of their legislation and approximation of their

administrative systems,

6

genuinely competitive patterns of trade will bring about the

desirable effects of economic growth and consequently an improvement of working

and living conditions throughout the common market.

7

There have been two strategic plans for the economic integration of the Member

States, which have been implemented by European institutions and transposed to law

and policy by Member States. The first is the abolition of all tariff and non-tariff

obstacles to trade amongst Member States. The second is the establishment of an

effective, workable and undistorted regime of competition within the common market,

where abuse of market dominance and cartelisation could have serious economic

implications in its functioning. The first plan appears to have a static effect aimed at

abolishing all administrative and legal obstacles to free trade and had, as its focal

point, Member States and their national administrations, whereas the second has been

addressed at industry level and has a more on-going and dynamic effect.

All tariff barriers were abolished by the end of the first transitional period,

8

so

customs duties, quotas and other forms of quantitative restrictions could no longer

hinder the free flow of trade between Member States. Non-tariff protection, however,

has proved more difficult to eliminate, as it involves long-established market practices

and patterns that could not change overnight. In the list of non-tariff barriers we

include public monopolies, fiscal factors such as indirect taxation, state aid, technical

standards and, last but not least, public procurement. The above could distort the

operation of the common market and its fundamental freedoms by means other than

tariffs. Trade patterns are hindered as a result of the existence of non-tariff barriers,

and all the attention has been directed on how to eliminate them.

The Commission’s White Paper for the Completion of the Single Market

9

identified

existing non-tariff protection and provided the framework for specific legislative

measures to address the issue at national level. A set of directives was deemed

necessary for the completion of the single market by the end of 1992, and the time

table was set out in the Single European Act, which in fact amended the Rome Treaty

by introducing, inter alia, the concept of the single market. The single market, in

quantifiable terms, could be considered as something less than the common market,

but was perhaps the first and most important part of the latter. As mentioned earlier,

public procurement was pointed out as an actual non-tariff barrier and action was

scheduled to address the issue. The Commission gathered its momentum by referring

to two notable studies,

10

where empirical proof of the distorted market situation in the

June 1998 Regulation of Public Procurement

© Blackwell Publishers Ltd. 1998 221

4

White Paper for the Completion of the Internal Market, (COM) 85 310 fin, 1985.

5

Article 9 (1) EC.

6

Cf, Articles 100, 100A, 100B, the latter two being introduced by the SEA.

7

Cf, Articles 2, 3 and 6 of the Rome Treaty.

8

The period from the establishment of the European Communities until 31/12/1969. Cf, Art 8(7) EC.

9

White Paper for the Completion of the Internal Market, (COM) 85 310 fin, 1985.

10

Cf, The Cost of Non-Europe, Basic Findings, Vol 5, Part A; The Cost of Non-Europe in Public Sector

Procurement, (Official Publications of the European Communities, 1988). Also, the Cechinni Report 1992

The European Challenge, (Wildwood House 1988).

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