C-114/86

OPINION OF MR LENZ — CASE 114/86

O P I N I O N OF M R ADVOCATE GENERAL LENZ delivered o n 30 J u n e 1988 *

Mr President, service contracts were to be determined by a Members of the Court, decision of the Council of Ministers. Since no such rules were adopted, Articles 24 to 27 of Protocol No 2 to the First ACP-EEC Convention ('Lomé I') applied to those A — Facts matters (see Annex XIV to Lomé II). 3 According to Article 24 of Annex XIV, technical cooperation contracts were to be awarded by mutual agreement and certain 1. The case on which I deliver my Opinion contracts could be awarded following today concerns questions regarding the competitive tendering. According to Article technical cooperation provided for in 25 of the Annex, for each operation of Chapter 10 of Title VII of the Second technical cooperation which was to involve ACP-EEC Convention of 31 October 1979 1 a mutual agreement procedure, the (hereinafter referred to as 'Lomé II') and in Commission was to compile a list of selected Chapter 3 of Title III of the Third candidates from Member States or ACP ACP-EEC Convention of 8 December States, selected according to criteria guaran- 1984 2 (hereinafter referred to as 'Lomé teeing their qualifications, experience and III'). independence and taking into account their availability for the proposed undertaking. From that list the ACP State concerned freely chose a candidate. When competitive 2. What is meant by technical cooperation tendering was resorted to, the list of may be ascertained from Article 138 of selected candidates was to be drawn up in Lomé II and Article 208 of Lomé III (for close collaboration with the Commission example, the carrying out of studies, the and the ACP State concerned on the basis provision of supervisory, advisory or admin- of the abovementioned criteria and the istrative services during the implementation contract was awarded to the listed candidate of a project, technical assistance and so that submitted the economically most forth). advantageous tender.

5. In Lomé III the criteria for the selection Agreement of February 1985. 6 Since that of service contractors are set out in Article practice (the details of which I shall discuss 209 (2). According to Article 210 of this later) was criticized by some Member Convention, service contracts are to be States, an agreement was reached with the awarded on the basis of restricted invi- Commission in April 1983 in the competent tations to tender and certain contracts may Council Working Party to the effect that, be awarded by direct agreement. According during a trial period (from 1 June 1983 to to Article 211 (1) (a), for each technical 28 February 1985), 81.75% of projects cooperation scheme for which an invitation would be allocated on the basis of the quota to tender is to take place, a short list of system and in the case of 18.25% of all candidates from the Member States or the operations no consideration would be given ACP States is to be drawn up by agreement to national quotas (in this case, where larger between the Commission and the ACP State sums were involved, open invitations to concerned, where appropriate following tender were addressed to undertakings in all pre-qualification; candidates are to be Member States, which numbered 10 at that chosen by reference to their legal time). and financial situation, qualifications, experience, independence, availability and the criteria and principles set out in Article

6. Where the procedure by direct applied. . . '. This intention was also agreement is applied, the successful declared by the Commission representative candidate is to be chosen by the ACP State at a meeting of the Working Party on 18 on the basis of a Commission proposal and December 1985 (Annex 4 to the a candidate may also be proposed by the application). It was then actually put into ACP State. effect: at a meeting of the Working Party on 6 March 1986 the Commission represen- tative stated that 'the system introduced on a trial basis in 1983 was no longer applied

5 — OJ L 347, 22.12.1980, p. 210 el seq. 6 — OJ L 86, 31.3.1986, p. 210 et seq.

OPINION OF MR LENZ — CASE 114/86

revert, with effect from 1 March 1986, to B — Opinion the quota system applied before 1 June 1983.

I — Admissibility of the application

9. The United Kingdom does not consider this decision to be lawful. It had already 13. Much of the argument has been taken pointed this out in a letter sent to the Head up by the question whether the statement of Directorate-General VIII on 21 March made by the Commission representative at 1986 and it did so again in a letter of 28 the meeting of the Working Party on 6 April 1986 in which the Commission was March 1986 concerning the reversion to the requested to produce the documents quota system previously applied as regards embodying the terms of its decision. the entry into service contracts indicates an act which is open to challenge for the purposes of Article 173 of the EEC Treaty.

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known to them. In such circumstances, it is 17. Furthermore, it must also be stated not possible, in the Commission's view, to forthwith that the short list undoubtedly see any necessity for any judicial review had definitive effect under Article 25 (1) of within the meaning of Article 173 of the Annex XIV to Lomé II because, as is stated EEC Treaty and a political review is the therein, the ACP State could choose only most which may be considered appropriate. from the selected candidates on that list. Although, in the case of competitive tendering under Article 25 (2) there appeared to be a difference in so far as under that provision the list of selected 15. 1. As far as this issue is concerned, it candidates was to be drawn up in close must be borne in mind first of all that cooperation between the Commission and responsibility for carrying out the the ACP State concerned (the procedure Commission actions referred to in Article 25 under Article 211 of Lomé III is similar, of Annex XIV to Lomé II and in Article too,), in practice apparently — so we have 211 of Lomé III, namely the drawing up of been informed — the lists drawn up by the a short list of candidates, is clearly entrusted Commission are normally accepted by the to the Head of Directorate-General VIII ACP States and only very occasionally will (Development) as the chief authorizing an ACP State extend the list submitted to it. officer (within the meaning of Article 121 of Lomé II) so that neither the competent Member of the Commission nor even the Commission as a body acts in this regard.

O P INIO N OF MR LENZ — CASE 114/86

quite clear from the case-law on Article 173 light on the question whether an internal of the EEC Treaty that a measure must be instruction of a department responsible for a characterized primarily in the light of its certain measure, which is doubtless intended subject-matter and content; in other words, as guidance for the department itself as the the nature of a measure must be considered body giving the instruction, may be and not its form. This was made clear in the regarded as a measure that is susceptible of judgments in Joined Cases 16 and 17-/62 8 challenge. and in Case 60/81. 9 T h e judgment in Joined Cases 316/82 and 40/83, 10 according to which, in the law relating to Community officials, oral decisions are also possible, is also of some relevance in this 20. Although in the judgment in Case context. Consequently, it is certainly not 54/65 1 2 the Court ruled out judicial review possible to conclude from the circumstance of a statement regarding the concept of that the formal requirements listed in scrap made by the Scrap Equalization Fund Decision N o 22/60 were not observed when the instructions in question were drawn up in existence at that time, it must not be that the measure concerned is not open to overlooked that the Court held that no challenge. decision was involved in that case on account of the fact that the Scrap Equali­ zation Fund's powers had been revoked and hence it no longer had the power to adopt such measures at the material time.

8 — Judgment of 4 December 1962 in Joined Cases 16 and 17/62 Confédération nationale des producteurs de fruits et légumes and Others v Council [1962] ECR 471. 22. 3. I also have the impression that no 9 — Judgment of 11 November 1981 in Case 60/81 IBM v compelling precedents for the point at issue Commission [1981] ECR 2639. here can in fact be derived from the 10 — Judgment of 9 February 1984 in Joined Cases 316/82 and 40/83 Nelly Kohler vCourt of Auditors [1984] ECR 641. 11 — Judgment of 12 February 1960 in Joined Cases 16 to 18/59 12 — Judgment of 16 June 1966 in Case 54/65 Compagnie des Geitling Ruhrkohlen-Verkaufigesellschafi mbH, Mausegatt forges de Chãtillon v High Authority of the ECSC [1966] Ruhrkohlen-Verkaufigesellschąįt mbH, Präsident Ruhr- ECR 185. kohlen-Vtrkaufsgesellscbaft mbH and Others v High 13 — Judgment of 17 July 1959 in Case 20/58 Phoenix- Authority of the European Coal and Steel Community [ 1960] Rheinrohr AG v High Authority of the ECSC [1959] ECR ECR 17.

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case-law concerning the Development Tund, States may bring an action before the Court which has also been cited by the challenging Commission measures taken in Commission. such a context was not discussed.

According to not of direct concern to them (see the the case-law of the Court (Case 22/70 18 ), judgments in Cases 126/83 14 and 118/83 15) that term covers a Council decision on the and in other cases of this kind it was negotiation and conclusion of an agreement stressed that undertakings had legal (the decision laid down rules of conduct relations only with the associated States, and contained procedural provisions) and which awarded the contracts, that no (according to the judgments in Cases Community decisions were taken with 230/81 19 and 108/83 20) resolutions of the regard to them (see the judgment in Case European Parliament (on the holding of 33/82 16) and that the undertakings plenary sessions and meetings of committees remained outside the exclusive dealing and political groups at a certain place and conducted between the Commission and on the work of the Secretariat and the ACP States (see the judgment in Case technical services). 267/82 17 ).

Commission [1984] ECR 2769. 15 — Judgment of 10 July 1985 in Case 118/83 CMC v 18 — Judgment of 31 March 1971 in Case 22/70 Commission v Commission [1985] ECR 2337. C o u n c i l [1971] ECR 263. 16 — Judgment of 19 September 1985 in Case 33/82 /Murri Frères 19 — Judgment of 10 February 1983 in Case 230/81 Grand v Commission [1985] ECR 2759, at p. 2780. Duchy of Luxembourg v European Parliament [1983] ECR 17 — Judgment of 24 June 1986 in Case 267/82 Développement 255. SA and Clemessy v Commission [1986] ECR 1907, at 20 — Judgment of 10 April 1984 in Case 108/83 Grand Duchy of

OPINION OF MR LENZ — CASE 114/86

Whoever is surprising since most of the consultants excluded from that group is normally qualifying for consideration do not have excluded from the award procedure for sufficient knowledge about the service good. For undertakings which the contracts to be awarded nor the necessary Commission does not put on the short list, relations with all the ACP States so that no the Community pre-selection measure is pressure to supplement the lists can come therefore quite final. Consequently, from them). If, however, those powers of considering the matter in that light, it the Commission, which undoubtedly include cannot be said that the instructions regarding the drawing-up of the short lists a certain margin of discretion (how wide have no legal effects. may for the moment remain an open

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cooperation with the ACP States and States which had exceeded their annual because it is hard to see why a Member quota were excluded (Annex 4 to the State which does not agree with the Application, page 3) and the aforemen- Commission's practice should have to wait tioned memo of 21 February 1986 speaks of for a definite measure, that is to say the giving top priority to consultancy firms from establishing of a specific short list. countries showing a substantial shortfall. It appears from a memo of 17 September 1984, also appended to the Commission's reply to the Court's request, that where relatively small amounts are involved, only one consultant is to be short-listed 'without reference to guidance on Member States' II — Substance percentages', whereas in all other cases consultants are to be chosen 'pref- erably . . . according to current guidance on percentages for EEC Member States'.

29. 1. The Court's consideration of the case should be preceded by a description of the quota system employed by the system, as it emerges from the documents submitted.

OPINION OF MR LENZ — CASE 114/86

In any event, connection with entry into service contracts it is certainly not possible to achieve a short and it is impossible to infer such a criterion list solely on the basis of the express criteria from the Conventions. In fact, the correct and if, pursuant to the discretion view is that the important selection criteria undoubtedly remaining to it, the for use in drawing up lists of selected Commission has regard, inter alia to candidates are set out exhaustively in Article candidates' nationality it must be 25 of Annex X I V to Lomé II and in Article acknowledged that that serves the objective 211 of Lomé III, and hence there is no of achieving a satisfactory pattern of scope for additional criteria of the kind at relations between all the Member States and

the Netherlands. could easily result in the very undertakings likely on closer examination to provide the most effective assistance being excluded on the ground of nationality from the circle of undertakings fulfilling the criteria set out in 35. (a) It can be said straight away that the Article 25 of Annex XIV to Lomé II and in principle characterizing Title VII of Lomé II Article 211 of Lomé III. and Title III of Lomé III on financial and technical cooperation is that of equal treatment of participating undertakings or — to put it another way — the exclusion

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However, it cannot be General, who issued the contested denied that Articles 108 and 125 of Lomé II instructions) is to ensure equality of (Articles 192 and 232 of Lomé III) have conditions for participation in invi- general application and, in particular, it tations to tender and see to it that there cannot be considered that the sole purpose is no discrimination; of Article 125 (Article 232 of Lomé III) is to identify the geographical area from which persons eligible to participate may come and point to the need for equal treatment (iii) Article 125 of Lomé II (corresponding between undertakings from the Community to Article 232 of Lomé III), under and undertakings in the ACP countries. which, as regards operations financed by the Community, participation in invitations to tender and contracts is to be open on equal terms to all natural persons and companies falling within the scope of the Treaty and to all natural persons and companies of the 38. (b) N o lengthy explanations are needed ACP States; and on top of this to show that the prominent importance attached as a result of the quota system to the nationality of undertakings taken into consideration gives rise to (iv) Article 126 of Lomé II (corresponding unequal treatment within the meaning of the to Article 233 of Lomé III), which provisions cited.

time after time undertakings which basically 37. In my view, the principle expressed should be excluded because the relevant thereby is diminished only to an insigni- national quota has been exhausted are taken ficant degree by the fact that the last- into consideration all the same on the mentioned provisions refer solely to works ground that they have quite special and supply contracts (which play no role in competence. In fact, that simply means that these proceedings but which, nevertheless, those undertakings have to satisfy higher as we have been informed, account for requirements (they must be 'better') and about 8 0 % of the disbursements from the that, owing to the nationality criterion,

which entails the application of a stricter 40. However, as far as the wording of the standard to them, they are not given equal Lomé Conventions is concerned, they treatment. manifestly contain no provision providing for the nationality-based procedure adopted by the Commission. Rather, special provisions allowing for derogations from the requirement for equal treatment are provided only in favour of the ACP States, 39. (c) I also agree with the applicant's such as, for instance, Articles 130 and 140 statement that derogations from that of Lomé II and Articles 209 and 236 of principle may only be accepted where they Lomé III. Moreover, it is certainly not can be derived clearly from the wording or possible to try to justify nationality quotas the scheme of the Convention, precisely by reference to the spirit of the Conventions because an instrument is involved which the by arguing that they are concerned to give Community accepted as such and which rise to relations whose intensity is as confers on the Commission, that is to uniform as possible between all the Member say, a Community institution, important States and all the ACP countries. If that management powers. If the Member States, consideration manifestly has no significance which are also parties to the Convention, in the case of works and supply contracts, had genuinely considered that it was which account for by far the largest share of important to take account of the nationality the development assistance, it cannot really of eligible undertakings, they would be seen why that idea should have dominant certainly have made express reference to importance in the case of service contracts. that factor, which was important from their point of view but which, as far as the Community itself is concerned, cannot have any relevance. In this respect it is doubtless not without interest that in the law relating to Community officials it was considered that express reference had to be made to the possibility of taking account of nationality (which under Article 7 of the Staff Regu- lations is in itself to be regarded as being, so to speak, extraneous), and that was in fact 41. As against that it cannot be argued that done in Article 27 of the Staff Regulations, the importance of consultancy contracts which states that recruitment is to be on the goes far beyond their share in value terms, broadest possible basis from among on the ground that they often pave the way nationals of Member States of the for subsequent supply or works contracts. Community. It is also of interest in that connection that strict requirements are laid down in the case-law in that regard, it having repeatedly been emphasized that where the qualifications of the various candidates are equal, nationality may play a decisive role in order to secure geographical balance. 21

But it cannot justify reading the nationality candidate, but on which is the cheapest criterion, which conflicts with the basic possible service). In any event, the argument tendency of the other provisions of the that it is practically impossible for the Convention, into a provision which lays Commission to identify a small group down objective quality criteria. initially on the basis of the criteria set out in the provisions in question is not plausible. Indeed the Commission itself stated in the course of the proceedings — with regard to criticism in that regard in the Court of Auditors' report — that the method for assessing eligible undertakings has since

comparison with general invitations to tender and because attention must be paid, inter alia on cost grounds — frequently rela- tively small sums are involved — to reducing 44. If one accepts the existence of a certain the number of candidates), this does not margin of discretion with regard to the necessarily mean that in this case the establishment of the short lists (which it candidates' nationality can be made into a would be difficult to deny), the fact determining factor. It is not, in my view, certainly still remains that in the context of convincing to interpret the aforesaid two that discretion nationality quotas may not provisions as meaning that initially play a predominant role, if only because that candidates are to be selected on the basis of would be liable to endanger a characteristic the criteria laid down, and that subsequently principle of development assistance, which a reduced list selected from those candidates can be inferred from a number of provisions can be compiled at the Commission's free cited by the applicant from the two discretion (with, inter alia, national quotas Conventions at issue, namely ensuring the

At most, the characteristic of interpretation that the express, listed criteria nationality may play a quite subordinate are primiarily to be used also in drawing up role in the context of any discretion the short list (and — in Article 25 of Annex (comparable to that which exists in the law XIV to Lomé II — also probably the price, relating to Community officials, that is to since in the case of an actual project, it will say when the objective equality of the possibly depend, not on who is the best candidates has been established) and it can qualified and hence the most expensive even be held to have a certain utility in so

45. (e) Lastly, it is plain that I am not convinced by the Commission's reference to the practice followed by other institutions active in the sphere of development 49. 3. Consequently it is in fact unnecessary assistance (World Bank, Inter-American to consider the applicant's other two Development Bank, African Development grounds, namely the alleged infringement of Bank, U N Development Programme). Article 7 of the EEC Treaty (according to which any discrimination on grounds of nationality within the scope of application of the Treaty is prohibited) and the alleged 46. From what has been stated it would infringement of the objective defined in appear that in those institutions it is not Article 3 (f) of the EEC Treaty (the nationality quotas in the sense of the institution of a system ensuring that compe- practice adopted by the Commission which tition in the common market is not play a role, but simply the desire to secure distorted). However, for the sake of the widest possible geographical distribution completeness I shall append at least a few of service contracts. Furthermore, the point brief remarks on those claims. should be made that, of course, practices of purely international organizations cannot simply be transposed to the qualitatively quite different type of cooperation which takes place under the Lomé Conventions, to which the Community itself is a party (as a result of which quite specific allowance has (a) Article 7 of the EEC Treaty to be made for the interests of Community citizens) and from which in addition clear principles of substantive law can be derived with regard to the treatment of candidates for service contracts. 50. The applicant argues that it can be inferred from Article 228 of the EEC Treaty that agreements concluded by the 47. (f) Consequently, it must be held with Community (as Lomé II and III were) regard to the applicant's first conclusion should be compatible with the Treaty. It that the quota system, as described in these also considers that acts of the Commission proceedings, to which the competent issued in connection with such agreements Commission department decided in March fall within the field of application of the 1986 to revert in full is to be regarded as Treaty; consequently, they are covered by being incompatible with the Second and the prohibition set out in Article 7 and that Third Lomé Conventions, and hence the precludes attaching critical importance in application for it to be declared void ought forming such acts to the location of the to be granted. head office of an undertaking.

51. Without question this sounds at first set out in Article 7. In practice, there is no quite convincing. In any event, it is hard to getting round the fact that we are dealing argue against this view that the quota with mixed agreements, that is to say system at issue in this case takes account of agreements which have also been signed by the differing situations of the Member the Member States, and while in those States as reflected in their differing financial agreements powers have been transferred to contributions to the Development Fund the Commission, that does not necessarily (which is used to finance the service mean that they are exercised solely in the contracts), and that it should be regarded name of the Community, but it appears (for from that point of view as objectively instance from Article 11 of the Internal

as having sole competence for the in the first place two judgments relating to conclusion of the relevant agreement; by commercial policy. In the judgment in Case contrast, it is not possible to infer from that 41/76 23 a restriction in intra-Community decision the principle that a particular mode trade in products from non-member of financing enables derogations to be made countries which were in free circulation in a from basic principles of Community law. Member State was held to be permissible under and with regard to Article 115 on the ground that the Community commercial policy had not yet been fully achieved.

53. However, the question has rightly been achieved there was justification for raised as to whether it can in fact be said restrictive measures with respect to goods that acts of the Commission in connection which were in free circulation in a Member with the conclusion of service contracts in State. I also have in mind the judgment in the context of technical cooperation with Case 153/73, 25 which justified in the sphere the ACP countries fall completely within the field of application of the Treaty and 23 — Judgment of 15 December 1976 in Case 41/76 Doncker- wolcke v Procureur de la République and Others [1976] ECR therefore are fully subject to the prohibition 1921. 24 — Judgment of 5 March 1986 in Case 242/84 Tezi BV v Minister for Economic Affairs [1986] ECR 933. 22 — Opinion 1/78 of the Court of 4 October 1979 given pursuant to the second paragraph of Article 228 (1) of the 25 — Judgment of 2 July 1974 in Case 153/73 EEC Treaty on the International Agreement on Natural Holtz & Willemsen GmbH v Council and Commission Rubber [1979] ECR 2871. [1974] ECR 675.

59. In my view it is quite certain that in this 56. Neither can support be mustered against connection one must leave it out of account the Commission's proposition from the that in any event there will be a restriction of judgment in Case 126/82. 26 Although the the number of persons being considered for judgment contains certain (in the final service contracts and hence the competition analysis, negative) observations on Article 7 will be restricted in each case to a few of the EEC Treaty, it cannot simply be interested persons. That is provided for concluded therefrom that the Court expressly in the Conventions and it can also assumed that although there were lacunae in be held to be in the interest of rational the common transport policy, the development assistance (because it means prohibition of discrimination applied in full that only seriously interested undertakings in that field. are appointed for work, which in any event by its nature does not lend itself readily to 26 — Judgment of 25 January 1983 ¡n Case 126/82 Smit Transport BV v Commissie Grensoverschrijdend Beroeps- general invitations to tender, and because it goederenvervoer[1983] ECR 73. enables costs to be kept down as compared

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61. For the rest, the case-law cited by the applicant in this connection scarcely yields any decisive support. This is true of the judgment in Joined Cases 6 and 7/23, 27 which was concerned with an undertaking with a dominant position trying to eliminate 60. Whilst, on the other hand, it cannot be a competitor and hence involved the accepted in this connection that the question of the effects of behaviour on the objective set out in Article 3 (k) has priority competitive structure within the common over that set out in Article 3 (f) (in so far as market. That is also true of the judgment in it is a matter of achieving with the help of Case 249/85. 28 Although that judgment the national quotas the most uniform refers to the Community institutions having possible development of the Members to take account of the requirement of States' relations with the ACP countries — I fairness in trade, I cannot see how that have already said everything which needs to principle can seriously be affected by the be said on this subject), it must, however, be quota system. considered doubtful whether the selection method in question — leading to objectively deserving candidates not being included on the list and others being included only because of their nationality — actually does have repercussions on the situation in the Community (given that services to be provided outside the Community are involved) such as to involve significant 62. Consequently neither can it be taken effects on competition within the meaning that Article 3 (f) of the EEC Treaty might of the relevant provisions on competition. afford a further ground for declaring the Nevertheless, it can be assumed that decision void. favouring undertakings which are basically unworthy of participating is not the general 27 — Judgment of 6 March 1974 in Joined Cases 6 and 7/73 Istituto chemioterapico italiano and Others v Commission rule. On the other hand, it has not been [1974] ECR 223. shown that failure to consider intrinsically 28 — Judgment of 21 May 1987 in Case 249/85 Albako v Bundes- anstalt für landwirtschaftliche Marktordnung [1987] ECR worthy undertakings on nationality grounds 2345.