3. Public procurement and state aid
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 The purpose of EU public procurement legislation is to create cross-border competition within the European Union. The aim is to ensure suppliers from all EU member states equal access to bidding for public contracts. This promotes cross-border competition and leads to procurement on the best terms possible. In 2005, the work of the Danish Competition Authority within the field of public procurement was dominated by the new Directives which entered into force in Denmark on 1 January 2005. The first year with the new Directives Denmark was the first of the EU member states to implement the two Procurement Directives (2004/17 and 2004/18) which entered into force on 1 January 2005. For the past year, the Danish Competition Authority has received several inquiries regarding the new rules. Through the operation of the daily hotline, the Authority has obtained an overview of which of the new rules present the greatest challenges for the affected authorities and private entities and in which areas the need for new guidance is present. Some of the main areas causing difficulties in Denmark concern the rules regulating the selection of candidates and the award of contracts due to the changes made to the rules. New practice by the courts has to be incorporated. Another difficult area relates to the calculation of the contract value in regard to the thresholds in the Directives. In order to give the contracting authorities better insight into the rules, the Danish Competition Authority published a guide regarding the thresholds and the calculation of contract values. Among other things, the publication seeks to give answers to the following issues:
The new Act on Tendering Procedures for work contracts A new Act on Tendering Procedures for Work Contracts below EU thresholds (Tilbudsloven) was adopted in the spring of 2005 and entered into force on 1 September 2005. As its predecessor, the new Act is based on the principles of the Directives and on the basic principles of the EU Treaty. However, the Danish Act on Tendering Procedures offers more flexible procurement methods than those in the Directive, especially regarding the use of the negotiated procedure or negotiation within other procedures. The most significant changes made are:
The aim of the new Act is a simplification of the rules of public procurement below the EU thresholds. In November 2005 the Danish Competition Authority published new guidelines to the new Act on tendering procedures for work contracts below EU thresholds. The new publication addresses issues such as:
Complaint cases and informative statements Whenever a tenderer has reason to believe that a contracting authority runs counter to public procurement legislation, a complaint can be submitted to the Competition Authority. In order to submit such a complaint, the tenderer is offered an easily accessible, rapid and inexpensive way of dealing with the procurement problems. On receipt of a complaint, the Competition Authority contacts the contracting authority in question, examines the case and presents solutions for potential violations. In most cases, this results in the infringements being remedied and the contracting authorities complying with the rules. However, the Competition Authority does not deal with cases where a contract has already been signed, nor does it deal with claims for damages. In 2005, the Competition Authority received a total of 39 complaints. In 14 of these cases the Authority expressed criticism of the contracting authority. In addition to the informal problem solving system, the Competition Authority is responding promptly to procurement questions submitted by the contracting authorities, tenderers and advisors via a telephone hotline service. Written informative statements are limited to questions of general interest concerning law interpretation. Average duration of case handling, Procurement 2002-2005 (months)
The Public Procurement Network (PPN) In 2005 the cooperation within the PPN has been reinforced. All members have shown interest in using the network for exchanging experiences, and especially the “new” EU member states have found an easy way of making contact with colleagues in other countries. PPN has launched common projects. In this context, the Danish Competition Authority has developed an electronic guide of central purchasing bodies across Europe. The guide can be found at www.ks.dk/english/procurement/guide/ 3.1 State aidIn 2005, the Commission launched its State Aid Action Plan - a roadmap for state aid reform 2005 - 2009 (SAAP). With the appointment of the new Commissioner Mrs. Neelie Kroes and her announcement that the Commission's future focus will revolve around the state aid rules making them as efficient as the rules in Articles 81 and 82, the SAAP was a highly anticipated document. To make the state aid rules as efficient as Articles 81 and 82 would indeed require a reform of the current state aid rules. Thus, expectations were high when the document was finally presented in the summer of 2005. The high expectations, however, were not met entirely. From a Danish point of view, the plan did not qualify as a true reform. The traditional approach to state aid was preserved and the apparent lack of an economic approach proved disappointing. However, the SAAP, nevertheless, is one of the most important documents on the state aid scene in recent times. The Lisbon Agenda mandates less and better targeted state aid, which Denmark supports entirely. Denmark believes that state aid should always be the last option and that it should be used only where a clearly defined market failure exists - such as the environment. Distortion of competition is the reason for having state aid rules. However, in some cases the potential gain of state aid can justify the distortion, as with de minimis aid. There has to exist a reasonable equilibrium to justify aid, but determining whether the equilibrium exists, is not an easy task. Other barriers of trade are often based on toll or measures of equivalent effect being imposed on certain goods. In this situation, it is rather simple to determine the distortion on competition. However, the problem concerning state aid is that existing methods to analyse the effect of an aid are entirely based on an ex post analysis. Consequently, state aid has to be given in order to measure its effect on competition and then the distortion may very well have occurred. The Danish Competition Authority has subsequently decided to explore the possibilities of developing a method of ex ante analysis of the economic effects of competition. The hope is once to be able to develop certain criterias that can be taken into account prior to an aid being granted. New rules on state aid and modernization of state aid control As a consequence of the SAAP, many new rules and changes to existing rules are to be expected in the future. An important occurrence in 2005 was the Commission's follow up on case C-280/00, Altmark Trans. In November 2005, the Commission presented a set of 3 documents: a decision, a framework and a directive. The decision exempts aid to certain sectors and aid awarded for the delivery of services of general economic interest under a certain threshold. The Danish view-point is that state aid for services of general economic interest and aid for services of general interest will be one of the main revelations in recent state aid policies in the future. Many issues shall still have to be examined in order to reveal the true nature of these kinds of services and their relation to state aid. With the publication of the three documents, status quo on services of general economic interest can be summarized as follows:
The Commission also issued new rules, decisions and guidelines on airports, regional aid and short term export credit. The Commission will continue to review its state aid instruments to simplify and clarify them, and to remove possible conflicts between the different texts. At present, priority is given to the review of the existing block exemptions and to simplify and consolidate the rules. It is the plan that there will be a general block exemption including risk capital and aid related to innovation activities, research and development, environment and regional aid besides the areas already covered by block exemptions - training, employment and small and medium sized enterprises. Production figures, Procurement and state aid 2002-2005
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