CJEU rules on 'tender shaping' practices in the medical device sector
On 25 October 2018, the CJEU ruled in Case C-413/17 on the margin of discretion of contracting authorities to establish technical specifications in relation to medical devices. According to the CJEU, contacting authorities are free to refer to either the individual characteristics of the medical devices or to functional requirements. However, the technical specifications may not favor a particular supplier. The CJEU left it to the national court to assess whether that was the case.
Many hospitals in the EU are contracting authorities for the purposes of the public procurement rules. Unless an exclusion or exception applies, they must follow the rules when awarding contracts for supply contracts, including for medical devices or medicines.
However, some hospitals revert to so-called 'tender shaping', whereby the specifications of the procurement are tailored in order to favor certain preferred suppliers. It is clear that this practice is at odds with the purposes of the public procurement rules.
The CJEU recently rendered a preliminary ruling referred to it by the Lithuanian Supreme Court. A supplier had challenged the tender specifications of a procurement for blood analyzers by a Lithuanian hospital. It argued that the technical specifications were overly detailed and in fact corresponded to the products of specific manufacturers, thereby excluding other manufacturers. The referring court asked the CJEU whether the rules allow the tender specifications to describe the operational (technical) and use-related (functional) characteristics in isolation or whether they should instead be formulated in terms of qualitative parameters or performance testing results.
The CJEU clarified that contracting authorities have a wide margin of appreciation in this respect. Both (i) performance or functional requirements, and (ii) references to certain technical specifications or specific standards are permitted. There is no hierarchy between the two methods.
Nevertheless, the CJEU emphasizes that the freedom of choice of contracting authorities is limited by the principles of equal treatment, non-discrimination and transparency. The procurement may not be designed with the intention of unduly favoring or disadvantaging certain economic operators.
The CJEU agreed that the more detailed the technical specifications, the higher the risk of favoring the products of a given manufacturer will be. Therefore, the level of detail of the technical specifications must respect the proportionality principle, i.e. it must be necessary to achieve the desired objectives. However, in the area of public health in particular, Member States have a margin of discretion.
The CJEU concluded that it is primarily for the national court to determine whether the technical specifications satisfy the requirements of equal treatment and proportionality. In doing so, the national court must consider the technical specifications as a whole. There is no requirement to prioritize either the importance of the individual characteristics of medical supplies or the importance of the result of their functioning.
On 2 January 2019, the Lithuanian Supreme Court ruled that the hospital’s technical requirements did not meet the proportionality test set by the CJEU. The hospital had insufficiently demonstrated that its objectives, i.e. public health and the accuracy of patient research, could not be achieved by other and less restrictive means.
Please do not hesitate to contact us if you have specific questions on the compliance of technical specifications with the procurement rules.