The Court of Justice recently gave some important clarifications regarding the use of fair trade criteria in public procurement. In its judgment in Case C-368/10, European Commission v The Netherlands, the Court had to examine the alleged infringement, by the Netherlands, of several provisions of Directive 2004/18 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts.
The infringement procedure was initiated after the province of North Holland published a contract notice for the supply and management of coffee dispensing machines. The notice emphasized a desire to increase the use of organic and fair trade products in these machines, and the criteria established in the call for tenders referred specifically to the Max Havelaar and EKO labels. The Commission alleged infringement of the Directive, mainly on the grounds that technical specifications and award criteria should not require that the products to be delivered bear such labels.
The Court of Justice made a distinction between eco-labels, which are environmental characteristics and may be included in the technical specifications under Article 23 of Directive 2004/18, and fair trade labels, which it regards as conditions for the performance of the contract (Article 26). It therefore rejected the Commission’s complaint in that regard, but did indicate that “to require that the tea and coffee to be supplied must come from small-scale producers in developing countries, subject to the trading conditions favourable to them, falls within those conditions”. Fair trade may therefore be a criterion for the performance of public procurement contracts. However, the use of specific labels in calls for tenders, without providing the detailed specifications they stand for, is contrary to Article 23.
Environmental and social characteristics, such as those underlying the EKO and Max Havelaar labels, may also be part of the award criteria, so long as they refer to the goods to be supplied themselves, and not to the general purchasing policy of the tenderers. However, although specific labels may be referred to, in order to create a presumption that the products bearing them comply with certain characteristics, the contracting authorities must allow for other means of proof. In the choice of the most economically advantageous tender, granting points to certain products bearing these labels, instead of listing the criteria underlying them, is precluded by the Directive.
Other infringements resulted from the use of criteria of sustainability of purchases and socially responsible business as a minimum level of technical capacity, not authorized under the exhaustive list provided in Article 48 of the Directive, and from the failure to comply with the obligation of transparency provided for in Article 2. This was due to the reference, by the province, to general criteria that did not allow tenderers to know whether they met the requirements, nor indicate precisely what information they should provide.
Although the Court of Justice found that the Netherlands had failed to fulfil its obligations under Directive 2004/18, this ruling is an encouraging sign, clearly confirming that fair trade may be supported through public procurement, in a similar way to organic agriculture, both through the specifications given in a call for tenders, and through the choice of award criteria. Contracting authorities wishing to do so must, however, use detailed specifications rather than refer to specific labels.
Reproduction autorisée avec l’indication: Turmo Araceli, "The Court of Justice confirms the Admissibility of Fair Trade Criteria in Public Procurement", www.ceje.ch, actualité du 16 mai 2012.