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Fair play for public procurement

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New law would ensure European companies have the same opportunities to benefit from global markets as their competitors have in Europe.

A company from anywhere in the world can bid for the majority of contracts offered by public authorities around the EU. But a European company can only bid to supply goods or services in certain countries. This is an unfair situation, which the European Commission hopes to change with a new law on public procurement .

Public procurement – the acquisition of goods or services on behalf of a public authority – accounts globally for around €1 000 billion per year. Within the EU, around €420 billion was available for contractors in 2010.

Some 84% of this was obtainable for companies anywhere in the world – only the utilities and defence sectors place restrictions on the countries that can bid. By contrast in the United States, foreign companies may bid for just 32% of the €556.25 billion available, while the proportion is even lower for Japan at 28%.

The restrictions affect sectors in which the EU is very competitive, such as construction, public transport, medical devices, power generation and pharmaceuticals.

The Commission is proposing that for contracts worth more than €5 million, contracting authorities may decide to exclude tenderers from non-EU countries when a large share of the goods or services concerned are not covered by international agreements.

If an authority wishes to do this, it must inform the European Commission, which will then have two months to decide whether the decision is justified. The assessment will be based on the extent to which the country’s procurement processes are open to EU companies.

If a country discriminates against European suppliers on a regular basis, the Commission may seek a negotiated solution. If that fails, it may limit access to the EU’s markets for companies from that country – with, for example, restrictions targeting a particular sector or by imposing a price penalty on non-EU bids.

The economic downturn has caused several countries to introduce protectionist measures, discriminating against European companies. The proposed law would create a more level playing field while also increasing business opportunities for European companies within the EU and elsewhere, helping Europe’s smaller companies bid for contracts abroad, and increasing employment within the EU.

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