In 2019, the Finnish Tax Administration requested tenders for the procurement of office furniture and associated services. The value of the procurement exceeded the European Union threshold values. The contracting entity chose Isku Interior Oy as the winner of the tender competition but subsequently removed the procurement decision and chose Isku Interior Oy’s competitor to implement the procurement. Isku Interior Oy appealed against the decision to the Market Court where it sought, as its principal claim, annulment of the procurement decision but also requested the Market Court to declare the procurement agreement inefficient since the contracting entity had concluded the procurement agreement with the new winner after the submission of the appeal and a ten-day standstill period.
The Market Court assessed, first, whether the contracting entity had breached the procurement rules with respect to the invitation to tender. The Market Court held that an error had occurred in the procurement procedure and that the invitation to tender had been unclear and had therefore not served as a basis for submission of comparable tenders. Due to the error, the Market Court assessed whether a sanction – specifically an inefficiency sanction – pursuant to the Finnish Public Procurement Act should be imposed in the situation in which the contracting entity had concluded the procurement agreement after an appeal had been filed.
With regard to the conditions concerning the imposition of an inefficiency sanction, the Market Court noted that no inefficiency sanction could be imposed under the current Finnish Public Procurement Act since the case did not concern a situation in which the voluntary standstill period described in the Finnish Public Procurement Act had not been observed. Furthermore, the automatic suspension – meaning that the contracting entity shall not conclude a procurement agreement if the case has been referred on appeal to the Market Court – was not applicable either under the Finnish Public Procurement Act and the reasoning in the government proposal relating thereto. Therefore, the provision on the automatic suspension did not allow for the imposition of an inefficiency sanction as the observance of the standstill period is voluntary in a dynamic purchasing system under the Finnish Public Procurement Act. However, the appellant had during the proceedings stated that narrowing the scope of application of an inefficiency sanction was in contradiction with both the Remedies Directive and particularly the principle of effectiveness. The appellant was of the view that it could not have been the legislator’s intention that an inefficiency sanction would be inapplicable after the contracting entity has followed a voluntary ten-day standstill period and after an appeal has been filed during the appeal period.
The Market Court examined the automatic suspension and its applicability in the procurement in question under EU law. The Market Court took the view that according to Article 2(3) of the Council Directive 89/665/EEC, as amended by, inter alia, Directive 2007/66/EC, the member states shall ensure that the contracting authority cannot conclude the contract before the review body has made a decision on the application either for interim measures or for review. Furthermore, according to Article 2d(1)(b) of the Council Directive 89/665/EEC, the member states shall ensure that a contract is considered ineffective by a review body or that its ineffectiveness is the result of a decision of such a review body in case of an infringement of Article 2(3) of the Council Directive 89/665/EEC, if this infringement has deprived the tenderer applying for review of the possibility to pursue pre-contractual remedies where such an infringement is combined with an infringement of the Directive 2014/24/EU.
Based on the above, the Market Court held that the automatic suspension pursuant Article 2(3) of the Council Directive 89/665/EEC also concerns procurements which exceed the European Union threshold values but do not require observance of a standstill period under national legislation. According to the Market Court, no discretion has thus been afforded to the member states to decide whether the automatic suspension applies to procurements within dynamic purchasing systems exceeding the European Union thresholds, as well. Therefore, the Market Court concluded that the Finnish Public Procurement Act in that respect is not in line with the Council Directive 89/665/EEC.
According to the settled case-law of the European Court of Justice, whenever the provisions of a directive appear, so far as to their subject-matter is concerned, to be unconditional and sufficiently precise, they may be directly relied upon at the national courts by individuals where the member state has failed to implement the directive in national law by the end of the period prescribed or where it has failed to implement the directive correctly. The Market Court considered the subject-matter of the provisions of Articles 2(3), 2(4) and 2d(1)(b) of the Council Directive 89/665/EEC unconditional and sufficiently precise for an individual to be entitled to rely upon them at the Market Court. Therefore, notwithstanding Section 150 of the Finnish Public Procurement Act referred to in Section 156, Subsection 1, Paragraph 3 of the said Act, an inefficiency sanction could be imposed in the case by virtue of the direct effect of the Council Directive 89/665/EEC. The Finnish Public Procurement Act thus contravened the Council Directive 89/665/EEC with respect to the imposition of an inefficiency sanction, as well.
The Market Court declared the procurement agreement inefficient as of 12 October 2020 and ordered an annulment of the Finnish Tax Administration’s procurement decision for corresponding parts. The Market Court obliged the contracting party to implement the procurement in conformity with the Finnish Procurement Act. Moreover, the Market Court imposed a conditional fine of EUR 160,000 to enforce compliance of the obligation.
The Market Court’s ruling is significant since it states that the Finnish Public Procurement Act as it currently stands contravenes the Council Directive 89/665/EEC. According to the ruling, the automatic suspension applies to competitive tendering within a dynamic purchasing system as well and a procurement agreement may be declared inefficient, as provided in the Market Court’s decision, where the contracting entity concludes the procurement agreement after the initiation of an appeal.
Merilampi represented Isku Interior Oy in the matter. The Market Court ruling N:o 332/20 is final.