Background to the complaint

1. On 25 February 2022, the European Commission awarded a contract for a study on a ’Commission Assessment of Future Market Entry, Expansion and Imports in EU Merger Decisions’ (COMP/2021/OP/0003)^[1] to a consultancy specialised in competition law. The objective of the study was to evaluate whether the Commission’s ex ante assessments of future market developments were correct, with a view to improving its enforcement practice in merger control.

2. Between 28 November 2022 and 5 June 2023, the complainant in case 972/2023/KR, a civil society organisation, and the Commission corresponded on issues related to EU competition policy, including about the abovementioned contract. The complainant was concerned that the award of that contract had given rise to conflicts of interest, as the successful bidder had worked for major transnational companies in the past, preparing merger and acquisition authorisation requests. These companies in turn have an interest in changes to EU competition policy. The Commission defended its decision, saying that it had put in place mitigating measures to avoid such risks. Dissatisfied with the Commission’s reply, the complainant turned to the Ombudsman.

3. On 19 June 2023, the complainant in case 1292/2023/KR, in his capacity as Member of the European Parliament, wrote to the Commission expressing similar concerns. On 11 July 2023, as he had not received a reply from the Commission, this complainant also turned to the Ombudsman.  

The inquiry

4. The Ombudsman opened an inquiry into both complaints to examine how the Commission assessed the risk of conflicts of interest in the award of the contract, in relation to the specific tasks to be carried out as regards the study in question.

5. The Ombudsman asked the Commission to submit for inspection the documents related to the award of the contract and how it had assessed related risks of conflicts of interest.

6. Following the opening of the inquiry, the Commission terminated the contract with the company in question with effect from 28 August 2023, because it considered that the study might be perceived as biased.^[2]

7. In view of this, the Ombudsman decided that it was no longer necessary to inspect the file related to the award of the contract, and inspected only the Commission's internal guidance for staff involved in public procurement procedures.

The Ombudsman’s assessment

8. The Ombudsman opened this inquiry to examine how the Commission assessed the risk of a conflict of interests posed by the consultancy’s bid, in relation to the specific tasks to be carried out as regards the study in question.

9. Given that the Commission has terminated the contract in question following the opening of the Ombudsman’s inquiry, the Ombudsman considers that no further inquiries into the issues raised in the complaints are justified.

10. However, following the award of the contract at issue, the Commission made changes to its internal guidance on procurement (known as ‘Vade-mecum on public procurement’) to strengthen the provisions related to identifying and mitigating conflicts of interest arising from professional activities, which it refers to as ‘professional conflicting interests’. This update happened in August 2022.

11. In a previous inquiry of 2020,[3] which concerned the Commission’s decision to award a contract to a company to carry out a study that gave rise to conflict of interest concerns, the Ombudsman suggested that the Commission provide clearer guidelines on possible conflicts of interest to assist its staff dealing with public procurement procedures for policy-related service contracts. She also suggested that the Commission reflect on whether a specific update to the Financial Regulation is needed to strengthen the provisions on possible conflicts of interest.

12. The Ombudsman thus took this inquiry as an opportunity to assess the changes the Commission made to its internal guidance on public procurement in August 2022. The main changes include:

 (i) including a clear definition of ‘professional conflicting interests’, as well as some examples (including related to the subject of the Ombudsman’s previous inquiry);

(ii) setting out clearly what the conditions are for rejecting a bidder on the grounds of professional conflicting interests;

(iii) describing how professional conflicting interests should be assessed, at what stage and what the possible consequences of actual or potential professional conflicting interests are;

(iv) providing for flexibility for staff concerned to ask for additional information from certain bidders to better understand whether there are risks of professional conflicting interests; and

(v) laying down that staff concerned must assess mitigating measures included in bids to determine whether they are adequate.

13. The Ombudsman considers that these changes could indeed strengthen how the Commission deals with potential conflicts of interest in a professional capacity in the context of public procurement procedures. However, the effectiveness of these changes depends on how the relevant Commission staff members put them in practice. For example, ensuring that all relevant information from bidders is obtained, or that measures sufficiently mitigate professional conflicting interests requires critical thinking from the Commission staff members assessing the different bids in a procurement procedure.

14. The Commission has also adopted a legislative proposal for a recast of the EU Financial Regulation^[4], which includes adding an explicit ground for rejecting participants in award procedures if professional conflicting interests are deemed to exist. According to this proposal, bidders for EU contracts would have to submit a declaration on honour confirming that they do not have any professional conflicting interests, and provide relevant information when required.^[5] Once the recast of the Financial Regulation is adopted, the Commission should check whether its guidance on procurement, both internal as well as public guidance, needs revising.

15.  The Ombudsman will continue monitoring how the Commission handles risks of professional conflicting interests, and how the changes to its internal guidance on public procurement will be implemented in practice.

Conclusion

Based on the inquiry, the Ombudsman closes this case with the following conclusion:

Given that the Commission has terminated the contract in question following the opening of the Ombudsman’s inquiry, no further inquiries into the issues raised in the complaints are justified.

The complainants and the European Commission will be informed of this decision.

Emily O'Reilly
European Ombudsman

Strasbourg, 13/11/2023

 

[1] See: https://ted.europa.eu/udl?uri=TED:NOTICE:173090-2022:TEXT:EN:HTML.

[2] See the Commission’s reply to parliamentary questions from MEPs José Gusmão and Marisa Matias: https://www.europarl.europa.eu/doceo/document/E-9-2023-001624-ASW_EN.html

[3] Case 853/2020/KR: https://www.ombudsman.europa.eu/en/decision/en/135363.

[4] See: https://commission.europa.eu/document/download/864989a7-dec6-4703-bfe7-c3a26a8c5581_en.

[5] The co-decision procedure to adopt the changes to the Financial Regulation is ongoing. See: https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2022/0162(COD)&l=en.