European companies currently still face restrictions in accessing procurement markets in third countries, which affects sectors such as construction, public transport, energy or pharmaceuticals.
The EU’s Committee on Internal Trade has recently approved the proposed International Procurement Instrument (IPI) Regulation. The IPI aims at opening protected markets and strengthening the level playing field in the global procurement market.
Investigation by the European Commission
The IPI would give the European Commission new tools to tackle market protection in public procurement by third countries. Under the IPI, the Commission will launch investigations if a third country:
(i) does not offer EU companies the same access to its procurement market as EU Member States offer companies of that third country, or
(ii) adopts or maintains discriminatory or restrictive practices.
The measures: price adjustment and exclusion
In response to a third country’s restrictive measures, the Commission could implement two measures. Firstly, it can use a price adjustment measure to make the bids from the third country’s bidders up to 20% more expensive, and thereby procure a competitive advantage to other bidders. Secondly, it can exclude bids by that third country’s bidders.
Scope of application
IPI measures would only apply to procurement procedures for contracts of at least EUR 10 million for works and concessions, and EUR 5 million for goods and services. As the IPI Regulation will primarily aim at opening up public procurement markets of major trading partners of the EU, least-developed countries and certain developing countries would not be concerned. SMEs established in the Union would also be exempted from the Regulation.
Next step: plenary vote in January 2022
The instrument will be put to a plenary vote in January 2022. If adopted, the IPI will be discussed in inter-institutional dialogue between the European Parliament and the Council.
