Trade secrets in public tender processes: a “qualified” right to confidentiality Antea Polska S.A. v Państwowe Gospodarstwo Wodne Wody Polskie

Factual background

In a judgment of 15 December 2022, the Court of Justice of the European Union (CJEU) has ruled on several questions related to the interpretation of EU law on public procurement, following a request for a preliminary ruling by a Polish court. The case involved a public contract for the development of environmental management projects in certain river basin districts in Poland, which was awarded to CDM Smith after the evaluation of four submitted tenders. Antea, another company that had submitted a tender, brought legal action seeking annulment of the award to CDM Smith, a new evaluation of the tenders, and disclosure of certain information.

The case is of interest because it suggests that, as a principle of EU Law, it is important to maintain the confidentiality the trade secrets of tenderers which may be contained within bid submissions.  Some may have expected the Court to prioritise the enhancement of competition and transparency in a process governed by the rules of EU public procurement.   On the subject of transparency, the Court does reemphasise the importance of issuing adequate statements of reasons to bidders.

This is a subject that is are often asked about by clients involved in procurement submissions, as they are concerned about what rival bidders may be entitled to see in the event of a complaint.  While the UK has now left the European Union, this judgment may still be considered by English courts as a useful guide in similar cases, particularly as the current UK rules on procurement remain based on the EU Directives.  The EU Trade Secrets Directive (Directive 2016/943), which was discussed in this judgment, has also been incorporated into UK Law (as the Trade Secrets (Enforcement, etc.) Regulations 2018).

Confidential information

In its first question, the Polish court asked the CJEU whether EU Directive 2014/24 must be interpreted as precluding national legislation which required that:

1. except for trade secrets, information sent by tenderers to contracting authorities as part of a bid submission which had won must be published in full or communicated to other tenderers, and
2. contracting authorities must automatically accept requests from bidders for confidential treatment of trade secrets.

The CJEU ruled that while contracting authorities must act in a transparent manner, they are not permitted to disclose information that economic operators have designated as confidential (noting Varec, C‑450/06, EU:C:2008:91, paragraphs 34 to 36).   It noted that under Article 21(1) of that directive, such an entity may not disclose ‘information forwarded to it by economic operators which they have designated as confidential’.

Equally, however, the contracting authority cannot be bound by an economic operator’s mere claim that the information submitted is confidential but must require that that operator demonstrate the genuinely confidential nature of the information which it claims should not be disclosed (citing Klaipėdos regiono atliekų tvarkymo centras, C‑927/19, EU:C:2021:700)

In the present case, Polish law defined “trade secrets” as information that has commercial value because it is secret and has been subject to reasonable steps to keep it secret.   The court found that the definition of “trade secrets” in Polish law was in line with EU law (notably the Trade Secrets Directive,  Directive 2016/943) and that the practice of contracting authorities automatically accepting requests for confidential treatment of trade secrets does not violate the principles of equal treatment and transparency (subject to the authority verifying that the information designated as confidential was indeed commercially sensitive).

Access to information

The Polish court asked whether a contracting authority must allow a rejected tenderer access to information submitted by other tenderers concerning relevant experience and references, the identities and professional qualifications of persons proposed to perform the contract or subcontractors, and the design of the projects and manner of performance of the contract.

The CJEU ruled that information on a tenderer’s relevant experience and references, which largely corresponds to information listed in Annex XII of Directive 2014/24, cannot be classified as confidential in its entirety. As a general rule, a tenderer’s experience is not secret, and its competitors cannot be denied access to information on that experience on the basis of the concept of “trade secrets” or the protection of “legitimate commercial interests” or “fair competition.” At a minimum, tenderers must have access to the essential content of the information provided by each of them to the contracting authority concerning their relevant experience for the contract in question and the references used to demonstrate that experience. However, in certain circumstances, such as contracts for sensitive products or services, a refusal of disclosure on the grounds of protecting public security, public interest, or the legitimate commercial interests of an economic operator may be justified.

With regard to the identities and professional qualifications of persons proposed to perform the contract or subcontractors, and the design of the projects and manner of performance of the contract, the CJEU ruled that the protection of “legitimate commercial interests” or “fair competition” may justify a refusal of disclosure. However, the contracting authority must carry out an individual assessment of each request for access to such information to ensure that the grounds for refusal are justified (CJEU, Case C-844/19, Antea v Wojewódzki Sąd Administracyjny we Wrocławiu).

Access to scoring methodology

The Polish court asked whether a contracting authority must allow a rejected tenderer access to the scoring methodology used for evaluating tenders.  The CJEU ruled that the general principle of good administration requires that the essential content of information provided by tenderers regarding their relevant experience and references be made available to other tenderers, at least, in order to ensure transparency and compliance with the requirements of good administration and effective judicial protection. However, this requirement is subject to certain exceptions, including the protection of trade secrets and the protection of the legitimate commercial interests of economic operators or the preservation of fair competition.

Regarding information concerning the identities and professional qualifications of the persons proposed to perform the contract or subcontractors, the CJEU ruled that such information does not generally qualify as a trade secret and must be disclosed to other tenderers, unless it is shown that disclosure would harm the legitimate commercial interests of the tenderer or prejudice fair competition.

As for information concerning the design of the projects to be carried out under the contract and the manner of performance of the contract, the CJEU ruled that such information may be protected as a trade secret if it meets the requirements for protection as a trade secret and its disclosure would harm the legitimate commercial interests of the tenderer or prejudice fair competition.

In all cases, the contracting authority must carry out an individual assessment of each request for confidential treatment and must provide an adequate statement of reasons for any decision to grant or refuse such treatment.

Right to an effective remedy

The Polish court also asked whether the right to an effective remedy, as established in Article 1(1) and (3) of Directive 89/665/EEC, must be interpreted as meaning that an unsuccessful tenderer has the right to be informed of the characteristics and relative advantages of the successful tender, including the criteria used to evaluate the tenders.

The CJEU ruled that, in order to ensure the effectiveness of the right to an effective remedy, an unsuccessful tenderer must be informed of the characteristics and relative advantages of the successful tender, as well as the criteria used to evaluate the tenders. This information must be provided in an adequate and sufficient manner to enable the unsuccessful tenderer to effectively exercise its rights of review and to ascertain whether the decision of the contracting authority to award the contract was vitiated by errors or unlawfulness.

Conclusions

This ruling is likely to be of interest to construction and engineering firms involved in public procurement processes, as it provides guidance on the interpretation of EU law on the treatment of confidential information and the obligations of contracting authorities in relation to disclosure and the provision of reasons for the award of contracts.   Many will welcome a ruling which underscores the need to keep their information confidential.    The judgment does however imply that there is a degree of responsibility on the bidder to designate information appropriately to put the contracting authority on notice of the relevant parts of its bid being confidential.  It also shows that the Court will consider objectively whether information does have the relevant quality of being commercially confidential (notably here, it rejected that argument with regard to details of the bidder’s previous experience).

The right to confidentiality is not absolute, even in respect of information which has been designated as such by the bidder.  In the event of court proceedings, a reviewing court may well order that sensitive information regarding a tender submission be disclosed to the claimant on the basis that this is necessary to enable the claimant to formulate its case, fully understand the evaluation and assess whether its allegations are well-founded.   The Court will usually however require the imposition of restrictions to protect the confidentiality of such information including for example the use of a confidentiality ring which may limit the provision of the information to the claimant’s lawyers, thereby removing (or at least mitigating) the risk of abuse or further dissemination of the information.

In addition, the CJEU confirmed that a contracting authority must provide an adequate statement of reasons for the scoring of tenders, including specific reference to the sub-criteria set out in the tender specifications and the weighting of those criteria. The statement of reasons must be sufficient to enable the tenderers to understand the grounds on which the contract has been awarded and to enable the courts to review the legality of the award decision.  This element of the ruling is less noteworthy, as it reenforces many of the previous judgments on that particular point.  It is helpful to tenderers that the court expressly said that a statement of reasons must include any scoring of sub-criteria as that can be important to enable bidders to understand the reasons underlying an evaluation outcome.