Two German local authorities drafted a contract which gave one of the local authorities the responsibility of cleaning buildings situated on the other’s territory. In return for providing this service, the local authority was to receive compensation covering its expenses. The local authority providing the cleaning services indicated it would employ a company it owned to carry out the work.  A German court decided to refer the case to the ECJ for a preliminary ruling on whether such a contract constituted a ‘public contract’ and therefore fell within the scope of Directive 2004/18/EC which provides the EU rules on public procurement.

The ECJ concluded that this contract constituted a ‘public service contract’ for the purposes of Article 1(2)(d) of the Directive, and so was subject to EU rules on public procurement.

This decision was based on a number of factors:

• The ECJ decided that neither authority was exercising control over the other. Accordingly, the exception that contracts between public bodies does not come within the scope of EU procurement law where one body exercises control over the other, did not apply.
• The ECJ decided that this could not be regarded as simply co-operation between public authorities with a view to carrying out a public service task that both of them have to perform.
• The contract authorised the use of the services of a third party to carry out the cleaning. The effect of this was that the third party might be placed in a position of advantage over other bodies offering similar services.

The case will of interest to local authorities that have, or that are considering entering into, services contracts with other local authorities.

If you think you’d benefit from advice on that, please feel free to get in touch.

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Gary Webster, formerly of Stolt Comex Seaway, was convicted and sentenced yesterday at Southwark Crown Court.  Kenneth Thomas, former chief executive of OilExec, and also part of the scheme had previously pleaded guilty to conspiracy to corrupt. The court heard that Mr Webster accepted a £6,000 kickback from Mr Thomas in a nightclub under the scheme.  The trial judge is reported as having commented that “Bribery is an offence that merits an immediate custodial sentence” but he did not send Mr Webster to jail – he was given a 12 month suspended sentence and ordered to pay back the £6,000.  Mr Thomas was sentenced to three years imprisonment after admitting conspiracy to corrupt.  A third party to the scheme, Jeffrey Mountain, also received a 12 month suspended sentence.

The offences pre-date the coming into force of the Bribery Act, but the case is important today because it contain three key messages for business in getting to grips with the Act:-

(1)   Business should ensure that there is a transparency in contract decisions, and monitor/review the decision making of those who award contracts on behalf of the business.  Prosecutors stated that BP’s Head of Diving enjoyed a “great deal of freedom” and “cynically abused” this power for personal gain. 

(2)  Appropriate due diligence of business suppliers and other third parties is essential.  Under the scheme bogus invoices for, among other things, marketing and consultancy services were created to justify making the corrupt payments.   

(3) The Scottish Crown Office and Procurator Fiscal Service is currently operating a self reporting initiative (up for review at the end of this month) under which it will consider not prosecuting businesses who self report bribery discovered within the organisation.  In this case the scheme was uncovered after a whistleblower made a call to BP’s helpline.  When a business receives that kind of call, it’s absolutely crucial to be sure footed with next steps.

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In terms of the Edinburgh Agreement, the Electoral Commission is to have responsibility for overseeing the general conduct of the referendum (with the exception of the conduct of the poll and the announcement of the result). Its specific role is set out in the Scottish Independence Referendum Bill, currently making its way through the Scottish Parliament. These powers reflect the standards laid down by the Political Parties, Elections and Referendums Act 2000 (PPERA), which provides the general framework for referendums in the UK.  The Scottish Government is required to have regard to the Commission’s views on certain matters, and the Commission has already issued detailed advice on the referendum question and the level of spending limits for referendum campaigners.

The most important parts of the Commission’s remit are its regulation of the campaign and campaign spending. The Bill includes provisions limiting the amount of expenses that can be incurred by those campaigning in the referendum; restricting the publication of certain material; and controlling donations, and the provision of loans and credit, to those campaigning. The Commission has warned that it will closely monitor campaign activities for compliance with the restrictions and will use its enforcement powers to intervene if it spots anything untoward.

The Bill confers various powers of investigation on the Commission (in line with its powers under PPERA) to look into any suspicious behaviour, including the power to issue a disclosure notice demanding proof of income and expenditure. If documents were unreasonably withheld the Commission could apply to a sheriff or justice of the peace for an inspection warrant to search premises.

The Bill also creates certain offences for withholding or failing to provide documents or information, or providing false information, to the Commission. Depending on the offence, the perpetrator may be liable to a fine or even face imprisonment.

The Electoral Commission also has its own civil enforcement powers, such as the power to issue fixed monetary penalties. If it reasonably believes the rules are being or will be breached, and that the activity in question is (or risks being) seriously damaging to public confidence in the legal controls on the referendum, it can also issue a stop notice prohibiting a person  from continuing or repeating the offending activity.

The Electoral Commission will want to ensure a fair and transparent referendum process, but it will be hoping not to have to rely on its enforcement powers. The Commission has never yet used its power to issue a stop notice. We will see whether the independence referendum will give it a reason to issue its first one.

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The latest Scottish Government paper, entitled Scotland’s Economy: the case for independence, was launched last Tuesday by First Minister Alex Salmond and Deputy First Minister Nicola Sturgeon. This paper came a day after the Treasury issued a paper of its own (the third in a series expected to run to a dozen or so) dealing with financial services and banking issues. Needless to say, the papers reflected fairly contrasting views of Scotland’s prospects in the event of independence.

Currency continues to prove a thorny issue, with the First Minister repeating at last week’s event his claim that, unless the rest of the UK agreed to enter into a formal Sterling union with an independent Scotland, the Scottish Government would refuse to accept a share of the existing UK national debt. 

Charles posted at the time about the recommendation of the Scottish Government’s Fiscal Commission Working Group that Scotland should keep the pound as part of a formal ‘Sterling zone’. The Treasury published its own report on the topic last month, setting out the perceived advantages and disadvantages of the various currency options an independent Scotland might have (including a Sterling zone) and concluding that none would work as well for Scotland as the current arrangement. The report, and even more so the George Osborne speech that launched it, also suggested that the rest of the UK may be unwilling to agree to enter into a Sterling zone with an independent Scotland, at least not without requiring significant levels of control over Scottish taxes, borrowing and debt levels.

If you would like advice on any of these issues, or any other aspect of the independence debate, do not hesitate to get in touch with us. Please also feel free to comment below if you have a view you’d like to share.

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The general principles of the Bill, which will enfranchise around 120,000 young people not otherwise entitled to vote, were approved by a vote of 97 to 12.

The issue that dominated the debate was the prohibition on prisoner voting.  There were calls from the Lib Dems to extend the franchise to convicted prisoners serving short sentences.   Deputy First Minister Nicola Sturgeon indicated that she was “not persuaded” by the arguments in favour of even limited prisoner voting rights, but did express a willingness to hear the arguments.  The Lib Dems may try to amend the Bill to allow prisoner participation the next time the Bill is debated in the chamber.

The Scottish Government intends that the Bill should complete its parliamentary passage by the end of June this year and be in force later in the summer.  This will allow the electoral registration officers across all local authority areas in Scotland to begin collecting data about prospective young voters as part of the annual household canvass starting in October.  The Government is confident that its provisional timetable will be met, notwithstanding a potential challenge against the prisoner voting ban on human rights grounds.

The other referendum Bill currently going through the Parliament, which contains the substantive details on the referendum, is still being considered by the specially-established Bill Committee.  The Committee’s report and the first full Parliamentary debate are expected this autumn.

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Followers of the independence debate will recall last year’s stramash about whether the Scottish Government had taken legal advice on the question of Scotland’s EU status in the event of independence. To recap, the Scottish Ministers had initially refused to confirm, in responding to an FOI request from a Labour MEP, whether or not they held legal advice on that issue. Indeed, they appealed to the Inner House against a decision of the Scottish Information Commissioner that they had to say one way or the other. That appeal was dropped in October, when Deputy First Minister Nicola Sturgeon revealed to the Scottish Parliament that no advice had previously been obtained but that it was about to be sought.

Another Scottish Minister, Fiona Hyslop, has now disclosed that advice has been obtained by the Scottish Government. However, she also said that they will not be making it public.

In February, the UK Government published an opinion they had obtained on an independent Scotland’s position under international law, including its EU status. The Scottish Government are therefore likely to come under pressure to disclose their own advice, notwithstanding the usual convention that legal advice to Ministers is not disclosed.

It’s also likely that further FOI requests will be submitted for the advice, if they haven’t been already. The Scottish Information Commissioner may therefore be bracing herself to deal with the issue if and when a dissatisfied applicant asks her to consider it. The particular significance of the FOI process is that it is the only context in which legal advice, the confidentiality of which is usually absolute, can be required to be disclosed on public interest grounds. The final decision on that question may ultimately rest with the courts, given the likelihood that the Commissioner’s decision (whichever way it went) would be appealed.

There may therefore be plenty of legs in this story yet, though the typical timescale for the full FOI process (including appeals) means that time may already be quite tight for anyone wanting to have an FOI request fully resolved prior to next September’s referendum.

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Salvesen v Riddell concerned section 72 of the Agricultural Holdings (Scotland) Act 2003, which allowed a tenant in an agricultural tenancy to secure their tenure even if the landlord gave notice to dissolve the Limited Partnership by which the tenancy was held. Both the provision and the facts are rather complicated, but the Supreme Court summarised them here. Our Agriculture & Estates colleagues issued an update when the decision came out.

The case is of particular interest from a Public Law perspective because the Court ruled that section 72 was outside the legislative competence of the Scottish Parliament, on the grounds that it was incompatible with the landowner’s rights to peaceful enjoyment of his possessions under Article 1 of the First Protocol to the European Convention on Human Rights. This is in fact the first case in which any part of an Act of the Scottish Parliament has been held to be unlawful on any of the grounds set out in section 29 of the Scotland Act 1998.

Rather than just quashing the legislation outright, the Court has made an order under section 102(2)(b) of the 1998 Act suspending the effect of the decision for a maximum of 12 months to allow the defect in the 2003 Act to be corrected. This is also the first time section 102(2)(b) has been used.

The Lord Advocate has been given permission to apply to the Court of Session for any further orders required under Section 102 to allow the legislation to be corrected within the 12-month timetable. We will wait to see how the Scottish Ministers deal with this decision and the corrective measures required to ensure compliance with the ECHR.

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This post on Lexxion’s State aid blog is quite technical, but also quite interesting if you’re into that sort of thing. It summarises two recent Commission decisions, concerning Irish and German schemes to impose the local equivalent of APD at different rates in certain circumstances. The Irish scheme was struck down as illegal State aid, while the German scheme was upheld (though the reasoning in the latter seems slightly strained).

It’d be much too complicated a task to consider in this space whether a devolved APD might run into similar issues, but if it is devolved it’ll be interesting to see whether the structure adopted would take that risk into account.

Never let it be said that the law can’t complicate an apparently straightforward issue.

If you have any views on APD and/or State aid, or would like some advice on the issue, please get in touch or comment below.

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The agreements are said to have come about following patent infringement proceedings brought by GSK against Alpharma, Generics (UK) Limited and Norton Healthcare Limited after the three pharmaceutical companies attempted to launch generic versions of paroxetine in competition with Seroxat.  In a bid to settle the infringement proceedings each of the three companies entered into agreements with GSK.  The OFT alleges that these agreements provided that GSK would make substantial payments in return for the other companies agreeing to delay the launch of their generic products.    

The OFT’s preliminary view on the agreements is that they breach Chapter I of the UK Competition Act 1998 as well as Article 101 of the EU Treaty.  The OFT also alleges that by entering into these agreements GSK abused its dominant position in the market for the supply of paroxetine in the UK.   

The Statement of Objection gives the parties involved notice of the allegations against them.  The OFT emphasises that no assumption should be made about whether there has been an infringement until it has completed its investigation. 

The OFT will now invite the parties to respond to the statement of objections.  The OFT will not publish its statement of objections, but any third parties wishing to comment on the OFT’s provisional findings have until Friday 17 May 2013 to request a non-confidential version of the statement.

Competition issues have been raised in the pharmaceutical sector before.  The European Commission conducted an inquiry into the pharmaceuticals industry in 2008 which found that settlement agreements, limiting generic entry and including a value transfer from an originator company to one or more generic companies, are an example of potentially anti-competitive agreements designed to keep competitors out of the market.  These types of agreement will be of particular concern where the motive is to share profits to the detriment of patients and public health budgets.  This is an area which the European Commission continues to monitor, and its second report on monitoring patent settlement agreements was published in 2011.  The Commission found in that report that the number of potentially problematic settlements had decreased significantly.

*This post was first published on 3 May 2013

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