Regional Administrative Court Of Milan: Exclusivity Is Not A Sufficient Criterion For Not Calling For Tender

Author:Mr Andrea Stefanelli
Profession:Stefanelli & Stefanelli Studio Legale

The Regional Administrative Court of Milan (Section IV) has recently ruled (21/2/2018, n.500) on the principles of "exclusivity" and "non-fungibility" and on whether they are sufficient grounds for not carrying out a public tender procedure.

The specific case concerns a public administration that had announced a tender, only to cancel it when they subsequently learned that there was an exclusive provider of the good in question, therefore awarding the tender to the company holding the exclusive rights.

However, the Administrative Court of Milan annulled this award due to the distinction between "exclusivity" and "non-fungibility" (also referred to in the Guideline No. 8 of the ANAC- Anticorruption National Association of Italy). In fact, exclusivity occurs when industrial property rights are concerned, while non-fungibility is determined by the uniqueness of the good, which is the only good that meets the needs of the public administration. In such way, "the existence of an exclusive right does not necessarily imply that the need of the contractor cannot be adequately met even by turning to other products".

Therefore, "exclusivity" and "non-fungibility" are not equivalent terms since exclusivity can be one of the causes of non-fungibility, but the opposite is not necessarily true, as a product can be non-fungible even if it no company has exclusive rights on it.

This implies that the need of the contracting authority, even in the case of an exclusive right, can also be met with the supply of alternative products (ie having the characteristics required by the public administration), or there may be other "independent distributors or economic operators that have access to the asset". (Guideline No. 8).

Hence the sentence of the Court, which establishes that the exception to the obligation to call for a competition is only possible when there is an actual non-fungibility and not in case of exclusive rights. So much so...

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