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The European economy is under mounting pressure from China's rapid technological advances and industrial policy, trade uncertainties linked to the new Trump administration in the USA, and growing geopolitical instability, which impact the competitive landscape in several global markets and increase disruption risks in supply chains. In this challenging economic and political climate, enhancing the competitiveness of European businesses and reinforcing the resilience of the Single Market have become key political priorities, as outlined in the European Council's Budapest Declaration on the New European Competitiveness Deal.

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Eine Vergabe eines öffentlichen Auftrags an ein bestimmtes Unternehmen ohne europaweite Ausschreibung ist nur in engen Ausnahmefällen zulässig. Ein in der Praxis häufig herangezogener Grund ist, dass aufgrund von Ausschließlichkeitsrechten, beispielsweise Urheberrechten, nur ein Unternehmen den Auftrag ausführen kann. Diese Möglichkeit hat der Europäische Gerichtshof (EuGH) in einer bemerkenswerten Entscheidung eingeschränkt – mit erheblichen Folgen für Unternehmen und an das Vergaberecht gebundene Auftraggeber.

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Government-to-government (G2G) contracts represent a popular tool among EU Member States to procure defence equipment and other sensitive goods as well as related works and services, such as capacity training or maintenance and logistical support. In particular, many EU countries frequently purchase equipment from the US through its Foreign Military Sales (FMS) program. Intra-EU defence trade is also common, with France and Germany being the Union's two largest sellers of defence and security goods and services. While such G2G contracts hold many advantages from a security policy point of view, they may negatively affect competition in the defence and security market for private operators. Nevertheless, such G2G transactions can be exempted from compliance with EU public procurement law.

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As the global shift to sustainable energy continues to gather pace, the European hydrogen market offers unprecedented opportunities. Recent developments in Germany and the European Union highlight strategic advances in both production and infrastructure.

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The Foreign Subsidies Regulation’s (FSR) concentration and public procurement tool came into force one year ago in October 2023. Its first year of application has shown that the European Commission is determined to make use of its new tools to tackle third-country subsidies distorting competition in the EU internal market. In this briefing, we provide an overview of the most important FSR rules and the lessons learned from their first application.

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After many years in the shadows, the European defence industry has returned to the political agenda since Russia's war of aggression in Ukraine. One of the ways to strengthen the domestic industry is to favour EU companies in defence procurement by EU Member States. A recent decision by the European Court of Justice has paved the way – with significant consequences for non-EU defence companies.

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A recent decision brings new life to the question of compensation for unlawful conduct by the German MOD in Defence Procurements. As the German lawmakers decided in February 2022 to reduce the effectivity and the possibilities to seek the prevention of awards by way of single source procurements, competitors were effectively left to claim damages. However, chances of succeeding therein have always been difficult low. A recent ECJ decision might change that.

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As announced in January, BLOMSTEIN is publishing a series of briefings introducing into European and German legal defence matters. In our last briefing, we have provided some insight into the regulatory framework for the defence industry to produce and sell from the EU.

The cooperation of EU Member States regarding defence and security policy and activities ranks high on the European Union’s agenda. This includes EU Member States’ joint procurement of military and sensitive equipment within the meaning of Directive 2009/81 on procurements in the fields of defence and security. Advantages of such joint procurements to national procedures are manifold, including cost reductions through scale economies, facilitated in-use collaboration due to increased interoperability of material and a strengthening of allies.

This briefing gives an overview over the legal framework of such joint procurements. In practice, EU Member States assign the task of procuring equipment from suppliers (mainly private companies) to a single entity (Executive Entity), which, in turn, conducts the procurement for (the benefit of) all participating EU Member States. Candidates for the role as Executive Entity are, firstly, states – participating EU Member States or third countries – acting as a “lead nation”. However, multinational institutions such as the European Defence Agency (EDA), NATO Support and Procurement Agency (NSPA) or Organisation Conjointe de Coopération en Matière d’Armement (OCCAR) can also take on this role.

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Artificial intelligence (AI) is the hot topic of the moment. Interest in the use of AI systems is growing in both the private and public sectors. The motives are obvious: the hope is to increase the efficiency and speed of decision-making processes, save costs and achieve better results overall.

However, the regulation of AI is still in its early stages. At the end of 2023, the EU Parliament and Council agreed to adopt a regulation to regulate AI systems based on the proposal submitted by the Commission in 2021 (AI Act). It was formally adopted by the EU Parliament on 13 March 2024 and has yet to be adopted by the Council. The AI Regulation enters into force 20 days after its publication in the Official Journal of the EU and will be fully applicable - with some exceptions - 24 months after its entry into force. The AI Act is intended to ensure a reasonable balance between risk and innovation. The needs of citizens, SMEs and start-ups will be particularly taken into account and protected.

In light of the expected AI Act, potential challenges in relation to the procurement of AI systems shall be identified. Questions in the context of direct use of AI in a procurement procedure, e.g. in tenders or tender preparation with the help of AI, are explicitly not addressed.

The following considerations are a continuation in a series of BLOMSTEIN briefings addressing AI-related aspects of public procurement law, competition law, trade/direct investment (FDI) and ESG.

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As announced in January, BLOMSTEIN is publishing a series of briefings introducing into European and German legal defence matters. In our last briefing, we discussed when and how to challenge unlawful single source contracts in the EU.

Today’s topic concerns the relationship between public procurement, constitutional law and the division of powers in the German Government:

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