Commission publishes guidance on procurement of innovation

The European Commission has just published earlier today a lengthy guidance document on procurement of innovation. It is welcome since procurement of innovation is the kind of approach (policy? idea?) that is useful mostly for the top 1% of procurers and even then, just some of the time. As such, guidance is required to make it easier for it to be deployed. 

Here's the blurb:

"The 2014 modernised public procurement directives 2 adjusted the public procurement framework to the needs of public buyers and economic operators arising from technological developments, economic trends and increased societal focus on sustainable public spending.

Public procurement rules are no longer only concerned with “how to buy” – they provide scope for incentives on “what to buy”, without prescribing them. The objective of spending taxpayers’ money well is gaining new dimensions, beyond merely satisfying the primary needs of public entities. With each public purchase, the public opinion is rightly interested to know whether the procured solution is not only formally compliant, but also whether it brings the best added value in terms of quality, cost-efficiency, environmental and social impact and whether it brings opportunities for the suppliers’ market."

The more we try to achieve with procurement the more complex it becomes. Remember when the next cycle of complaints about procurement complexity comes about.

Commission launches initiative to improve public procurement

The Commission published yesterday a Communication on Making Public Procurement work in and For Europe. According to its press release, the 4 objectives of this initiative are:

  1. Definition of priority areas for improvement
  2. Voluntary ex-ante assessment of large infrastructure projects
  3. Recommendation on professionalisation of public buyers
  4. Consultation on stimulating innovation through public procurement

All of these initiatives warrant some though and consideration, but at a glance it is refreshing to see the Commission interested in the wider picture of public procurement instead of bringing its gaze as usual to the procedural aspects of how a purchase is conducted.

I've just talked with Albert and we'll be making a short procurement tennis session on these four topics over the next few days. His first entry on the voluntary ex-ante assessment is already up.

European Commission fines Google €2.4B but that is just the start of the story

The European Commission has just fined Google for abuse of dominant position for giving an illegal advantage to its own comparison shopping service on search results. The fine is big €2.4B but it is simply the beginning of a long story instead of the closure of another.

The decision also requires Google to cease its infringing practice within 90 days, leaving squarely on the company's shoulders the explanations of how it intends to comply with the order. As the Commission did not mandate any specific remedies, this is due to become particularly problematic. 

It is likely Google will appeal the fine and drag its feet on changing the way it operates for two reasons. First, there is no incentive to do so otherwise - paying the fine and changing practice would be an admission of wrongdoing and no manager wants to have a €2.4B hole on its finances to explain. So we can expect Google to drag this through the courts. Second, the process takes so long that the real final decision (assuming it maintains the current one) may well be 10+ years away from now. What will be the purpose of changing search results then? And inflation will eat into that €2.4B fine. Plus, from the perspective of Google's executives a protracted court battle means that it is likely that when closure happens they will all be long gone.

As I argued last year in this blog, current abuse of dominant position rules are not the correct deterrent to solve this issue as they are too slow to be useful. In a world where technology waves become shorter and shorter, speed is of the essence also for competition enforcement. I called at the time for abuse of dominant position enforcement to either be sped up or in alternative dropped all together. I maintain most of that view and would suggest looking into merger control rules as an alternative.

In any event, today's decision is simply the start of a long drawn out process.