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P&O sues UK government over no-deal Brexit ferry case | P&O sues UK government over no-deal Brexit ferry case |
(about 4 hours later) | |
Ferry firm P&O is taking legal action against the UK government, claiming a rival was unlawfully handed £33m of taxpayers' money. | Ferry firm P&O is taking legal action against the UK government, claiming a rival was unlawfully handed £33m of taxpayers' money. |
Last month, the Department for Transport (DfT) was forced to settle with train operator Eurotunnel, which had challenged the procurement of no-deal Brexit shipping contracts. | Last month, the Department for Transport (DfT) was forced to settle with train operator Eurotunnel, which had challenged the procurement of no-deal Brexit shipping contracts. |
As part of the deal, Eurotunnel agreed to make improvements to its terminal. | As part of the deal, Eurotunnel agreed to make improvements to its terminal. |
P&O argues that this put its business at a "competitive disadvantage". | P&O argues that this put its business at a "competitive disadvantage". |
Eurotunnel's case came after the DfT awarded contracts worth more than £100m in total to three firms - Brittany Ferries, DFDS and Seaborne Freight. | Eurotunnel's case came after the DfT awarded contracts worth more than £100m in total to three firms - Brittany Ferries, DFDS and Seaborne Freight. |
The companies were to provide extra capacity across the Channel in the event that a no-deal Brexit led to congestion at UK ports. | The companies were to provide extra capacity across the Channel in the event that a no-deal Brexit led to congestion at UK ports. |
In February, the DfT was forced to cancel its contract with Seaborne, which the BBC found had never run a ferry service. | In February, the DfT was forced to cancel its contract with Seaborne, which the BBC found had never run a ferry service. |
The government was criticised for not having run a full public procurement process, and Eurotunnel subsequently sued, claiming it had never been considered for a contract, despite having previously run a cross-channel ferry service. | The government was criticised for not having run a full public procurement process, and Eurotunnel subsequently sued, claiming it had never been considered for a contract, despite having previously run a cross-channel ferry service. |
The DfT, led by Transport Secretary Chris Grayling, settled the claim out of court for £33m. | The DfT, led by Transport Secretary Chris Grayling, settled the claim out of court for £33m. |
The government was keen to stress that the money would be used by Eurotunnel to upgrade its facilities in Folkestone, including installing new scanners and changing traffic routing. | The government was keen to stress that the money would be used by Eurotunnel to upgrade its facilities in Folkestone, including installing new scanners and changing traffic routing. |
At the time, experts said that this provision could amount to illegal state aid. | At the time, experts said that this provision could amount to illegal state aid. |
Andrew Dean, from law firm Clifford Chance said it "could be construed as another piece of public procurement without open and transparent competition". | Andrew Dean, from law firm Clifford Chance said it "could be construed as another piece of public procurement without open and transparent competition". |
P&O, which did not bid for the original ferry contracts, is now challenging the Eurotunnel settlement. | P&O, which did not bid for the original ferry contracts, is now challenging the Eurotunnel settlement. |
"We have repeatedly made clear during decades of providing vital transport services between Britain and the Continent that we are happy to compete with other providers on a level playing field. | "We have repeatedly made clear during decades of providing vital transport services between Britain and the Continent that we are happy to compete with other providers on a level playing field. |
"We also fully accept that it was prudent of the government to make contingency plans to protect international supply chains in the event of a hard Brexit. | "We also fully accept that it was prudent of the government to make contingency plans to protect international supply chains in the event of a hard Brexit. |
"However, we do not believe that the payment of £33m of public money to Eurotunnel to settle its legal challenge to these plans is fair or reasonable. | "However, we do not believe that the payment of £33m of public money to Eurotunnel to settle its legal challenge to these plans is fair or reasonable. |
"It is explicitly designed to be invested in the tunnel's infrastructure and if left unchallenged would put our services at a competitive disadvantage." | "It is explicitly designed to be invested in the tunnel's infrastructure and if left unchallenged would put our services at a competitive disadvantage." |
A government spokeswoman said: "We are confident we acted appropriately in reaching the agreement with Eurotunnel." | A government spokeswoman said: "We are confident we acted appropriately in reaching the agreement with Eurotunnel." |
What could happen if P&O wins its case? | |
By Emily Heard, Head of Procurement, Competition and State Aid at law firm Bevan Brittan | |
P&O's potential grounds include a claim that the £33m payment to Eurotunnel amounts to a contract, which should have been advertised under the Public Contracts Regulations 2015. | |
The remedies include setting aside the contract, damages and a fine. | |
The interesting question here is whether securing "Improvement Projects" as part of the Eurotunnel settlement agreement turns an otherwise lawful settlement agreement into an unlawful public contract. | |
P&O may also be arguing that the settlement amounts to unlawful state aid, on the grounds that it confers an advantage on Eurotunnel over its competitors. | |
If unlawful state aid is found, the government would have to recover the aid in full, with interest, and damages may be payable to P&O. | |
The extent to which the settlement represents fair value will be highly relevant here. |