Draft ITA clarifications

We issued clarification on the subject of the Bond. This is in reference to Section 4.3.2 (Accessing the data room) of the Draft ITA.

Bond
1. Section 4.3.2 (Accessing the data room) includes that "In accordance with the Bid Process Agreement, each Bidder must also provide a Bond of £100,000 to be payable on demand in the event that a Bidder, or any party covered under the terms of the agreement, does not comply with those terms. This must be in the form specified in the Bid Process Agreement, and must be provided by a bank licensed and located within the EEA and with a longterm credit rating of not less than A from Standard and Poor’s Rating Services or a long-term credit rating of not less than A2 from Moody’s Investor Services Limited. Subject to the provisions of the Bid Process Agreement, the bond shall be valid until 31 December 2007 and will be returned on expiry. In the event that a Bidder decides not to submit a Bid, the Bid Process Agreement allows for the earlier return of the Bond, provided that certain conditions are fulfilled."

The Commission has decided that where it is not practicable for a Bidder to obtain a bond from a bank licensed and located within the EEA, it may obtain a bond from a bank licensed and/or located elsewhere provided that (i) such bank has a long-term credit rating of not less than A from Standard and Poor’s Rating Services or a long-term credit rating of not less than A2 from Moody’s Investor Services Limited; and (ii) the Commission’s prior written approval has been obtained.

Issue date: 12 May 2006

2. In addition, if, after a bidder submits a bond, it decides to withdraw from the bid process and does not submit a bid, clause 7.2(a) of the bid process agreement provides that the bond shall be returned upon the later of either (i) the date upon which the successful bidder is announced (ii) the termination of the Third Competition by the Commission or, (iii) the date on which the bidder satisfies its obligations under the bid process agreement.

Issue date: 22 May 2006

3. Section 4.3.2 of the ITA (Accessing the data room) includes that each Bidder must provide a bond in the amount of £100,000 to be payable on demand in the event that a Bidder, or any party covered under the terms of the relevant bid process agreement, does not comply with its terms.

The bond submitted may be in the form of an irrevocable letter of credit, providing that the wording of the bond is as specified in schedule 2 of the bid process agreement.

Issue date: 25 May 2006

4. Subject to the Commission’s prior approval, an entity that has already entered into a bid process agreement with the Commission and duly provided a bond (the ‘Original Entity’) may be changed and replaced by another entity (the ‘Substituting Entity’). In such circumstances, the Substituting Entity must enter into a separate bid process agreement with the Commission and provide a bond. The bid process agreement and the form of bond as set out in Schedule 2 of the bid process agreement entered into by the Substituting Entity will be amended so that the bond shall, in addition to the circumstances envisaged in clause 7.3 of the bid process agreement, become payable in the event that the Original Entity, its representatives, any member of its Group (as defined in the bid process agreement) and/or their respective Related Persons (as defined in the bid process agreement) breaches any of the terms of the bid process agreement and / or any other rules applicable to the Third Competition. On provision of the bond by the Substituting Entity in the form set out above, the Commission will allow the release of the bond provided by the Original Entity

Issue date: 6 June 2006

Related Links

• ITA clarifications

  The Invitation to Apply (ITA) was published in June 2006. Where the Commission received requests for clarification on any matter relating to the ITA, its response was published here.