Private enforcement of procurement rules: The heterogeneous effect of the EU remedies directive

This study examines the impact of the EU Remedies Directive on the prevalence of direct awards in public procurement. Strengthening bid protest mechanisms should, in theory, curb the use of direct awards by increasing the likelihood that aggrieved bidders challenge such decisions. Using a difference-in-differences approach, exploiting the staggered implementation of the directive across EU countries, we test this hypothesis using a large database of public procurement contracts. We find a strong deterrent effect for public buyers with a high initial propensity to use direct awards. For this group, the directive led to a reduction in direct awards exceeding 50 percentage points within two years of implementation. These results highlight the effectiveness of private enforcement mechanisms in shaping procurement behavior, yet indicate that such measures may also discourage the justified use of direct awards. • The EU Remedies Directive reduced the use of direct awards in public procurement. • For frequent users, direct awards fell over 50 points in two years of implementation. • Deterrence was strongest for frequent users, with little effect on occasional users. • Signs of over-deterrence are found in countries with weak judicial systems. • No evidence is found that the Directive harms long-term relationships.