1 the infringement procedures – fines for non- compliance* dr. günter wilms ll.m. member of the...

1

The infringement procedures – fines for non-

compliance*

Dr. Günter Wilms LL.M.Member of the European Commission’s Legal

Service

*The opinions expressed are personal and do not represent

the ones of the Commission

2

I. Introduction

• EU community of law

• System of legal protection of the essence (f.i.: judgment of 3 September 2008, case C-402/05 P und C-415/05 P. Kadi/Council and Commission, para. 281)

3

I. Introduction• Role of the Court of Justice:

– Ensure that the law is observed (Article 19 TEU)

• Article 17 TEU → the Commission “guardian of the Treaties”

Article 258 TFEU :→ 1st infringement procedure

Article 260 TFEU: → 2nd infringement procedure, in case of non/bad execution of a judgment

4

II. Infringement Procedure, GeneralPre-litigation phase:

- Opening of the case (ex officio or following a complaint)- Pilot Phase- Letter of Formal Notice- Reasoned Opinion

Litigation phase:• 1st Infringement: Art. 258 TFEU

• 2nd Infringement: Art. 260 TFEU

5

II. Infringement Procedure, General:

Pre-litigation phase• Framework: Art. 4(3) TEU: obligation of MS to

cooperate with the Commission

• Letter of Formal Notice

• Reasoned Opinion– defines the subject-matter of the dispute – fixes a time limit within which the MS must

comply (2 months)

• Sets the frame (time-wise and content-wise) for the litigation phase

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II. Infringement Procedure, GeneralLitigation Phase:

• Written (application, defence, reply, rejoinder) andoral (hearing)

If MS condemned: • (Art. 260(1) TFEU, special expression of duty to

cooperate loyally Art. 4(3) TEU):

– MS must take the necessary measures to comply with the judgement immediately

7

Environment and taxation account for almost half of the infringement proceedings

10 cases = 1.0%

15 cases = 1.5%

17 cases = 1.7%

27 cases = 2.7%

28 cases = 2.8%

30 cases = 3.0%

30 cases = 3.0%

31 cases = 3.1%

34 cases = 3.4%

36 cases = 3.6%

41 cases = 4.1%

41 cases = 4.1%

44 cases = 4.4%

48 cases = 4.8%

52 cases = 5.2%

54 cases = 5.4%

55 cases= 5.5%

58 cases = 5.8%

66 cases = 6.6%

102 cases = 10.2%

132 cases = 13.2%

0 20 40 60 80 100 120 140

Maritime transport

Free movement of capital

Financial services

Information society and media

Environmental impact

Free movement of goods and market surveillance

Inland transport

Working rights and conditions

Atmospheric pollution

Free movement of professionals

Social security schemes and free movement of workers

Health and consumers

Justice (incl. Union citizenship and equal treatment)

Public procurement

Energy markets and networks

Services

Waste management

Air transport

Water protection and management

Indirect taxation

Direct taxation

Number of pending cases

8

Number of infringement proceedings by Member States

101 81 79 75 71 54 50 46 44 43 35 35 31 24 22 22 21 21 17 14 13 12 10171821240

25

50

75

100

BE EL IT ES FR PT DE UK PL NL IE SE AT BG HU RO SK CZ LU DK MT CY SI FI LV EE LT

Num

ber o

f pen

ding

case

s

red = increase in the number of pending cases since November 2010 (in Scoreboard n°22)dotted lines = decrease in the number of pending cases since November 2010 (in Scoreboard n°22)

EU average: 37 pending cases.

EFTA

16 1020

5

10

15

20

NO IS LI

9

III. Second Infringement: Sanctions• Sanctions for failure to comply with the first

judgment: the Art. 260 TFEU procedure

– Case law

– Calculation of lump sums and penalty payments

• Changes introduced by the Treaty on the Functioning of the European Union : new Art. 260 (3) TFEU

10

III. Second Infringement: Art. 260 (2) TFEU Failure to comply

• Pre-litigation

– No reasoned opinion

– Commission shall specify the amount of the lump sum or penalty payment

– Must be appropriate in the circumstances

11

III. Second Infringement: Art. 260(3) TFEU New

• Failure to notify measures transposing a directive

• Commission may propose penalty payment or lump sum already in “first infringement”

• Court bound by the Commission’s proposal as a ceiling

12

III. Second Infringement: History

• Until 2002 the COM asked the Court only to impose daily penalty payments

• Result: MS complied only at a late stage

• Purpose of financial sanctions was re-examined

13

III. Second Infringement: Purpose

Objectives of two sanctions → complementary:

• Penalty payment (Persuasive function):→ end an infringement ASAP after the 2nd

judgment

• Lump sum (Dissuasive function)→ effects on public and private interests

caused by the failure to comply with the 1st judgement

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III. Second Infringement: Precedents

• C-304/02 COM v France cumulative use:

- Breach of Community law - has continued for a long period and - is inclined to persist (par. 82)

- In the concrete case:

• Penalty payment of EUR 57.761.250 for each period of 6 months

• Lump sum of EUR 20.000.000

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III. Second Infringement:Lessons learned

• Practical consequences of C-304/02 COM v France:

- COM includes now, in general, in its applications to the Court a specification of:

» both the penalty payment by day of delay after the delivery of the judgement under Art. 260 TFEU

» and a lump sum penalising the continuation of the infringement between the first judgement and the one delivered under Art. 260 TFEU

16

III. Second Infringement: Communications by the Commission

• Purpose of the communications

– Legal certainty

– Proportionality and equal treatment

– Deterrent effect

→ encourage early compliance

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Calculation of sanctions(SEC 2011/1024 of 01/09/2011; principles: SEC 2005/1658 of 09/12/2005)

• Criteria:1. Seriousness of the infringement

1. 2. Duration of the infringement2. 3. Sanction deterrent for further infringements

3. Respect of proportionality principle (in particular)• Sanction has to be appropriate in case of partial compliance

Progress made towards compliance must be taken into account

(several infringements separate sanctions; reduction for progress made)

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Calculation of sanctions(SEC 2011/1024 of 01/09/2011; principles: SEC 2005/1658 of 09/12/2005)

• Standard flat rates:• for daily penalty payments:

• 630€/day x coeff. for seriousness from 1 to 20 x coeff. for duration between 1 and 3x factor ‘n’(→ GNP&votes in Council)

• for lump sum:• 208€/day x coeff. for seriousness from 1 to 20

x factor ‘n’(→ GNP&votes in Council)x number of days between 1st

judgment and compliance or 2nd judgment • Minimum lump sum:• Between 314.000€ (EST) and 11120.000€ (GER)

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NEW ART. 260(3) TFEU

• Raison d’être

• Stronger incentive to transpose directives within deadlines

• Help EU citizens to enjoy the rights conferred by these directives at an earlier stage

• Respect for the legislator

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Infringement proceeding for non-conformity as percentage of Internal Market directives (as of 1 May 2011)All statistics from: SEC(2011) 1128 final Internal Market Scoreboard n°23, 29.9.2011

0.2

%

0.3

%

0.3

%

0.3

%

0.5

%

0.5

%

0.5

%

0.5

%

0.5

%

0.6

%

0.7

%

0.7

%

0.8

%

0.8

%

0.8

%

0.9

%

0.9

%

0.9

%

1.0

%

1.0

%

1.0

%

1.1

%

1.2

%

1.5

%

1.6

%

1.6

%

0.1

%

0%

1%

2%

CY MT FI NL RO LV LT DK EE LU BG AT IE DE HU SI SK SE CZ ES PT UK EL FR BE IT PL

EU average: 0.8%

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NEW ART. 260(3) TFEU

• Features of this instrument:

Already in first infringement lump sum and / or penalty payment may be imposed

Court will not exceed the amount specified by the Com.

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NEW ART. 260(3) TFEU

• Communication on the Implementation of Art. 260(3) TFEU [O.J. C 12 of 15/01/2011 p. 1]

• Same principles as Art. 260(2) TFEU

• 2 possible cases:

– Total failure to notify transposition measures– Partial notifications of these measures

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NEW ART. 260(3) TFEU

• Coefficient of duration:

– Starting point: day following the expiry of the transposition period

• Proposal of the COM is not binding for the Court

• But: Court cannot go beyond

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Case Parties Substance Sanction imposed

C-387/97 Com./Greece Waste24 20.000 Euro per day

C-287/01 Com./Spain Quality of bathing waters 624.150 Euro per cent for affected bathing waters

C-304/02 Com./France Prohibition to catch small fish 57.761.250 Euro per 6 months of non-compliance and 20.000.000 Euro lump sum

C-177/04 Com./France Non-transposition of product safety directive

31.650 Euro per day of non-transposition

C-119/04 Com./Italy Foreign language teachers Condemned for non-compliance but no sanction

C-503/04 Com./Germany Waste treatment Braunschweig

Condemned for non-compliance but no sanction

C-70/06 Com./Portugal Public procurement 19.392 Euro per day of non-compliance

C-121/07 Com./France GMOs 10.000.000 Euro lump sum

C-369/07 Com./Greece Subsidies fpr Olympic Airways 16.000 Euro per day of non-compliance and2.000.000 Euro lump sum

C-457/07 Com./Portugal Free circulation of construction products

Rejected

C-568/07 Com./Greece Optician-stores 1.000.000 Euro lump sum

C-109/08 Com./Greece Gambling machines 31.536 Euro per day of non-compliance and3.000.000 Euro lump sum

C-407/09 Com./Greece Compensation of crime victims 3.000.000 Euro lump sum

C-469/09 Com./Italy Recovery of illegal State aid • Penalty payment 30.000.000 Euro per 6 months x % of unlawful aid not recovered 30.000.000 Euro lump sum

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Average duration of infringement proceedings (from one year to almost three years)

34.7

33.2

30.8

29.8

29.1

29.1

28.4

28.4

27.9

27.1

26.9

26.2

26.1

24.7

23.8

22.7

22.4

21.7

20.5

20.0

19.9

19.7

17.1

15.4

15.0

14.1

11.5

0

10

20

30

FI10

CZ16

DK19

IE24

DE36

UK42

PT30

SE28

NL35

FR58

HU20

ES57

PL35

EL63

BE85

LT10

IT65

EE11

MT14

SK21

BG24

AT18

SI14

LV13

RO22

CY15

LU15

Number of cases per Member State

Dura

tion s

ince s

endin

g of le

tter

of for

mal n

otice

(in m

onths

)

EU average: 24.7 months

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Cases from most Member States are still open more than 12 months after the Court ruling

24.2

22.4

21.1

20.6

18.2

17.3

16.2

16 15.9

14.6

14.2

14 14 12.1

10.4

9.8

9 6.1

4.1

0

5

10

15

20

25

FR28

ES41

IE17

AT18

PT14

IT52

EL26

NL13

LU21

BE18

SE10

DE28

UK20

FI12

DK3

PL6

LT2

SK1

MT2

Number of cases

Dur

atio

n be

twee

n ju

dgem

ent

of t

he C

ourt

and

clo

sure

(in

mon

ths)

EU average= 17.4 months

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CLOSING STATEMENT

• For it is only through a legally stable environment, based on the rule of law,

democratic principles and fundamental rights, that the confidence of citizens, of partners and

investors can be gained and upheld.

Commission President Barroso, Plenary debate of the EPStrasbourg, 18th January 2012