National and EU competition rules apply in parallel. The areas to which the rules
are applied are not the same, and therefore fines can be issued under both sets of rules.
Read lawyer Hans Sønderby Christensen’s article published on Monday, May 6, 2019, on Jyllands-Posten’s website here or download it as a PDF here.
The EU Court of Justice recently delivered an important judgment on the interpretation of the principle of prohibition of double punishment – or, as lawyers call it, “ne bis in idem”. The principle is one of the fundamental rights in the EU Charter of Fundamental Rights, which since the adoption of the Treaty of Lisbon in 2009 has been binding on the Member States with the same legal value as the EU Treaties. This means that in all cases where EU law applies, the Member States, as a result of the primacy of EU law, must not apply national rules that are contrary to the EU Charter.
In the judgment, the EU Court of Justice stated that although the principle of prohibition of double punishment does not prevent a national competition authority from imposing two fines on a company for the same infringement within the same decision, the fines – taken as a whole – must be reasonable in relation to the infringement. That is, if the company has violated both a Member State’s national competition rules and the EU competition rules, it may be possible to issue two fines, but in such a situation, the authority must ensure that the fines, taken as a whole, are reasonable in relation to the infringement.
The case concerned a decision taken by the chairman of the Polish competition and consumer protection authorities, which imposed two fines on the Polish insurance company Powszechny Zakład Ubezpieczeń na Życie S.A. of PLN 33,022,892.88 (approximately EUR 7,664,000) and PLN 17,358,187.23 (approximately EUR 4,033,000), respectively. The first fine was imposed on the company because it had taken measures to prevent competition in the Polish market for group life insurance, which constituted anti-competitive behavior in violation of the prohibition of abuse of a dominant position in the national competition rules. The second fine was imposed on the company for simultaneously violating the prohibition of abuse of a dominant position in the EU competition rules, because the anti-competitive behavior could also have a negative impact on foreign insurance companies’ ability to enter the Polish market, which in turn could negatively affect trade between Member States.
After first bringing the decision before two lower courts without success, the company appealed the case to Sąd Najwyższy (Supreme Court, Poland), where it is now pending. Before this court, the company has argued that it has been imposed two fines for the same matter, and that this constitutes a violation of the principle of prohibition of double punishment in the EU Charter. As the court was in doubt about the correct interpretation of the principle, it decided to postpone the case and submit a preliminary question to the EU Court of Justice in Luxembourg on this topic.
The preliminary question submitted to the EU Court of Justice was whether the principle should be interpreted as precluding a national competition authority from imposing a fine on a company for violation of national competition law and a fine for violation of EU competition law within the same decision.
Initially, the EU Court of Justice noted that, according to the EU Court of Justice’s established case law, national law and EU law apply in parallel in the area of competition. This is because the national competition rules and the EU competition rules view the anti-competitive behavior differently, and their scope of application is not the same. This means that in situations where a national competition authority applies the national competition rules to anti-competitive behavior which – in addition to affecting competition in the national market – may also affect trade between Member States, the authority must apply the EU competition rules in parallel with the national competition rules.
The EU Court of Justice then noted that it follows from the EU Court of Justice’s established case law that a national competition authority, when imposing a fine on a company for violation of EU competition law, must comply with the principle of prohibition of double punishment in the EU Charter. The principle implies that a company cannot later be convicted or prosecuted again for an infringement if the company has already been imposed a fine or has been declared free of liability for the same infringement by a previous decision that can no longer be challenged. The principle aims to ensure legal certainty and equality so that when a company has once been prosecuted and possibly also punished for an infringement, the company has security that it will not subsequently be further prosecuted and, if applicable, punished for the same infringement.
The EU Court of Justice then stated that it follows from the foregoing that the protection which the principle of prohibition of double punishment intends to give against double prosecution, where a fine is imposed, is not relevant in a case such as the present, where a national competition authority applies the national competition rules and the EU competition rules simultaneously and sanctions a company by imposing two fines on it within the same decision for violation of, respectively, the national competition law and the EU competition law. Thus, the EU Court of Justice refuted the preliminary question.
The EU Court of Justice also noted, however, that in cases where a national competition authority decides to impose two fines on a company for violation of, respectively, the national competition rules and the EU competition rules, the authority must exercise this competence in compliance with EU law. This means that although the choice of sanction belongs to the national authority, the authority must nevertheless ensure that a violation of EU law is sanctioned according to the same rules as apply under national law to violations of the same kind and severity, and the sanction must in any case be proportionate to the violation.
The EU Court of Justice’s judgment shows that a company can be imposed two fines within the same decision if the company has violated both national competition law and EU competition law. However, the judgment also shows that the fines in such a situation must, taken as a whole, be reasonable in relation to the infringement being sanctioned.