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The infringement procedures – fines for non-compliance*

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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, General
Pre-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

6 II. Infringement Procedure, General
Litigation Phase: Written (application, defence, reply, rejoinder) and oral (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

8 Number of infringement proceedings by Member States

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

14 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 for each period of 6 months Lump sum of EUR

15 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

17 Calculation of sanctions (SEC 2011/1024 of 01/09/2011; principles: SEC 2005/1658 of 09/12/2005)
Criteria: 1. Seriousness of the infringement 2. Duration of the infringement 3. Sanction deterrent for further infringements 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)

18 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 x coeff. for duration between 1 and 3 x factor ‘n’(→ GNP&votes in Council) for lump sum: 208€/day x coeff. for seriousness from 1 to x factor ‘n’(→ GNP&votes in Council) x number of days between 1st judgment and compliance or 2nd judgment Minimum lump sum: Between € (EST) and € (GER)

19 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

20 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,

21 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.

22 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

23 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

24 Case Parties Substance Sanction imposed C-387/97 Com./Greece Waste24 Euro per day C-287/01 Com./Spain Quality of bathing waters Euro per cent for affected bathing waters C-304/02 Com./France Prohibition to catch small fish Euro per 6 months of non-compliance and Euro lump sum C-177/04 Non-transposition of product safety directive 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 C-70/06 Com./Portugal Public procurement Euro per day of non-compliance C-121/07 GMOs Euro lump sum C-369/07 Subsidies fpr Olympic Airways Euro per day of non-compliance and Euro lump sum C-457/07 Free circulation of construction products Rejected C-568/07 Optician-stores Euro lump sum C-109/08 Gambling machines Euro per day of non-compliance and Euro lump sum C-407/09 Compensation of crime victims Euro lump sum C-469/09 Recovery of illegal State aid Penalty payment Euro per 6 months x % of unlawful aid not recovered Euro lump sum

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

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

27 Commission President Barroso, Plenary debate of the EP
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 EP Strasbourg, 18th January 2012

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