Case T‑610/19
Deutsche Telekom AG
v
European Commission
Judgment of the General Court (Seventh Chamber, Extended Composition), 19 January 2022
(Action for annulment and for damages – Competition – Abuse of dominant position – Slovak market for broadband telecommunications services – Decision finding an infringement of Article 102 TFEU and of Article 54 of the EEA Agreement – Judgment annulling the decision in part and reducing the amount of the fine imposed – Refusal of the Commission to pay default interest – Article 266 TFEU – Article 90(4)(a) of Delegated Regulation (EU) No 1268/2012 – Sufficiently serious breach of a rule of law conferring rights on individuals – Loss of use of the amount of the fine that had been unduly paid – Loss of profits – Default interest – Rate – Harm)
1. Non-contractual liability – Conditions – Unlawfulness – Harm – Causal link – One of the conditions not satisfied – Claim for compensation rejected in its entirety
(Art. 340, second para., TFEU)
(see paragraphs 30-32)
2. Non-contractual liability – Conditions – Actual and certain harm – Burden of proof – Repayment by the Commission of a fine cancelled and reduced by the EU Courts – Loss of profit by the undertaking concerned in respect of the amount repaid – No evidence demonstrating the possibility of making investments capable of achieving a return equivalent to the return on invested capital or to the weighted average cost of the capital – No actual and certain harm
(Art. 340, second para., TFEU)
(see paragraphs 39-48, 51, 52)
3. Non-contractual liability – Conditions – Unlawfulness – Failure of the Commission to fulfil its obligation to pay default interest on the repaid amount of a fine cancelled and reduced by the EU Courts – Infringement of Article 266 TFEU – Sufficiently serious breach of a rule of law conferring rights on individuals
(Arts 261, 263, 266, first para., and 340, second para., TFEU; Council Regulation No 1/2003, Art. 31)
(see paragraphs 71-76, 95, 111-113)
4. Non-contractual liability – Conditions – Unlawfulness – Repayment by the Commission of a fine cancelled and reduced by the EU Courts – Refusal of the Commission to pay default interest on the amount repaid – Ex tunc effect of the annulment and reduction carried out by the EU Courts – Default interest that was determined or capable of being determined on the basis of established objective factors at the date of the provisional payment of the fine
(Art. 340, second para., TFEU; Commission Regulation No 1268/2012, Arts 83 and 90; Commission Decision C(2013) 2488 final, Art. 24(2))
(see paragraphs 78-87, 95)
5. Own resources of the European Union – Payment of a debt incumbent on the Commission – Interest due – Reimbursement by the Commission of a fine cancelled and reduced by the EU Courts – Obligation to pay default interest on the amount repaid from the date of payment of the fine – Conflict with the deterrent function of fines – None
(Art. 266, first para., TFEU)
(see paragraphs 91-94)
6. Own resources of the European Union – Payment of a debt incumbent on the Commission – Interest due – Partial repayment by the Commission of a fine reduced by the EU Courts – Competence of the Commission to determine the conditions of repayment by way of an individual decision – None
(Art. 266, first para., TFEU; Commission Regulation No 1268/2012, Art. 90(4))
(see paragraphs 96-105)
7. Own resources of the European Union – Payment of a debt incumbent on the Commission – Interest due – Compensatory interest – Default interest – Distinction – Measure giving effect to a judgment of the EU Courts partially annulling a fine and reducing its amount
(Art. 266, first para., TFEU)
(see paragraphs 107-110)
8. Non-contractual liability – Conditions – Causal link – Repayment by the Commission of a fine cancelled and reduced by the EU Courts – Refusal of the Commission to pay default interest on the amount repaid – Harm resulting from that refusal – Existence of a causal link
(Art. 266, first para., and Art. 340, second para., TFEU)
(see paragraphs 116-118)
9. Own resources of the European Union – Payment of a debt incumbent on the Commission – Interest due – Repayment by the Commission of a fine cancelled and reduced by the EU Courts – Determination of the rate of interest due – Immediate payment of the fine – Deferment of payment and provision of a bank guarantee – Distinction
(Commission Regulation No 1268/2012, Arts 83 and 111)
(see paragraphs 120-123, 127-137)
Résumé
The General Court awards Deutsche Telekom compensation in the amount of approximately EUR 1.8 million for the harm which it suffered as a result of the European Commission’s refusal to pay it default interest on the amount of the fine which it had unduly paid for an infringement of competition rules.
By decision of 15 October 2014, (1)the European Commission imposed on Deutsche Telekom AG (‘Deutsche Telekom’) a fine of EUR 31 070 000 for abuse of its dominant position on the Slovak market for broadband telecommunications services, in infringement of Article 102 TFEU and Article 54 of the EEA Agreement.
Deutsche Telekom brought an action for annulment of that decision but paid the fine on 16 January 2015. By its judgment of 13 December 2018, (2) the General Court upheld Deutsche Telekom’s action in part and, exercising its unlimited jurisdiction, reduced the amount of the fine by EUR 12 039 019. On 19 February 2019, the Commission repaid that amount to Deutsche Telekom.
However, by letter of 28 June 2019 (‘the contested decision’), the Commission refused to pay default interest to Deutsche Telekom for the period between the date of payment of the fine and the date of reimbursement of the portion of the fine held not to be due (‘the period in question’).
Deutsche Telecom accordingly brought an action before the Court seeking annulment of the contested decision and an order directing the Commission to pay compensation for lost revenue as a result of the loss of use, during the period in question, of the principal amount of the portion of the fine unduly paid or, in the alternative, compensation for the harm suffered as a result of the Commission’s refusal to pay default interest on that amount.
By its judgment, the Seventh Chamber, Extended Composition, of the General Court upholds in part Deutsche Telekom’s action for annulment and compensation. In that respect, it provides clarifications with regard to the Commission’s obligation to pay default interest on the portion of a fine which, following a judgment of the EU Courts, must be reimbursed to the undertaking concerned.
Findings of the General Court
In the first place, the Court rejects Deutsche Telekom’s claim for compensation, on the basis of the non-contractual liability of the European Union, for the alleged loss of revenue which it claims resulted from the loss of use, during the period in question, of the portion of the fine that had been unduly paid and which corresponds to the annual return on its invested capital or to the weighted average cost of its capital.
In that regard, the Court notes that, in order for the European Union to incur non-contractual liability, a number of cumulative conditions must be satisfied: there must be a sufficiently serious breach of a rule of law conferring rights on individuals; the damage must actually have occurred; and there must be a causal link between the breach and the harm suffered, these being matters which the applicant must prove.
In the present case, however, Deutsche Telekom failed to adduce conclusive proof of the actual and certain nature of the harm alleged. More specifically, Deutsche Telekom demonstrated neither that it would necessarily have invested the amount of the fine that had been unduly paid in its business nor that the loss of the use of that amount led it to abandon specific and actual projects. Deutsche Telekom had also failed in this context to demonstrate that it did not have the necessary funds to take advantage of an investment opportunity.
In the second place, the Court addresses Deutsche Telekom’s claim, put forward in the alternative, for compensation for infringement of Article 266 TFEU, the first paragraph of which provides for the obligation on institutions whose act has been declared void by a judgment of the EU Courts to take all necessary measures to comply with that judgment.
The Court notes, first, that, by imposing on the institutions the obligation to take all necessary measures to comply with the judgments of the EU Courts, the first paragraph of Article 266 TFEU confers rights on the individuals who have been successful in their actions before those Courts. Second, the Court notes that default interest represents an essential component of the obligation on the institutions under that provision to restore an applicant to his, her or its original position. It therefore follows from that provision that, in the event of cancellation and reduction of a fine imposed on an undertaking for infringement of competition rules, there is an obligation on the Commission to repay the amount of the fine unduly paid together with default interest.
The Court clarifies that, since the applicable financial legislation (3) gives companies which have provisionally paid a fine that is later cancelled and reduced a right to claim restitution, and since the cancellation and reduction of the amount of the fine made by the EU Courts have retroactive effect, Deutsche Telekom’s claim existed and was certain as to its maximum amount at the date of the provisional payment of the fine. The Commission was therefore required, under the first paragraph of Article 266 TFEU, to pay default interest on the portion of the fine held not to be due by the Court, for the entire period in question. That obligation is designed to provide compensation at a standard rate for the loss of use of the monies owed in connection with an objective delay and to encourage the Commission to exercise particular care when adopting a decision involving the payment of a fine.
The Court adds that, contrary to what the Commission has submitted, the obligation to pay default interest does not conflict with the deterrent function of fines in competition cases, since that deterrent function is necessarily taken into account by the EU Courts when exercising their unlimited jurisdiction to reduce, with retroactive effect, the amount of a fine. Moreover, the deterrent function of fines must be reconciled with the principle of effective judicial protection set out in Article 47 of the Charter of Fundamental Rights of the European Union, compliance with which is ensured by means of judicial review as provided for in Article 263 TFEU, supplemented by the unlimited jurisdiction in respect of the amount of the fine.
The Court also rejects the other arguments put forward by the Commission.
First, even if the amount of the fine paid by the applicant did not yield interest while it was in the Commission’s possession, the Commission was required, following the judgment of the Court of 13 December 2018, to reimburse to the applicant the portion of the fine held to have been unduly paid, together with default interest, without this being precluded by Article 90 of Delegated Regulation No 1268/2012, which deals with the recovery of fines. In addition, the obligation to pay default interest follows directly from the first paragraph of Article 266 TFEU and the Commission is not entitled to determine, by way of an individual decision, the conditions under which it will pay default interest in the event of annulment of a decision imposing a fine and a reduction in the amount of that fine.
Second, the interest due in the present case is default interest, not compensatory interest. Deutsche Telekom’s principal claim was a claim for restitution, relating to the payment of a fine that had been made provisionally. That claim existed and was certain as to its maximum amount or at least could be determined on the basis of established objective factors at the date of that payment.
Since the Commission was required to repay to Deutsche Telekom the portion of the fine that had been unduly paid, together with default interest, and since the Commission had no discretion in that regard, the Court concludes that the refusal to pay that interest to Deutsche Telekom constitutes a serious breach of the first paragraph of Article 266 TFEU, which results in the European Union incurring non-contractual liability. Given the direct link between the infringement that occurred and the harm consisting in the loss, during the period in question, of default interest on the portion of the fine that had been unduly paid, the Court awards Deutsche Telekom compensation in the amount of EUR 1 750 522.38, calculated by application, by analogy, of the rate provided for in Article 83(2)(b) of Delegated Regulation No 1268/2012, namely the rate applied by the European Central Bank in January 2015 to its principal refinancing operations, that being 0.05%, increased by three and a half percentage points.