On 20 January 2021 the European Court of Justice ("ECJ") upheld the General Court's ruling on the European Commission's duty to pay default interest on reimbursed fines as a form of restitutio in integrum, clarifying the rate to be applied and that late payment of interest will itself incur interest.
| what you need to know - key takeaways |
- Upon reimbursement of a fine provisionally paid in compliance with an antitrust decision, which is subsequently annulled, the company is also entitled to default interest.
- The default interest rate to be applied is currently that set by the European Central Bank for its principal refinancing operations, plus 3.5 percentage points.
- If the European Commission fails to fully comply with this obligation, the company can bring an action seeking payment of the shortfall.
- The company can also seek default interest on the shortfall itself, from the date of partial repayment of the fine until the date of payment in full.
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In the ruling under appeal in this case (T-201/17 of 12 February 2019), the General Court had recalled that, pursuant to Article 266(1) TFEU, the institution whose act has been declared void must take the necessary measures to comply with that judgment i.e. restore the situation which existed before that decision was adopted. In the event of the annulment of a European Commission decision imposing a fine which the company has provisionally paid – as in Printeos' case – that requires reimbursement of the principal amount of the fine and, in addition, payment of default interest from the date of the provisional payment. If the European Commission fails to comply with that obligation, that constitutes a sufficiently serious breach of Article 266(1) TFEU, entitling the applicant to bring an action for damages.
On appeal (C-301/19 P) the ECJ confirmed the General Court's ruling on those basic points. However, it provided some important additional clarifications and also reformed the ruling in relation to one key issue.
Firstly, the ECJ clarified that default interest is aimed at compensating at a standard rate for the loss of enjoyment of the monies owed and to encourage the debtor to pay the due amount as soon as possible. Since the annulment of an antitrust decision shows that the European Commission erred in imposing the payment of a fine, default interest must be paid according to the restitutio in integrum principle.
Secondly, the ECJ confirmed that applicable rate of interest should normally be the rate set by the European Central Bank ("ECB") for its principal refinancing operations, plus 3.5 percentage points, pursuant to Article 83 of Delegated Regulation 1268/2012 (now Article 99 of Delegated Regulation 2018/1046). However, where the European Commission has invested the provisionally paid fine and that investment has yielded a higher rate of interest, then it is that higher rate that should apply. Ironically, in this specific case, Printeos had explicitly asked the General Court for a significantly lower rate – i.e. ECB plus 2 percentage points – and the court therefore did not have the power to grant any more than that in its judgment ("ne ultra petita "or "not beyond request" principle).
Finally, in its application before the General Court, Printeos, in view of the fact that the European Commission had failed to pay the full amount of default interest due to it immediately after the annulment of its decision, had asked to receive "compound" default interest on the amount (of interest) that the Commission had failed to pay. The General Court had rejected this request for "compound" interest, except for the period following its own judgment.
That finding was overturned on appeal. The ECJ confirmed that, if the European Commission failed to reimburse all interest due, default interest thereon should be recognized on the amount which had not been paid by the Commission. The rate to apply would again be the ECB refinancing rate plus 3.5 percentage points and it would apply from the date of the partial reimbursement of the fine. Again, somewhat ironically, in this specific case Printeos requested "compound" default interest from a later date (the date on which it introduced its action for damages before the General Court). As a result, it could not be awarded any "compound' interest before that date in accordance with the ne ultra petita principle.
With this ruling the ECJ solved (once and for all?) important doubts surrounding the recovery of antitrust fines unduly paid, namely (i) the European Commission's duty to pay default interest on the fine to be reimbursed, (ii) the applicable interest rate and (iii) the possibility to compound interest.
