CN01 - Deutsche Telekom v Commission

With its judgment of 19 January 2022, case T-610/19, the General Court upheld Deutsche Telekom's action to obtain damages in the form of default interest on the principal amount of the fine provisionally paid pursuant to Commission decision C(2014) 7465 of the European Commission's 2014 decision in Slovak Telekom (AT.39523) and partially annulled by the General Court with its judgment of 13 December 2018.

The General Court held that default interest is due at the ECB refinancing rate plus 3.5% from the date of the provisional payment of the fine until its reimbursement. 

Key takeaways

• In case of (full or partial) annulment of a fine provisionally paid by a company pursuant to an antitrust decision, the Commission must reimburse not only the principal amount of the fine but also default interest.
• This can translate into very significant amounts, since the rate to be applied is the ECB refinancing rate plus 3.5% from the date of the provisional payment of the fine until its reimbursement.
• The company is not entitled to the reimbursement of default interest if it originally opted for the provision of a bank guarantee.

Established case law states that, in the event of a judgment annulling a Commission decision imposing a fine or a judgment ordering its repayment, the party concerned has the right to be restored to the situation which it was in before that decision. That requires both the repayment of the principal sum and the payment of interest. 

In Deutsche Telekom, its latest judgment on this issue, the General Court has given more details in relation to the payment of interest in such cases. According to the General Court, the payment of default interest is necessary to comply with judgments annulling Commission decisions imposing fines (as per Article 266(1) TFEU). It provides compensation at a standard rate for the loss of use of the monies owed and encourages the Commission to comply with that judgment as soon as possible.

The General Court also confirmed that:

• the default interest must be paid from the date of provisional payment until the reimbursement of the fine;
• the interest rate is the rate set by the European Central Bank (ECB) for its principal refinancing operations plus 3.5%; and
• the interest thus calculated is compounded at the same above-mentioned rate starting from the date of the judgment until full payment.

The General Court also pointed out that the Commission's obligation to compensate damages in the form of default interest does not arise if the company decided not to provisionally pay the fine but to provide a bank guarantee. In this case, indeed, the fine was not paid and the undertaking therefore suffered no loss in value as regards the amount corresponding to that fine. 

This judgment is in line with the Printeos precedents of both the General Court (case T-201/17) and the Court of Justice (case C-301/19 P). There are now several important precedents confirming the right to claim default interest. The confirmation in Deutsche Telekom of the applicable interest rate and starting date for its payment, when combined with the lengthy appeal process and high initial fines, means default interest alone can translate into tens, even hundreds of millions of EUR. 

There are already at least a dozen actions similar to the Deutsche Telekom proceedings, with one currently pending before the General Court.

Moreover, it appears likely that, in the light of this case law, companies which are addressees of fining decisions will increasingly opt for the provisional payment of the fine, which gives right to payment of default interest, rather than for the provision of a guarantee, which does not.