On July 4, 2024, the Court of Justice delivered its judgment in the Westfälische Drahtindustrie and Others v. Commission case,[1] addressing Westfälische Drahindustrie GmbH’s (“WDI”) challenge to the Commission’s request for interest payments on the fine imposed on WDI for its participation in a cartel in the prestressing steel sector. This judgment confirms that interest on fines levied by the Commission begins to accrue from the day indicated in the Commission’s decision, even if the EU courts later redetermine the amount of the fine.
Background
In 2010, the Commission fined 17 steel producers for conspiring to fix quotas and individual prices of prestressing steel, allocating customers across the EU amongst themselves, and exchanging sensitive commercial information.[2]
WDI filed an appeal and applied for interim measures to suspend the Commission’s decision until the judgment was delivered. The General Court granted these measures, suspending WDI’s obligation to pay the fine.
On July 15, 2015, the General Court annulled the fine imposed on WDI, finding that the Commission had erred in the calculation of the fine when assessing WDI’s ability to pay. However, exercising its unlimited jurisdiction, the General Court re-imposed a fine of the same amount. The judgment established that WDI’s claim for a reduced fine on the basis of its inability to pay was unsubstantiated. This was in particular due to the restructuring undertaken by WDI after the Commission’s decision, which demonstrated that it was not entitled to a reduction on those grounds.
The Court of Justice dismissed WDI’s appeal, [3] leading to a dispute between the Commission and WDI over the amount of the interest due. On October 16, 2019, WDI informed the Commission of its intention to pay the fine with interest accruing from October 15, 2015, three months after the General Court’s judgment. The Commission responded that, according to established practice, interest had started accruing from the date specified in the Commission’s decision on January 4, 2011.
The General Court’s judgment
WDI appealed the Commission’s response before the General Court, claiming that the interest on the fine should be calculated from the date of the General Court’s judgement. WDI claimed that the General Court, by exercising its unlimited jurisdiction, had annulled the Commission’s fine and replaced it with a new fine.
In its judgment, the General Court,[4] following established case law, clarified that fines imposed by EU courts do not amount to a new fine, even when unlimited jurisdiction is exercised. Thus, WDI had to pay interest from the date established in the Commission’s 2010 decision.
The Court of Justice rejected the appeal
WDI appealed the General Court’s decision, again claiming that the fine imposed by the General Court constituted a new and legally distinct fine from the one imposed by the Commission. It argued that interest should accrue only from the date of the General Court’s judgment.
The Court of Justice rejected the appeal. First, the Court of Justice observed that, when exercising unlimited jurisdiction, EU courts can substitute the Commission’s assessment of the penalty with their own, and reduce, increase, or cancel the amount as necessary.[5]
Second, the Court of Justice clarified that the General Court’s unlimited jurisdiction is limited to assessing the fine amount, and does not empower it to impose a new legally distinct fine.[6] Thus, any changes made by the EU courts are deemed to retroactively amend the Commission’s decision.
Finally, the Court of Justice affirmed that these principles apply even if the General Court first annuls the fine and then imposes an equivalent one. The Court of Justice ultimately held that WDI should pay interest on the fine starting from the date established in the original Commission’s decision, which was in January, 2011.
Practical implications
The Court of Justice’s judgment clarifies that in almost every case where a company is fined by the Commission for violating competition laws, it will have to pay interest starting from the date indicated in the Commission’s decision, even if the EU courts redetermine the fine amount.
[1] Westfälische Drahtindustrie and Others v. Commission (Case C-70/23 P) EU:C:2024:580 (“WDI v. Commission”).
[2] Prestressing Steel (Case COMP/AT.38344), Commission decision of June 30, 2010. See our previous newsletter here.
[3] Westfälische Drahtindustrie and Pampus Industriebeteiligungen v. Commission (Case C-523/15 P) EU:C:2016:541.
[4] Westfälische Drahtindustrie and Others v. Commission (Case T-275/20) EU:T:2022:723.
[5] WDI v. Commission, para. 39.
[6] Ibid., para. 41.