Court of Justice of the European Union rules that two financial penalties may be imposed within a single decision

The Polish Office of Competition and Consumer Protection may impose two penalties within a single decision, one for transgressions against Polish law and the other for transgressions against European Union law. This is the gist of a Court of Justice of the European Union judgement in a case concerning penalties levied on PZU Życie. At, respectively, PLN 33 million and PLN 17 million, the amounts at stake were quite significant.

Ruling on case C-617/17 (concerning PZU Życie S.A.) on 3 April 2019, the Court of Justice of the European Union held that observance of the ne bis in idem principle does not preclude imposition of two fines within one and the same decision; at the same time, the domestic competition authority ought to ensure that the two penalties, taken together, remain in proportion to the character of the breach. It is now up to the Polish Supreme Court to decide whether the aggregate penalty of PLN 50 million is not excessive.

PLN 50 mln in the balance

The roots of the case now adjudicated by the Court of Justice of the European Union go back to the decision issued by the Polish

Office of Competition and Consumer Protection (UOKiK) on 25 October 2007 in which the authority, having deemed that PZU Życie is abusing its dominant market position, imposed two penalties – approximately PLN 33 mln for violation of national competition law (art. 8 of the legislative Act regarding competition and consumer protection) for the period of 1 May 2001 through 25 October 2007, and another PLN 17 mln for violation of EU competition law (art. 82 of the European Union Treaty) for the period of 1 May 2004 through 25 October 2007. The case wound up before the Polish Supreme Court in an extraordinary appeal; all along, PZU challenged the very idea of imposing two discrete penalties in a single decision, arguing that this amounts to violation of the principle of ne bis in idem (not twice for the same) enshrined in art. 50 of the EU Charter of Fundamental Rights. This line of argument ran that PZU has been punished two times for violation of EU law – one time directly, on the basis of art. 82 of the European Union Treaty in reference to art. 5 of Council Regulation (EC) No 1/2003 of 16 December 2002, and the second time indirectly, on the basis of domestic competition law. The Polish Supreme Court found itself with a legal conundrum and inquired of the Court of Justice of the European Union:

1. Is it permissible to interpret art. 50 of the EU Charter of Fundamental Rights so as to predicate application of the ne bis in idem principle not only upon sameness of the entity in breach and of the factual circumstances, but also sameness of the legal interest to be safeguarded ?
2. Should art. 3 of Regulation (EC) No 1/2003 in reference to art. 50 of the EU Charter of Fundamental Rights be interpreted so that parallel application by the competition authority of a Member State of EU and domestic competition law safeguards the same legal interest  ? (…)

Two penalties are fine, as long as they remain in proportion to the violation

Such an outcome comes as no surprise to Bernadeta Kasztelan-Świetlik of GESSEL. “The President of UOKiK found in his decision that a violation of domestic as well as EU competition law had taken place. This means that the practice engaged in by the enterprise was potentially detrimental to competition not only in the Polish market, but also in the European one; imposition of two penalties is thus justified”, Kasztelan-Świetlik explains. (…)

“Albeit an aggregate penalty of PLN 50 is a very high one, we must bear in mind that the potential of PZU Życie is quite large, and that a penalty, apart from its disciplining or educational dimension, should not be negligible from the perspective of the enterprise being punished”, Bernadeta Kasztelan-Świetlik adds.

Full text is available (in Polish) on www.prawo.pl