Case T‑609/20

LA International Cooperation Srl

European Commission

Judgment of the General Court (Tenth Chamber), 29 June 2022

(Pre-Accession Assistance Instrument – OLAF investigation – Commission decision imposing an administrative sanction – Exclusion from procurement and grant award procedures covered by the general budget of the European Union for a period of four years – Registration in the early detection and exclusion system database – Financial regulation – Unlimited jurisdiction – Proportionality of the sanction)

EU budget – Financial regulation – Administrative sanctions which may be imposed by the Commission – Exclusion of an operator from procurement and grant award procedures – Judicial review – Unlimited jurisdiction – Scope

(European Parliament and Council Regulation No 966/2012, as amended by Regulation 2015/1929, Art. 108(11))

(see paragraph 157)
EU budget – Financial regulation – Administrative sanctions which may be imposed by the Commission – Exclusion of an operator from procurement and grant award procedures – Judicial review – Unlimited jurisdiction – Compliance with the principle of proportionality in the determination of the sanction imposed on the operator – Mitigating circumstances – Rejection

(European Parliament and Council Regulation No 966/2012, as amended by Regulation 2015/1929, Arts 106(3) and 108(11))

(see paragraphs 156, 158, 161, 163, 164)

Résumé

Pursuant to Regulation No 1085/2006, ( 1 ) the European Union is to assist the countries concerned by pre-accession assistance, including the Republic of North Macedonia, in the progressive alignment with its standards and policies. In the framework of two national programmes in favour of that country, two contracts had been awarded to the applicant, LA International Cooperation Srl, and concluded in 2013 and 2015.

Following an investigation and a final report by the European Anti-Fraud Office (OLAF) into potential acts of fraud and corruption committed by the applicant, between October 2012 and January 2017, the investigating body ( 2 ) adopted a recommendation. In the light of the latter, the European Commission inter alia decided to exclude the applicant, for a period of four years, from participating in procurement and grant award procedures financed by the general budget of the European Union ( 3 ) and from participating in procedures for the award of funds under the 11th European Development Fund. ( 4 )

Hearing an action for annulment of the Commission decision, the General Court exercises for the first time its unlimited jurisdiction to review the sanctions adopted by the Commission. ( 5 ) It also examines whether the four-year period of exclusion decided upon by the Commission is appropriate and proportionate.

Findings of the Court

The Court notes that it has unlimited jurisdiction which empowers it, beyond the mere review of legality, to review a decision whereby the contracting authority excludes an economic operator and/or imposes on it a financial penalty, including reducing or increasing the duration of the exclusion and/or cancelling, reducing or increasing the financial penalty imposed.

The Court assesses whether the duration of the exclusion at issue takes into account the mitigating circumstances invoked by the applicant, namely its good cooperation during the investigation and the organisational measures it subsequently adopted.

First, the Court recalls that a contracting authority which excludes an economic operator must comply with the principle of proportionality and, in so doing, must take into account, inter alia, the seriousness of the situation, its duration and its recurrence, the intention or degree of negligence, or any other mitigating circumstances, such as the collaboration of that operator and its contribution to the investigation.

Second, it finds that the acts of corruption and grave professional misconduct committed by the applicant are very serious by their very nature. Account must be taken both of the seriousness of the acts themselves and of their impact on the European Union’s financial interests.

Third, it is true that the elements relied on by the applicant in terms of its very good and full cooperation during the on-the-spot checks are established. However, the Court states that the applicant had been under an obligation to cooperate with OLAF and that, in the present case, its conduct can have only a slight impact on the degree of severity of the sanction, given the seriousness of the acts at issue.

Fourth, the Court decides not to take account of the organisational measures adopted by the applicant in 2016 since it finds that not only did they not put an end to its misconduct, which continued until January 2017, but, moreover, they had no effect at all on its conduct during the relevant period.

Fifth, the applicant’s conduct constituted both acts of grave professional misconduct, incurring an exclusion measure of five years, before 1 January 2016, and of three years after that date, and acts of corruption, subject to exclusion measures of a maximum duration of five years after 1 January 2016.

In the light of all those findings and circumstances, the Court holds that an exclusion of four years is appropriate and proportionate.

( 1 ) Council Regulation (EC) No 1085/2006 of 17 July 2006 establishing an Instrument for Pre-Accession Assistance (IPA) (OJ 2006 L 210, p. 82), Article 1. The countries concerned are listed in Annexes I and II to that regulation.

( 2 ) In accordance with Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ 2018 L 193, p. 1), Article 143.

( 3 ) Under the law in force, namely:

• Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 248, p. 1), as amended by Council Regulation (EC, Euratom) No 1995/2006 of 13 December 2006 (OJ 2006 L 390, p. 1), Article 93, applicable from 22 August 2006;

• Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Regulation No 1605/2002 (OJ 2012 L 298, p. 1), Article 106(1), applicable from 1 January 2013;

• Regulation No 966/2012, as amended by Regulation (EU, Euratom) 2015/1929 of the European Parliament and of the Council of 28 October 2015 (OJ 2015 L 286, p. 1), Article 106(1).

( 4 ) Council Regulation (EU) 2015/323 of 2 March 2015 on the financial regulation applicable to the 11th European Development Fund (OJ 2015 L 58, p. 17).

( 5 ) Under Article 108(11) of Regulation No 966/2012, as amended by Regulation 2015/1929.