COMMUNICATION FROM THE COMMISSION

Modification of the calculation method for lump sum payments and daily penalty payments proposed by the Commission in infringements proceedings before the Court of Justice of the European Union

(2019/C 70/01)

1.   Introduction

Under the Treaty on the Functioning of the European Union (TFEU), when the Commission refers a Member State to the Court of Justice of the European Union for having infringed EU law, the Court may impose financial sanctions in two situations:

—	When the Court has ruled that a Member State infringing EU law has not yet complied with an earlier judgment finding that infringement (Article 260(2) TFEU);

—	When a Member State has failed to fulfil its obligation to notify measures transposing a Directive adopted under a legislative procedure (Article 260(3) TFEU).

In both cases, the sanction is made up of a lump sum payment, to penalise the existence of the infringement itself (1), and a daily penalty payment, to penalise the continuation of the infringement after the Court's judgment (2). The Commission proposes an amount for the financial sanctions to the Court, which takes the final decision.

The general approach of the Commission to calculating its proposed sanction is well-established. Since 1997 (3) and as set out in successive Communications (4), it has applied an approach which reflects both the capacity to pay of the Member State concerned, and its institutional weight. This is applied through what is known as the ‘n-factor’ (5). This combines with other factors — the seriousness of the infringement, and its duration — in the Commission's calculation of a proposed sanction. Until now, the n-factor has been calculated with reference to the gross domestic product (GDP) of a Member State, and the number of votes allocated to it in the Council (6).

However, the Court of Justice has recently established that the Council voting rules can no longer be used for this purpose (7). Consequently, it would rely on the Member States' GDP as predominant factor.

The Commission has always considered that sanctions need both to act as a deterrent, and to be proportionate, and the proposals it makes to the Court for its final decision should already reflect this need. The combination of a Member State's capacity to pay and its institutional weight provided this balance. Use of GDP alone would upset this equilibrium, as it would exclusively reflect the economic dimension of Member States. It would have very different impacts for different Member States and in particular suggest a substantial increase in the amounts of the proposed sanctions for more than a third of the Member States. The Commission therefore considers that the n-factor should continue to reflect both GDP and institutional weight. This Communication sets out the details of how to retain this balance whilst adjusting the Commission's method of calculation for its proposed financial sanctions.

2.   Revision of the n-factor

The Court of Justice ruled on numerous occasions that the method of calculation for the sanction proposal of the Commission was an appropriate means of reflecting the capacity to pay of the Member State concerned, while keeping the variation between Member States within a reasonable range (8).

However, in its judgment of 14 November 2018 (9), the Court of Justice noted that since 1 April 2017, the voting system in the Council laid down in the Treaty establishing the European Community (EC Treaty) had changed (10). It concluded that as a result, the n-factor could no longer take account of the votes of a Member State in the Council, and that it had to rely on the Member States' gross domestic product (GDP) as predominant factor.

Composition of the n-factor

The Commission considers that, in addition to Member States' capacity to pay, the n-factor should also take account of the Member States' institutional weight. This means that the method of calculating the n-factor should not be based on demographic or economic weight alone, but also on the consideration that each Member State has intrinsic value in the institutional set-up of the European Union.

Given the Court's judgment, a new reflection of institutional weight to be used in the calculation of financial sanctions is needed. In order to maintain the balance between the capacity to pay and the institutional weight of a Member State, the Commission will calculate the n-factor on the basis of two elements: GDP, and the number of seats for representatives in the European Parliament allocated to each Member State (11). The Commission considers that this is the most appropriate reflection of institutional weight of Member States available today in the EU Treaties.

Range in the n-factor between Member States

Another reason for maintaining the institutional weight of Member States in the calculation of the n-factor is that the exclusive use of GDP would considerably increase the range in the n-factor between Member States. The difference between the lowest and the highest n-factor today is 55 — this would increase to 312 with the exclusive use of GDP.

Taking into account the number of seats of a Member State in the European Parliament in the calculation of the n-factor would ensure that the variation between Member States could continue to be within a reasonable range.

The Commission further considers that the new method for calculating the n-factor should lead to amounts that do not create unjustified differences between the Member States and stay as close as possible to the amounts resulting from the current calculation method, which are both proportionate and sufficiently deterring. While the resulting amounts may be lower compared to the current situation, they come closer to the practice of the Court, which generally sets lower fines than those proposed by the Commission.

Reference value for the n-factor

Until now, the Commission has used the n-factor of Luxembourg as reference value. This dates back to a time when Luxembourg was the country with the lowest total GDP amongst the Member States. The Commission considers it appropriate to opt for a reference that better reflects today's economic and political reality. The Commission will therefore determine the reference n-factor by using the average of each of the two factors being used, GDP and the number of representatives in the European Parliament (12). Using averages also increases the stability of this reference value over time.

However, using these factors without adjustment leads to a reference value for the n-factor that is considerably lower than the current value. An adjustment is therefore needed to ensure that the amounts proposed by the Commission remain proportionate and sufficiently deterring. An adjustment factor of 4,5 would come close to current levels whilst ensuring that no Member State will see an increase. The respective standard flat-rate amounts used for calculating the daily penalty payments and the lump sum payments are consequently adjusted as follows:

—	Standard flat-rate amount for daily penalty payments: EUR 690 × 4,5 = EUR 3 105;

—	Standard flat-rate amount for lump sum payments: EUR 230 × 4,5 = EUR 1 035.

Following the same logic, the current reference minimum lump sum amount of 571 000 EUR will also be multiplied by the new n-factor to calculate the minimum lump sum amount for each Member State. In order to ensure that the amounts proposed are proportionate and sufficiently deterring, that amount will also be multiplied by the adjustment factor: EUR 571 000 × 4,5 = EUR 2 569 500. These amounts will be revised annually, in line with inflation.

The resulting n-factor per Member State is set out in Annex I, and the resulting minimum lump sum in Annex II.

3.   Application

The Commission will apply the calculation method as outlined in this Communication to financial sanctions proposed to the Court of Justice from the date of its publication in the Official Journal. The Commission will review the calculation method as outlined in this Communication at the latest five years after the date of its adoption.

Once the withdrawal of the United Kingdom from the European Union becomes legally effective, and irrespective whether the Withdrawal Agreement (13) enters into force or not, the Commission will recalculate the relevant averages and will adjust the figures set out in Annex I and II accordingly.

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(1)  SEC(2005) 1658, point 10.3.

(2)  SEC(2005) 1658, point 14.

(3)  Method of calculating the penalty payments provided for pursuant to Article 171 of the Treaty establishing the European Community (EC Treaty) (OJ C 63, 28.2.1997, p. 2).

(4)  See in particular the re-cast communication SEC(2005)1658, the Communication ‘Implementation of Article 260(3) of the Treaty’ (OJ C 12, 15.1.2011, p. 1) and the Communication ‘EU law: Better results through better application’ (OJ C 18, 19.1.2017, p. 10).

(5)  SEC(2005) 1658, point 14.

(6)  As it was laid down in the EC Treaty.

(7)  Judgment of 14 November 2018 in case C-93/17, Commission v Greece.

(8)  Case C-93/17, Commission v Greece, EU:C:2018:903, point 132.

(9)  Case C-93/17, Commission v Greece, EU:C:2018:903, points 138 and 142.

(10)  Replaced by the system of double majority as laid down in Article 16(4) TEU. Prior to the phasing out of the voting system in the Council laid down in the EC Treaty, each Member State had a fixed number of votes in the Council. Under the Lisbon Treaty, each Member State in the Council has one vote, with the qualified majority reached when 55 % of Member States vote in favour and those Member States represent 65 % of the EU population. This cannot be translated into a straightforward weighting and used in the same way as the previous system.

(11)  See, for the current parliamentary term, Article 3 of European Council Decision 2013/312/EU of 28 June 2013 establishing the composition of the European Parliament (OJ L 181, 29.6.2013, p. 57), and Article 3 of European Council Decision (EU) 2018/937 of 28 June 2018 for the next parliamentary term, starting on 2 July 2019.

(12)  The mean is calculated as follows: the n-factor is a geometric mean calculated by taking the square root of the product of the factors based on Member States' GDP and the number of seats in the European Parliament. It is obtained via the following formula:

Where: GDP n = GDP of Member State concerned, in millions of euros; GDP avg = average GDP of EU28; Seat n = number of seats of the Member State concerned in the European Parliament; Seat avg = average number of seats in European Parliament of all Member States.

(13)  The Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, as annexed to the proposal for a Council Decision on the signing on behalf of the European Union and of the European Atomic Energy Community of that Agreement, COM(2018) 833 final.

Non-opposition to a notified concentration

(Case M.9005 — Booking Holdings/HotelsCombined)

(Text with EEA relevance)

(2019/C 70/02)

On 23 October 2018, the Commission decided not to oppose the above notified concentration and to declare it compatible with the internal market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004 (1). The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

—	in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

—	in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32018M9005. EUR-Lex is the online access to European law.

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(1)  OJ L 24, 29.1.2004, p. 1.

Non-opposition to a notified concentration

(Case M.9169 — Caisse des dépôts et consignations/Swiss Life/JV)

(Text with EEA relevance)

(2019/C 70/03)

On 12 February 2019, the Commission decided not to oppose the above notified concentration and to declare it compatible with the internal market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004 (1). The full text of the decision is available only in French and will be made public after it is cleared of any business secrets it may contain. It will be available:

—	in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes.

—	in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32019M9169. EUR-Lex is the online access to European law.

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(1)  OJ L 24, 29.1.2004, p. 1.

Non-opposition to a notified concentration

(Case M.9224 — Brookfield Asset Management/Johnson Controls Power Solutions Business)

(Text with EEA relevance)

(2019/C 70/04)

On 14 February 2019, the Commission decided not to oppose the above notified concentration and to declare it compatible with the internal market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004 (1). The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

—	in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

—	in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32019M9224. EUR-Lex is the online access to European law.

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(1)  OJ L 24, 29.1.2004, p. 1.

Non-opposition to a notified concentration

(Case M.9265 — Schwarz Gruppe/Nord-Westdeutsche Papierrohstoff/JV)

(Text with EEA relevance)

(2019/C 70/05)

On 18 February 2019, the Commission decided not to oppose the above notified concentration and to declare it compatible with the internal market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004 (1). The full text of the decision is available only in German and will be made public after it is cleared of any business secrets it may contain. It will be available:

—	in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

—	in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32019M9265. EUR-Lex is the online access to European law.

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(1)  OJ L 24, 29.1.2004, p. 1.

Non-opposition to a notified concentration

(Case M.9219 — Blackstone/Sretaw/Beauparc)

(Text with EEA relevance)

(2019/C 70/06)

On 18 February 2019, the Commission decided not to oppose the above notified concentration and to declare it compatible with the internal market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004 (1). The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

—	in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

—	in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/homepage.html?locale=en) under document number 32019M9219. EUR-Lex is the on-line access to European law.

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(1)  OJ L 24, 29.1.2004, p. 1.

Euro exchange rates (1)

22 February 2019

(2019/C 70/07)

1 euro =

	Currency	Exchange rate
USD	US dollar	1,1325
JPY	Japanese yen	125,56
DKK	Danish krone	7,4620
GBP	Pound sterling	0,87263
SEK	Swedish krona	10,5998
CHF	Swiss franc	1,1346
ISK	Iceland króna	135,70
NOK	Norwegian krone	9,7643
BGN	Bulgarian lev	1,9558
CZK	Czech koruna	25,667
HUF	Hungarian forint	318,03
PLN	Polish zloty	4,3370
RON	Romanian leu	4,7611
TRY	Turkish lira	6,0378
AUD	Australian dollar	1,5923
CAD	Canadian dollar	1,4976
HKD	Hong Kong dollar	8,8884
NZD	New Zealand dollar	1,6639
SGD	Singapore dollar	1,5324
KRW	South Korean won	1 273,20
ZAR	South African rand	15,8607
CNY	Chinese yuan renminbi	7,6109
HRK	Croatian kuna	7,4230
IDR	Indonesian rupiah	15 920,00
MYR	Malaysian ringgit	4,6174
PHP	Philippine peso	59,052
RUB	Russian rouble	74,1694
THB	Thai baht	35,493
BRL	Brazilian real	4,2392
MXN	Mexican peso	21,7810
INR	Indian rupee	80,5530

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(1)  Source: reference exchange rate published by the ECB.

Prior notification of a concentration

(Case M.9076 — Novelis/Aleris)

(Text with EEA relevance)

(2019/C 70/08)

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(1)  OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’).

Prior notification of a concentration

(Case M.9303 — LetterOne/DIA)

Candidate case for simplified procedure

(Text with EEA relevance)

(2019/C 70/09)

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(1)  OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation’).

(2)  OJ C 366, 14.12.2013, p. 5.