January 25
2021
Dolores Utrilla
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13th January 2021
Banking & Finance Institutional law Justice & Litigation

Commission v Slovenia: Court of Justice rules Slovenia failed to fulfil obligations and clarifies functioning of the one-stage infringement procedure

Today, the Court of Justice handed down its judgments in Commission v Slovenia (C-628/18 and C-631/18), ruling in favour of the European Commission in its allegations against Slovenia for failure to fulfil its obligations due to lack of communication to it of measures transposing the MiFID II Directive 2014/65 (as amended) and Delegated Directive 2017/593. The judgment in C-628/18 further provides important clarifications on several aspects of the so-called  ‘one-stage infringement procedure’ under Article 260(3) TFEU.

According to the Court of Justice, Slovenia failed to fulfil its obligations under Article 93 of the MiFID II Directive and under the provisions of Delegated Directive 2017/593 by failing, on expiry of the period prescribed in the Commission’s reasoned opinion, to adopt all the laws, regulations and administrative provisions necessary to comply with such Directives and, consequently, by failing to communicate those provisions to the Commission.

As regards the scope of Article 260(3) TFEU (which allows the Court of Justice to assess,  in the context of a single procedure, whether the Member State concerned has fulfilled its obligations to communicate the measures transposing the directive in question and, if so, to evaluate the seriousness of the failure and to impose the financial penalty it considers the most appropriate to the circumstances of the case), the judgment in C-628/18 clarifies the following:

  • The Commission has discretionary powers regarding its decision to seek a financial penalty under Article 260(3) TFEU, which can be done without giving reasons.
  • However, this does not relieve the Commission from the obligation to state the reasons for the nature and amount of the financial penalty requested. This requirement that reasons must be given for the nature and amount of the financial penalty is all the more important since, unlike the provisions of paragraph 2 of Article 260 TFEU, paragraph 3 of that Article provides that, in proceedings brought pursuant to that provision, the Court has only a limited discretion, since, in the event of a finding of failure by the latter, the Commission’s proposals are binding on the Court as to the nature of the financial penalty which it may impose and the maximum amount of the penalty which it may impose.
  • The fact that no such action has been brought against other Member States in similar cases is not such as to call into question the possibility for the Commission to request, pursuant to Article 260(3) TFEU, that Slovenia be ordered to pay a financial penalty.
  • Pursuant to Article 260(3) TFEU, only the Court of Justice has jurisdiction to impose a financial penalty on a Member State. Where the Court adopts such a decision after an adversarial procedure, it must state the reasons on which it is based. Therefore, the absence of a statement of reasons by the Commission for its choice to apply to the Court for the application of Article 260(3) TFEU does not affect the procedural guarantees of the Member State concerned.

Concerning the financial penalties applicable under Article 260(3) TFEU, the Court of Justice stressed in C-628/18 that an application by which the Commission seeks the imposition of a lump sum cannot be dismissed as disproportionate on the sole ground that it relates to an infringement which, while having continued over time, ended on the date on which the Court examines the facts at issue. Based on the dissuasive nature of this kind of penalty and the seriousness of the breach, the Court of Justice imposed on Slovenia the obligation to pay the Commission a lump sum of 750,000 euros.

The judgments are available here (for C-628/18) and here (for C-631/18).

An assessment of these cases by Albrecht Wendenburg will be published soon on EU Law Live. In the meantime, read his Long Read on the ‘one-stage infringement procedure’ published in our Weekend Edition No. 29.

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