Op-Ed: Commission v Slovenia (C-628/18) – Evolution of the one-stage infringement procedure, by Albrecht Wendenburg
1. The Grand Chamber of the CJEU has activated the ‘one-stage infringement procedure’ pursuant to Article 260(3) TFEU with three judgments in the past two years imposing periodic penalty payments (Commission v Belgium, C-543/17) and lump sums (Commission v Romania, C-549/18) and Commission v Ireland, C-550/18). This laid the cornerstone for a new type of procedure that significantly increases the pressure on Member States to transpose directives on time. The details have been discussed elsewhere. Three differences to the established ‘two-stage infringement procedure’ pursuant to Article 260(1), (2) TFEU deserve mention at this point:
- The ‘one-step infringement procedure’ does not deal with the question of the correct transposition of directives. Rather, it is only about the formal question of whether the Member State has notified the Commission of the transposition in a timely and in a detailed ‘article-by-article’ manner.
- Before the CJEU imposes sanctions according to the ‘one-stage infringement procedure’, there is only one administrative procedure and one court procedure, not two each. In addition, the Commission’s procedures are much more streamlined. This means that the judgment imposing sanctions can be expected as early as 26 months after the expiry of the transposition deadline for the directive and thus an estimated three years earlier than the judgment imposing sanctions in the ‘two-stage infringement procedure’ (see here).
- In the ‘one-stage infringement procedure, the period as of the expiry of the transposition deadline is sanctioned. By contrast, in the ‘two-stage infringement procedure’, only the period after the CJEU pronounces its declaratory judgment (Article 260(1) TFEU) can be sanctioned. In practice, this results in an additional, unwritten transposition period of at least two and a half years. This additional period does not apply in the ‘one-stage infringement procedure (see here).
2. Let’s now turn to the judgment of 13 January 2021 (Commission v Slovenia, C-628/18). Slovenia had not transposed the MiFiD II Directive 2014/65 (as amended) by the deadline of 3 July 2017, and consequently had not notified the Commission of its transposition. Less than three months after the expiry of the transposition deadline, the Commission then opened infringement proceedings on 26 September 2017. Legal action was filed on 5 October 2018, and only two months later was Slovenia able to notify full transposition of the directive. The Commission subsequently withdrew the application for the imposition of a periodic penalty payment, but maintained its application for a lump sum of EUR 1,028 560 in view of the previous delay in transposition. The Third Chamber of the CJEU has now essentially granted this request imposing a lump sum in the amount of EUR 750,000.
3. From the CJEU’s point of view, the case did not raise any new issues, which is why the Advocate General’s opinion was not requested (see Article 20(5) of the Statute of the CJEU). Accordingly, the judgment contains many repetitive clarifications of the above three leading judgments of the Grand Chamber. As the clarifications have already been reported elsewhere, I will confine myself to two remarks:
- Once again, the CJEU grants the Commission a non-reviewable margin of appreciation as to whether and against which Member State it initiates infringement proceedings. The CJEU holds that the Commission has ‘a discretion as to the advisability of initiating such proceedings over which the Court of Justice cannot exercise judicial review’ (Commission v Slovenia, C-628/18, paragraph 48 with further references, own translation). This precludes Slovenia from invoking unequal treatment (Article 4(2) TEU) vis-à-vis Spain, which was granted more generous (informal) grace periods by the Commission in a parallel proceeding also concerning the MiFiD II Directive 2014/65 (as amended), thereby avoiding legal proceedings altogether (Commission v Slovenia, C-628/18, paragraph 53).
- This judicial self-restraint, fully in line with established case law (Star Fruit v Commission, 247/87, paragraph 11), appears questionable in the present case. Admittedly, it has to be acknowledged that Slovenia had already been late and had not kept its assurances to transpose the Directive by September 2018, either (Commission v Slovenia, C-628/18, paragraph 9). It is also true that a ‘Member State may not rely on the fact that other Member States have also failed to perform their obligations in order to justify its own failure to fulfil its obligations under the Treaty’ (Commission v Finland, C-118/07, paragraph 48). But had Slovenia thereby forfeited its claim to ‘equality of Member States before the Treaties’ under Article 4(2) TEU?
Let’s keep the facts in mind once again: All Member States were subject to the same deadline of 3 July 2017 for transposing the MiFiD II Directive 2014/65 (as amended) (Article 93). Both Spain and Slovenia furthermore breached their obligation to notify the Commission of the Directive’s transposition within that deadline. Moreover, both Member States were far behind the formal deadlines that the Commission had set in each case with the reasoned opinions. Spain ended this breach ‘before the end of November 2018’, Slovenia on 6 December 2018 (Commission v Slovenia, C-628/18, paragraphs 20, 82), presumably only a few days later. What militated against equal treatment of both Member States? Is the mere fact that the Commission had not yet initiated legal proceedings against Spain a valid distinguishing criterion? Does not the fact that the College of the Commission had already decided to bring court proceedings against both Member States indicate that such a distinction should not be made (see Commission v Slovenia, C-628/18, paragraph 20)?
The Commission may have had good reasons not to initiate legal proceedings against Spain while taking a tougher stance on Slovenia. The fact that the CJEU has not even properly entered into the examination despite Slovenia’s reproach to this effect (Commission v Slovenia, C-628/18, paragraphs 53, 73) is, however, tantamount to a failure of judicial control. To be sure, the Commission is not obliged to pursue all infringement proceedings schematically in the same way. However, the requirement of equal treatment, which is also founded in international law, must be justiciable; corresponding allegations must be quashed in order to eliminate even the appearance of arbitrary discrimination of two Member States by the Commission. This is all the more true when the Commission itself presents itself as a political player. Former Commission President Juncker’s statement on French television about the generous handling of the deficit rules against France in 2016 (‘because it is France’) (see here) still resonates.
Slovenia and her interveners Estonia and Poland had also criticised that the Commission used the same method of calculating sanctions in both the ‘one-stage’ and the ‘two-stage infringement procedure’ (Commission v Slovenia, C-628/18, paragraphs 62, 65). However, the CJEU does not address this point at all. Instead, the CJEU draws on another circumstance in order to reduce the sanctions requested by the Commission: The low impact of the late transposition of the MiFID II Directive (Commission v Slovenia, C-628/18, paragraph 80)). Therefore, the argumentum e contrario can be made that the CJEU rejects such a distinction of calculation methods. Thus, it is also likely that the CJEU shares the reasoning of the Commission, which considers that ‘a breach of the obligation to notify measures transposing a directive is no less serious than a breach which may be subject to the sanctions referred to in Article 260(2) TFEU’ (Commission v Slovenia, C-628/18, paragraph 55, own translation).
This parallelism must be rejected once again: It is true that compliance with the transposition deadlines is important and that consistent monitoring of delays by the Commission is to be applauded. However, it also remains correct that in a ‘one-stage infringement procedure’ there is regularly a qualitatively and quantitatively smaller infringement to be found compared to ‘two-stage infringement procedures’. This is because the ‘two-stage infringement procedure’ is not only about the missing notification (but an insufficient transposition of directives) and also entails a twofold infringement of the Member State (as opposed to just one in the ‘one-stage infringement procedure’): an infringement of EU law and an infringement of the preceding declaratory judgment of the CJEU pursuant to Article 260(1) TFEU. A parallelism of calculation methods thus runs risk of disproportionately high sanctions (see Article 5(4) TEU). A differentiated sanction practice would also better implement the historic will of the Union legislator, who had envisioned the ‘one-stage infringement procedure’ quite differently (see CONV 734/03, p. 15).
4. Three recommendations to the Member States shall be made:
- Member States should not agree in the Council of the EU to implement deadlines that they cannot meet thereafter. Two years is often too short, especially when elections are around the corner or implementation hurdles have to be surmounted, for example in federally organised Member States.
- In any case, legal proceedings before the CJEU should be avoided. Prior to litigation, all implementing measures should be reported promptly and in an ‘article-by-article’ manner. The use of a ‘correlation table’ is recommended. Partial implementations should also be reported to the Commission without delay.
- At the very least, the transposition of a directive should be notified during the legal proceedings. In this way, Member States can at least avert periodic penalty payments. However, in this situation lump sums can hardly be avoided – as Slovenia has experienced in the present case.
Albrecht Wendenburg, Dr. jur., LL.M., is Head of Unit European law at the Ministry for Europe of Lower Saxony, Germany, and Lecturer in European law at Leuphana University, Lüneburg, Germany. The views set out in this article are strictly personal. He has recently published on ‘one-stage infringement procedures’ in EU Law Live’s Weekend Edition No. 29.