CJEU - C‑27/22 - Volkswagen Group Italia SpA

CJEU - C‑27/22 Volkswagen Group Italia SpA
Court:	CJEU
Jurisdiction:	European Union
Relevant Law:	Article 50 of the Charter of Fundamental Rights of the European Union Article 54 of the Convention implementing the Schengen Agreement Directive 2005/29/EC
Decided:	14.09.2023
Parties:
Case Number/Name:	C‑27/22 Volkswagen Group Italia SpA
European Case Law Identifier:	ECLI:EU:C:2023:663
Reference from:	CdS (Italy)
Language:	24 EU Languages
Original Source:	AG Opinion Judgement
Initial Contributor:	Sophia Hassel

The CJEU ruled when administrative fines can be considered criminal. It also ruled that the doctrine of ne bis in idem (the prohibition of double jeopardy) overrides national legislation.

English Summary

Facts

This case concerns a request for a preliminary ruling regarding the interpretation of Article 50 of the Charter of Fundamental Rights of the European Union, Article 54 of the Convention implementing the Schengen Agreement, and provisions of Directive 2005/29/EC.

The Autorità Garante della Concorrenza e del Mercato (Italy's Competition and Markets Authority, AGCM) imposed a fine of €5,000,000 on Volkswagen Group Italia SpA (VWGI) and Volkswagen Aktiengesellschaft (VWAG) for unfair commercial practices. The companies marketed diesel vehicles in Italy from 2009 with software installed that distorted emission levels during pollution tests. VWGI and VWAG were accused of misleadingly promoting these vehicles as environmentally friendly.

VWGI and VWAG challenged the AGCM's decision in Italian courts. While this action was ongoing, the German Public Prosecutor's Office imposed a €1,000,000,000 fine on VWAG for manipulating exhaust gas emissions in certain diesel engines. Part of this fine, €5,000,000, pertained to the conduct also addressed in the Italian proceedings. The German decision became final before the Italian decision.

VWGI and VWAG argued that the principle of ne bis in idem (not being tried or punished twice for the same offence) as enshrined in Article 50 of the Charter of Fundamental Rights should prevent the Italian fine from being upheld.

Holding

The court outlined when a fine could be considered criminal in nature in relation to unfair commercial practices. While the court does not directly mention the GDPR, this decision is relevant for GDPR fines.

The court ruled that an administrative fine would be criminal in nature if three criteria apply [at paragraph 45]:

Firstly, the legal classification of the offence under domestic law is irrelevant [at 48]. Article 50 of the Charter is not limited solely to proceedings and penalties which are classified as criminal by national law. This means that administrative fines can also be considered to be criminal if the further two criteria applies.

Secondly, the nature of the offence itself must be intended to both punish and prevent unlawful conduct [at 49]. The court distinguishes measures that only compensate for the damage caused by the offence in question to state that these cannot be considered criminal in nature. Parallels here can be drawn to the nature of GDPR fines which also ‘vary according the seriousness and duration of the infringement in question’ [at 52].

Thirdly, the severity of the penalty that the person concerned is likely to suffer [at 54]. In this context, an administrative fine of €5,000,000 was considered to be criminal in line with Article 50 of the Charter.

The court then addressed the concept of ne bis in idem (double jeopardy) and determined that it applied to the context of this case. Article 50 of the Charter overrides national legislation which would permit for two fines regarding the same behavior in two different Member States.

Comment

According to the CJEU decision GDPR fines are in some cases likely criminal penalties, as they do not aim to compensate for a damage suffered (see also Article 82 GDPR). However, one would still need to assess the severity of the fine in each context.

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