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Compliance: What are the consequences of corporate non-compliance?

By 9 Outubro, 2023Novembro 9th, 2023No Comments

In 2015, it came to light that a company in the automobile sector was failing to comply with regulatory criteria at the environmental level, by marketing cars in Italy with systems designed to alter the measurement of pollutant emissions, which would be much higher than legally permitted, violating the duties imposed by Directive 2005/29/EC.

That said, in 2016, the Italian Competition Authority (AGCM) imposed a financial penalty of 5 million euros on two companies in the group (Company A and Company B) for marketing vehicles with a system designed to tamper with the results of pollutant emissions, as well as for disseminating advertising messages that stressed the vehicles’ compliance with the regulated environmental parameters.

In 2018, for its part, the Braunschweig Public Prosecutor’s Office notified Company B of a decision imposing a penalty of 1 billion euros on it under the General Administrative Offenses Act, which related to the same facts previously punished by AGCM.

Given this, in 2022 a request for a preliminary ruling was lodged with the Court of Justice by companies A and B, in the context of a case between them and the AGCM, regarding the authority’s decision to impose the penalties referred to above on those companies.

The request for a preliminary ruling is based on three main questions, the conclusions of which are relevant to the Court of Justice:

The Court has come to consider, according to an interpretation in the light of Article 50 of the Charter of Fundamental Rights of the European Union, that the administrative sanction must constitute a criminal sanction when it pursues a repressive purpose and has a high degree of severity.

The non bis in idem principle enshrined in Article 50 of the Charter must be interpreted as precluding the imposition of a criminal fine on a legal person if it has been convicted of the same acts in another Member State, even if that conviction is after the date of the decision imposing the penalty.

Art. 52(1) of the Charter of Fundamental Rights of the European Union must be interpreted as authorizing the restriction of the application of the principle of ne bis in idem, to allow a combination of proceedings or penalties for the same facts, provided that the conditions laid down in Article 52(1) of the Charter, as specified in the case-law cited in the preliminary ruling, are met: (i) that such cumulation does not represent an excessive burden for the person concerned, (ii) that there are clear and precise rules which make it possible to foresee which acts and omissions may be subject to cumulation, and (iii) that the proceedings in question have been conducted in a sufficiently coordinated and approximate manner over time.

With this preliminary ruling, the Court of Justice of the European Union (CJEU) has established an important milestone in the legal framework for imposing sanctions on companies in cases violating the legally established criteria.

From the analysis of the decision, we highlight the importance given to companies’ compliance with the rules and regulations in force, as well as the aggravation and possibility of cumulation of sanctions, which once again reveal the importance of subjecting companies to duly established organizational compliance rules.

Filipa Bilé Grilo @ DCM | Littler