Opinion

A recent judgment of the European Court of First Instance (Corus UK Ltd Commission, 10 October 2001) has confirmed the European Commission's (EC) obligation to pay interest on fines required to be repaid following a successful appeal against a decision of the EC in competition cases. The proceedings also brought to light the existence of a recent, but little-publicised, EC decision that made a new system available for dealing with fines available to parties that have paid a fine but wish to appeal the decision.
The level of the EC's fines is escalating dramatically. In November, the EC imposed fines of €855m (£532.9m) against parties engaged in the vitamins cartel – Hoffman La Roche and BASF were each fined substantially more than any single party in any previous case. The Corus judgment offers some comfort on the financial treatment of those who might successfully challenge EC decisions.
It is normal for a party that has been fined by the EC and who wishes to appeal the decision to be offered the option of paying the fine immediately on a provisional basis, or giving a bank guarantee. In the latter case, the EC will usually require that the fined party pay interest on the fine should it lose its appeal. Perhaps for this reason, the trend is to pay the fine immediately. Until recently, after a successful appeal, the EC has paid back only the sum it had received without interest.
In the Corus cases, British Steel (now Corus) was fined ecus32m (£19.9m) by the EC in 1994 for alleged anti-competitive activities. British Steel paid the fine but promptly brought an action to annul the decision. The decision was annulled in part in 1999, when the Court of First Instance found that the correct level of the fine should have been only €20m (£12.47m). The EC paid back the difference, but refused to pay interest, so British Steel made an application to the Court of First Instance claiming interest.
The court decided that the EC was obliged to pay interest on the €12m, which it had held since 1994, as this was a necessary step in complying with the judgment annulling the original decision. While the Corus case was brought under the Treaty Establishing the Coal and Steel Community (ECSC Treaty), the reasoning in the judgment would apply equally to decisions under the European Community Treaty, such as decisions to oppose a fine for breach of Articles 81 or 82. The level of interest to be paid back was, for the main part, set by the court at the level that the EC had earned interest. The court calculated this at a little more than €3m (£1.87m).
However, the requirement to pay interest is apparently not limited to situations in which the EC may be unjustly enriched. The court stated that the duty to pay interest was an essential component of the EC's obligation to restore the applicant to its original position. Clearly, this is independent of any element of unjust enrichment. In the Corus case, the EC was obliged to pay interest on the €3m interest in respect of the period from payment back of the primary sum of €12m, until the date of the court's judgment. The court did not look for any unjust enrichment which might have occurred, but set a simple interest rate of 5.75 per cent, being the rate applicable to capital refinancing operations set by the European Central Bank, plus two percentage points.
Parties challenging an EC decision imposing fines now appear to have a further means of safeguarding their position on interest, but it is one in which the EC has so far appeared loathe to publicise. In the Corus case, the EC was obliged by the court to describe its new procedures for dealing with money paid in fines pending an application for annulment, and a very short description of recent changes has found its way into the judgment by the EC. Under a decision adopted by the EC on 14 September 1999, parties facing a fine but wishing to challenge the decision should now be offered the option of either providing a bank guarantee (plus an obligation to pay interest should the appeal fail), or payment of the fine into an interest-bearing account opened for that purpose by the EC. Before the court, the EC stated that following a tender procedure, the EC has appointed a bank and has been progressively applying the practice since June 2000.