Article 24 of Regulation 1/2003 (as did Article 16 of Regulation No 17) and Article 16 of Directive (EU) 2019/1 respectively allow the EU Commission and the competition authorities of EU member states to impose periodic penalties to re-enforce compliance with a number of their decisions. Penalties may be imposed to compel compliance with a decision to bring an infringement to an end; a decision ordering interim measures; a decision accepting binding commitments; a decision to supply complete and correct information; and a decision to submit to an inspection (Article 24(1) of Regulation 1/2003). Initially the maximum daily fine was in the order of $1000 USD (Christopher Bellamy and Graham D Child Common Market Law of Competition, Sweet and Maxwell, 1973, para. 1219 and Frederick Honig Cartel Law of the European Economic Community, Butterworths, 1963, 71-73). The maximum daily penalty has increased over time and currently stands at 5% of world-wide turnover.
As is made clear in the Commission’s Antitrust Manual of Procedures from March 2012, Article 24 of the Regulation sets out a two stage process. In the first stage there is a threat to impose the penalty (See for example Commission Decision of 19 December 2007 in Cases Comp/34.579, Comp/36.518 and Comp/38.580 MasterCard, para 774). In the second stage the actual penalty is imposed. Ordinarily, the mere threat that the penalty will be imposed is sufficient to secure compliance with the decision. As such, reaching the second stage of the process, and taking a decision to actually impose the threatened penalty is rare. This occurred for the first time in Microsoft, when the Commission threatened to impose a periodic penalty of €1.5 million for each day that Microsoft failed to bring an infringement to an end. The infringement continued and for the period between 16 December 2005 and 20 June 2006 a fine of €280.5 was fixed (IP/06/979: Commission imposes penalty payment of €280.5 million on Microsoft for continued non-compliance with March 2004 Decision, 12th July 2006). The Commission took a further decision threating that if Microsoft failed to bring the infringement to an end the periodic penalty would increase to up to €2 million per day and further increase to up to €3 million per day if the infringement had not been brought to an end within six months (MEMO/06/430: Competition: state of play on Microsoft’s compliance with March 2004 Decision, 15th November 2006). On 27 February 2008, the European Commission announced that it has imposed a penalty payment of €899 million on the basis that Microsoft had not complied with the infringement decision until 22 October 2007 (IP/08/318, SPEECH/08/105 and MEMO/08/125). The penalty was reviewed by the General Court and reduced from €899 million to €860 million (Case T-167/08, Microsoft v Commission, ECLI:EU:T:2012:323).
Periodic penalties have more often been used in response to failures to supply information and so encourage provision of information in a timely manner (See Baccarat OJ 1991 L79/16 and Commission Decisions of 8 February 2010 in Case COMP/39.523 and 3 September 2009 in Case Comp/39.523 Slovak Telecom). Article 15 of Regulation 139/2004 (on merger control) allows the EU Commission to impose periodic penalty payments of up to 5% of aggregate daily worldwide turnover in order to reinforce compliance with a decision under Article 11(3) to supply complete and correct information; a decision under Article 13(4) to submit to an inspection; a decision under Article 6(1)(b), Article 7(3) or Article 8(2) to comply with an obligation; and a decision under Article 8(4) or 8(5) to comply with a measure. This power has been used against undertakings that are not party to the merger transaction for failing to supply accurate information.
