On 11 June, the ECJ delivered a judgment defining, for the first time, the scope of the Commission right to interfere in proceedings pending before national courts where that is required to ensure consistent application of competition rules.
The reference for a preliminary ruling was made from the Gerechtshof te Amsterdam, in the proceedings between Inspecteur van de Belastingdienst (Inspector of Taxes) and X BV, concerning the tax deductibility of fines imposed by the Commission for infringement of the Community antitrust rules. The ECJ was asked to interpret Article 15(3) of Council Regulation 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty.
In November 2002, the Commission adopted a decision imposing fines on several companies, including X KG, for participating in a cartel. X KG which was established in Germany passed on part of the fine imposed on it within the group of which it is the parent company, and particularly to one its Dutch subsidiaries, X BV. According to X BV the fine imposed by the Commission, which was passed on to it in part, constitutes a fine within the meaning of the national law which does not allow the deduction of fines imposed by the Community institutions for the purpose of calculating the taxable profits of a company. However, the Dutch tax inspector did not agree. Consequently, X BV brought an action before the Rechtbank Haarlem (Haarlem District Court) which held that the fine was partially deductible. Then, an appeal against that judgment was brought by the Inspector before the Gerechtshof te Amsterdam (Court of Appeal, Amsterdam).
The European Commission learned about the case and in March 2007 notified the Amsterdam Court of Appeal that it wished to intervene as amicus curiae pursuant to Article 15(3) of Regulation 1/2003. Moreover, the Commission requested a time-limit to be established for that purpose and to receive any documents necessary for the assessment of the case. Hence, the referring court asked to the ECJ “whether the Commission is competent, under Article 15(3) of Regulation No 1/2003, to submit, on its own initiative, written observations to a national court in proceedings relating to the deductibility from taxable profits of the amount of a fine or a part thereof imposed by the Commission for infringement of Articles 81 EC or 82 EC.”
The ECJ pointed out that Regulation 1/2003 provides for a cooperation mechanism between the Commission, the national competition authorities and the courts of the Member States. The Court stressed that Article 15 of the regulation not only sets up a system for the mutual exchange of information between the Commission and the courts of the Member States but also provides, in specific circumstances, for the possibility of the Commission intervention in proceedings pending before national courts.
The Court concluded, from the literal interpretation of Article 15(3) of Regulation 1/2003, “that the option for the Commission, acting on its own initiative, to submit written observations to courts of the Member States is subject to the sole condition that the coherent application of Articles 81 EC or 82 EC so requires.” Moreover, the Court stressed that such condition “may be fulfilled even if the proceedings concerned do not pertain to issues relating to the application of Article 81 or Article 82 of the Treaty.”
The ECJ recall that Articles 81, 82 and 83 EC are designed to prohibit and punish anti competitive practices. The aim of Article 83 EC is to ensure the effective supervision of cartels and abuses of dominant positions by providing for fines and penalty payments. The Court stressed that the fines and periodic penalty payments which may be imposed on undertakings are designed to “ensure compliance with the prohibitions laid down in Article 81(1) [EC] and in Article 82 [EC].” The Court pointed out that the Commission is conferred with the power to impose fines on undertakings which infringe Articles 81(1) EC or 82 EC so it can carry out its task of supervision entrusted to it by Community law.
Consequently, according to the Court, it is not possible to “dissociate the principle of prohibition of anti competitive practices from the penalties provided for where that principle has not been observed” as “the provisions of Articles 81 EC and 82 EC would be ineffective if they were not accompanied by enforcement measures provided for in Article 83(2)(a) EC.” The Court, therefore, concluded that the effectiveness of the penalties provide in Article 83(2)(a) EC is “a condition for the coherent application of Articles 81 EC and 82 EC.”
The ECJ has ruled that Article 15(3) of Council Regulation 1/2003 must be interpreted as meaning that it allows the Commission to submit on its own initiative written observations to a Member State national court in proceedings concerning the deductibility from taxable profits of the amount of a fine imposed by the Commission for infringement of Articles 81 EC or 82 EC. According to the Court “The effectiveness of the Commission’s decision by which it imposed a fine on a company might be significantly reduced if the company concerned, or at least a company linked to that company, were allowed to deduct fully or in part the amount of that fine from the amount of its taxable profits, since such a possibility would have the effect of offsetting the burden of that fine with a reduction of the tax burden.”
