With a judgment handed down on 12 May 2016 (Case T-669/14, Trioplast Industrier AB v. European Commission), the General Court of the European Union (GCEU) dismissed an action brought by Trioplast Industrier AB (Trioplast Industrier) claiming the annulment of an alleged decision by the European Commission (EC) to ask Trioplast Industrier to pay interest for the late payment of a fine imposed on it for its involvement in the industrial bags cartel.

The case shows that when handed a fine, interest begins to accrue regardless of whether the fine is altered down the line through appeal.

By way of background, in 2005, the EC found that between January 1982 and June 2002 there had been a cartel on the market for plastic industrial bags consisting in, inter alia, price-fixing, agreements on sales quotas and the allocation of tender contracts. Among the addressees of the EC decision was Trioplast Wittenheim, a company that directly participated in the infringement. Trioplast Wittenheim was a subsidiary of FLSmidth before being purchased by Trioplast Industrier in 1999. The EC imposed a fine on Trioplast Wittenheim of €17.85 million and decided that Trioplast Industrier and FLSmidth should be held jointly and severally liable with Trioplast Wittenheim for the amounts of €7.73 million and €15.30 million, respectively.

Trioplast Industrier and FLSmidth each lodged an appeal before the GCEU seeking the annulment of the EC decision. Shortly afterwards, Trioplast Industrier provided the EC a bank guarantee for €4.87 million.

In 2010, the GCEU annulled the contested EC decision on the grounds that the EC had wrongly calculated the fine imposed on Trioplast Industrier and set at €2.73 million the amount of the fine.

Consequently, in 2011 the EC reduced Trioplast Industrier’s bank guarantee to the amount of €2.73 million which, importantly, included interest that had accrued from the date of the provision of the bank guarantee.

In March 2012, following the judgment delivered in relation to FLSmidth’s appeal, the EC informed Trioplast Industrier of the now definitive nature of the fine imposed on it, and requested the payment of an amount of €3.32 million, which corresponded to the initial fine of €2.73 million plus default interest at a rate of 3.56 percent. Trioplast Industrier accepted to pay the reduced fine but refused to pay the default interest.

In July 2014, the EC sent Trioplast Industrier a letter again requesting payment of the interest accrued. Trioplast Industrier finally complied while at the same time expressing concerns as to the existence of an obligation to pay. Thereafter, Trioplast Industrier challenged the EC letter before the GCEU seeking the cancellation or reduction of the amount of interest it had to pay to the EC and, in the alternative, damages for the same amount.

The GCEU dismissed Trioplast Industrier’s action for annulment as inadmissible. The GCEU held that the contested letter did not constitute an act for which an action for annulment can be brought.Indeed, the amount of the fine set by the GCEU in the 2010 judgment was not a new fine that was legally distinct from the one the EC had imposed in the 2005 decision. The GCEU held that a decision which imposes a pecuniary obligation is immediately enforceable, even though the amount may fluctuate further to an appeal, and must therefore be complied with immediately. The EC letter thus did not produce binding legal effects capable of affecting the interests of Trioplast Industrier by bringing about a distinct change in its legal position. Therefore, said letter could only be seen as confirmation of the original EC decision.

Regarding the action for damages, the GCEU ruled that Trioplast Industrier could not validly claim that the default interest flowed directly from the unlawfulness of the original decision. The GCEU highlighted the contribution of the applicant to its alleged damage. It had been Trioplast Industrier’s own choice to decide not to comply with the obligation to pay the amount of the fine and to instead provide a bank guarantee, even though this option had been suggested by the EC itself. In doing so the GCEU rejected all the arguments of the applicant based on, inter alia, the principles (1) that penalties must be specific (2) of legal certainty and (3) of proportionality.

After this ruling, companies should be wary of delaying the payment of their fines to the EC or be ready to bear the financial consequences.