(Appeal Competition Commission decision Fine Enforcement Regulation (EEC) No 2988/74 Limitation period Acts adversely affecting a party Inadmissibility)
- By its appeal, the Commission of the European Communities asks the Court to set aside the judgment of the Court of First Instance of the European Communities in Case T-153/04 Ferriere Nord v Commission [2006] ECR II-3889 ('the judgment under appeal') by which that court annulled the decisions of the Commission notified by letter of 5 February 2004 and by fax of 13 April 2004 ('the contested acts') concerning the outstanding balance of the fine imposed on Ferriere Nord SpA ('Ferriere Nord') by Commission Decision 89/515/EEC of 2 August 1989 relating to a proceeding under Article 85 of the EEC Treaty (IV/31.553 Welded steel mesh) (OJ 1989 L 260, p. 1; 'the Welded steel mesh decision').
Legal context
- Regulation (EEC) No 2988/74 of the Council of 26 November 1974 concerning limitation periods in proceedings and the enforcement of sanctions under the rules of the European Economic Community relating to transport and competition provides in Article 4, headed 'Limitation period for the enforcement of sanctions':
'1. The power of the Commission to enforce decisions imposing fines, penalties or periodic payments for infringements of the rules of the European Economic Community relating to transport or competition shall be subject to a limitation period of five years.
2. Time shall begin to run on the day on which the decision becomes final.'
- Article 5(1)(a) of that regulation, entitled 'Interruption of the limitation period for the enforcement of sanctions', provides:
'1. The limitation period for the enforcement of sanctions shall be interrupted:
(a) by notification of a decision varying the original amount of the fine, penalty or periodic penalty payments or refusing an application for variation'.
Background to the dispute
- As is clear from the judgment under appeal, the Commission adopted the Welded steel mesh decision by which, inter alia, it held that Ferriere Nord had participated in a series of infringements on the Community market in welded steel mesh and imposed on it a fine of ECU 320 000.
- Pursuant to Article 4 of the Welded steel mesh decision, the fine imposed on Ferriere Nord was to be paid within three months of the date of notification of that decision. It was further stated that interest would automatically accrue on the amount of the fine on expiry of that period at the rate charged by the European Monetary Cooperation Fund on its ecu operations on the first working day of the month in which the Welded steel mesh decision was adopted, plus 3.5 percentage points, i.e. 12.50%.
- On 18 October 1989, Ferriere Nord brought an action before the Court of First Instance seeking annulment of the Welded steel mesh decision.
- On 26 October 1989, with the agreement of the Commission, a bank guarantee was provided, on the instructions of Ferriere Nord, for the amount of the fine and for the interest.
- Ferriere Nord's action was dismissed by the Court of First Instance by judgment of 6 April 1995 in Case T-143/89 Ferriere Nord v Commission [1995] ECR II-917.
- The appeal against that judgment was dismissed by judgment of 17 July 1997 in Case C-219/95 P Ferriere Nord v Commission [1997] ECR I-4411.
- By letter of 28 July 1997, citing the severe devaluation of the Italian lira which occurred between the date of the Welded steel mesh decision and the judgment of 17 July 1997 in Ferriere Nord v Commission, and the duration of the legal proceedings of almost eight years, Ferriere Nord asked the Commission to consider reducing the amount of the fine and interest. That request was refused by the Commission by letter of 11 September 1997.
- In a registered letter of 2 December 1997, Ferriere Nord repeated its request. In the same letter, it stated that it had, moreover, transferred a sum in Italian lire corresponding to the amount of the fine, that is, ECU 320 000, at the exchange rate applicable in 1989. That sum was credited on 15 December 1997 to the Commission's account with a value of ECU 249 918.
- The Commission did not respond to the letter of 2 December 1997.
- With regard to the subsequent events, the Court of First Instance found as follows in the judgment under appeal:
'14. By letter of 5 February 2004 ('the letter of 5 February 2004'), the Commission informed [Ferriere Nord] that the amount still owed by it on 27 February 2004 amounted in total to EUR 564 402.26 (the principal amount of the fine [of ECU 320 000], less ECU 249 918 paid on 15 December 1997 and including interest for the period from 17 November 1989 to 27 February 2004). The Commission put [Ferriere Nord] on notice to settle the debt as quickly as possible and stated that, once payment had been made, it would agree to the cancellation of the bank guarantee.
15. By letter of 25 February 2004, [Ferriere Nord] replied to the Commission that the demands contained in the letter of 5 February 2004 were unjustified and out of time. [Ferriere Nord] argued in particular that the limitation period of five years under Article 4 of Regulation No 2988/74, applicable to the enforcement of sanctions, had expired on 18 September 2002 and that in those circumstances the Commission could no longer recover a debt owed to it or claim against the bank guarantee.
16. By facsimile of 13 April 2004 ('the fax of 13 April 2004'), the Commission replied to [Ferriere Nord] that, with regard to limitation under Article 4 of Regulation No 2988/74, that provision did not apply in the present case because of the existence of the bank guarantee which could be called in at any time and which had the effect of provisional payment so that enforcement was not necessary. The Commission also accepted that it had not reminded [Ferriere Nord] to pay its debt once the judgment of the Court of Justice had confirmed the Welded steel mesh decision and, on that basis, agreed that interest should accrue for only five months after delivery of that judgment, until 17 December 1997. As a result, the Commission was claiming from [Ferriere Nord] only the sum of EUR 341 932.32 instead of the sum of EUR 564 402.26 demanded in the letter of 5 February 2004. Finally, the Commission stated that, failing payment before 30 April 2004, it would call on the bank to honour the guarantee.'
The proceedings before the Court of First Instance and the judgment under appeal
- By application lodged at the Registry of the Court of First Instance on 23 April 2004, Ferriere Nord sought annulment of the contested acts.
- The Court of First Instance examined, first, in paragraphs 37 to 53 of the judgment under appeal, the question whether at the time the contested acts were adopted, that is to say on 5 February and 13 April 2004, the Commission's power to enforce the Welded steel mesh decision was time-barred within the meaning of Article 4(1) of Regulation No 2988/74. Having held that to be the case, it then ruled on the admissibility of the action in the following terms:
'54. It should be borne in mind that a decision within the meaning of Article 249 EC is any act clearly and definitively altering its addressee's legal position (Case 22/70 Commission v Council [1971] ECR 263, paragraphs 33 to 43, and Case 60/81 IBM v Commission [1981] ECR 2268).
55. It follows from the reasoning relating to limitation (paragraphs 37 to 53 above) that, because the Commission's power to enforce the Welded steel mesh decision was time-barred, its right to claim from [Ferriere Nord] payment of the outstanding balance had been extinguished and [Ferriere Nord] could legitimately, from 18 September 2002, regard itself as protected from any claim made by the Commission relating to the enforcement of that decision.
56. By the contested acts, the Commission addressed to [Ferriere Nord] a demand for payment of the outstanding balance and threatened to take steps to enforce the bank guarantee. The contested acts, to which in principle a presumption of lawfulness attaches, thus clearly and definitely alter [Ferriere Nord's] legal position and on that basis constitute a decision within the meaning of Article 249 EC which by definition does not confirm earlier acts.
57. The plea of inadmissibility must therefore be rejected as unfounded.'
- With regard to the substance, the Court of First Instance held, in paragraph 59 of the judgment under appeal, that the plea alleging infringement of Article 4(1) of Regulation No 2988/74 was well founded. It therefore annulled the contested acts.
Forms of order sought
- By its appeal, the Commission claims that the Court should:
set aside the judgment under appeal in so far as it declares admissible the action for annulment brought by Ferriere Nord against the contested acts;
declare inadmissible and accordingly dismiss the action for annulment brought at first instance by Ferriere Nord against the contested acts;
order Ferriere Nord to pay the costs of the proceedings, together with the costs of the proceedings at first instance.
- Ferriere Nord contends that the Court should:
dismiss the appeal as being manifestly unfounded;
order the Commission to pay the costs.
The appeal
- In support of its appeal, the Commission puts forward a single plea, entitled 'infringement of the first paragraph of Article 230 EC, read in conjunction with Article 249 EC; failure to state reasons or incorrect statement of reasons; lack of jurisdiction on the part of the Court of First Instance'.
- According to the Commission, the Court of First Instance, after setting out, in paragraph 54 of the judgment under appeal, the criterion to be applied in assessing whether an act is open to challenge, did not show that that criterion was satisfied in the present case. However, in paragraph 55 of the judgment under appeal, it did give the result of its analysis relating to the question of limitation. That analysis is of no relevance to the assessment of the admissibility of the action, since the question whether an act produces legal effects is independent of the question whether the arguments or conclusions which it contains are well founded.
- The Commission submits that a mere demand for payment does not in itself produce legal effects. It takes the view, therefore, that the Court of First Instance did not state reasons to support the conclusion that the contested acts could be challenged in an action for annulment or that the reason stated was manifestly incorrect. Furthermore, if it is accepted that there are such reasons, they are based on an error of interpretation of the notion of 'act open for challenge' for the purposes of the first paragraph of Article 230 EC in conjunction with Article 249 EC.
- The Commission adds that the Court of First Instance gave judgment on the dispute despite not having jurisdiction.
- It asserts that, if it had wished to obtain payment of the balance from Ferriere Nord despite the latter's refusal to pay, it would have had to bring enforcement proceedings before the competent national court and in accordance with the rules of civil procedure in force in the territory of the State concerned, as laid down in the second paragraph of Article 256 EC. In accordance with the fourth paragraph of Article 256 EC, the courts of the country concerned are to have jurisdiction over complaints that enforcement is being carried out in an irregular manner.
- Ferriere Nord submits that insofar as the supervening time-bar constitutes a legal fact that extinguished the obligation which existed to pay the fine, the legal effect of the notice to pay contained in the letter of 5 February 2004 consisted in the fact of 'reviving' (or in the attempt to revive) a right already extinguished, with direct and autonomous effect on the legal position of Ferriere Nord.
- Moreover, the content of the fax of 13 April 2004 was new and supplementary in relation to all the other preceding acts since, by that fax, the Commission advised that it had amended the global amount required from Ferriere Nord by reducing the amount of interest. Under Article 5(1)(a) of Regulation No 2988/74, according to which the limitation period for the enforcement of sanctions is to be interrupted 'by notification of a decision varying the original amount of the fine, penalty or periodic penalty payments ...', the reduction of interest would be regarded as a 'decision'.
- Ferriere Nord adds that if the letter of 5 February 2004 was not open to challenge under Article 230 EC, that would constitute a lacuna in the Community legal order and a breach of the rights of the defence. Indeed, it is not obvious how otherwise it could have used the supervening time-bar.
- In that regard, it should be recalled that only measures the legal effects of which are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in his legal position are acts or decisions which may be the subject of an action for annulment (see, inter alia, Case C-131/03 P Reynolds Tobacco and Others v Commission [2006] ECR I-7795, paragraph 54, and the case-law cited).
- It is apparent from paragraph 56 of the judgment under appeal that, in the view of the Court of First Instance, a distinct change in the legal position of Ferriere Nord was brought about by the fact that, by the contested acts, the Commission addressed to Ferriere Nord a demand for payment of the outstanding balance and threatened to take steps to enforce the bank guarantee.
- Nevertheless, as is clear from the findings of the Court of First Instance in paragraphs 14 and 16 of the judgment under appeal with regard to the contested acts, those acts must be regarded as giving notice of enforcement of a decision taken previously, that is to say the Welded steel mesh decision. As such, whether they occur before or after any time-bar, those acts cannot be regarded as having produced legal effects binding on, and capable of affecting the interests of, Ferriere Nord. In reality, they merely constitute acts purely preparatory to enforcement. Neither the former nor the latter acts constitute acts open to challenge (see, to that effect, Case C-46/03 United Kingdom v Commission [2005] ECR I-10167, paragraph 25, and Reynolds Tobacco and Others v Commission, paragraph 55).
- That interpretation is not invalidated by the use of the term 'decision' in Article 5(1)(a) of Regulation No 2988/74. Even if a decision within the meaning of that provision constitutes, in all events, an act open to challenge for the purposes of Article 230 EC, it should be noted that, by the contested acts, the Commission did not notify Ferriere Nord of a decision 'varying the original amount of the fine, penalty or periodic penalty payments' within the meaning of the former provision.
- Furthermore, the mere fact that, in the fax of 13 April 2004, the Commission agreed that interest should accrue for only five months after delivery of the judgment of 17 July 1997 in Ferriere Nord v Commission cannot be deemed capable of transforming into an act open to challenge an act which, for the reasons set out in paragraph 29 of this judgment does not constitute such an act. That fact as such cannot produce, in relation to the situation resulting from the Welded steel mesh decision, legal effects binding on, and capable of affecting the interests of, Ferriere Nord.
- Finally, with regard to the argument that there would be a legal vacuum if the contested acts were not open to challenge under Article 230 EC, it should be recalled that enforcement of a decision of the Commission which imposes a pecuniary obligation on a legal person such as Ferriere Nord is governed by Article 256 EC which, in its fourth paragraph, provides for effective judicial protection. Furthermore, it has not been shown that, if the Commission succeeded in calling in the bank guarantee furnished on the instructions of Ferriere Nord, the latter would be unable to benefit from effective judicial protection against the negative consequences thereof.
- In any event, the fact remains that, although the requirement as to legal effects which are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in its legal position must be interpreted in the light of the principle of effective judicial protection, such an interpretation cannot have the effect of setting aside that condition without going beyond the jurisdiction conferred by the EC Treaty on the Community courts (Reynolds Tobacco and Others v Commission, paragraph 81).
- It follows from the foregoing that the Court of First Instance has erred in law in classifying the contested acts as acts open to challenge for the purposes of Article 230 EC. The judgment under appeal must therefore be set aside and, having regard to the first paragraph of Article 61 of the Statute of the Court of Justice, the action for annulment of the contested acts must be declared inadmissible.
Costs
- Under the first paragraph of Article 122 of the Rules of Procedure, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is required to make a decision as to costs. Under Article 69(2) of the Rules of Procedure, applicable to appeal proceedings by virtue of Article 118 thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings.
- As the appeal brought by the Commission and the objection of inadmissibility raised by it are well founded, Ferriere Nord must be ordered to pay all the costs incurred before the Court of First Instance and the Court of Justice.
On those grounds, the Court (Second Chamber) hereby:
1. Sets aside the judgment of the Court of First Instance of the European Communities of 27 September 2006 in Case T-153/04 Ferriere Nord v Commission;
2. Declares the action for annulment brought by Ferriere Nord SpA against the decisions of the Commission of the European Communities notified by letter of 5 February 2004 and by fax of 13 April 2004 concerning the outstanding balance of the fine imposed on Ferriere Nord SpA by Commission Decision 89/515/EEC of 2 August 1989 relating to a proceeding under Article 85 of the EEC Treaty (IV/31.553 Welded steel mesh) inadmissible.
3. Orders Ferriere Nord SpA to pay the costs of both sets of proceedings.
[Signatures]
* Language of the case: Italian.
