Must Article 4(3) TEU and Article 101 TFEU be interpreted as meaning that imposing an obligation upon a Member State’s competition authority to interpret national law governing the fixing of fines in accordance with the principle of proportionality, in the sense that it is necessary to verify whether total turnover, as stated in the profit and loss account of the balance sheet for the previous financial year, faithfully reflects the economic and financial operations in accordance with the economic reality?

Yes, Article 4(3) TEU and Article 101 TFEU require that the national competition authority verify whether the turnover faithfully reflects the economic reality.

Must Article 4(3) TEU and Article 101 TFEU be interpreted as precluding, in the light of the principle of proportionality, the practice of a Member State’s competition authority of imposing a fine in relation to the turnover stated in the profit and loss account of the balance sheet for the previous financial year, which includes the sums re-invoiced to final customers in connection with services for the purchase of media space by an intermediary, rather than just the commissions on the work of the intermediary?

Yes, it precludes such a practice if the turnover does not reflect the real economic situation and another amount should be considered based on precise and documented evidence.

Must Article 4(3) TEU and Article 101 TFEU be interpreted as precluding the interpretation of a rule of national law as meaning that responsibility for the correct recording in the accounts and the faithful presentation of the economic and financial operations in accordance with the economic reality lies with the undertaking that is fined and that a Member State’s competition authority is bound by the manner in which the undertaking that is fined fulfils that obligation?

Yes, it precludes such an interpretation if it prevents the competition authority from examining evidence showing that the turnover does not reflect the real economic situation.

Fines must consider real economic situation if precise and documented evidence is provided.

European Court of Justice (Fifth Chamber) · 10 november 2022 · Judgment · Preliminary ruling

(Reference for a preliminary ruling – Competition – Agreements, decisions and concerted practices – Article 101 TFEU – Penalty imposed by the national competition authority – Determination of the amount of the fine – Consideration of turnover in the profit and loss account – Request for the national competition authority to take into account a different turnover – Refusal by the Competition Council – Real situation of the undertaking concerned – Principle of proportionality)

Rechtsvraag

Does Article 4(3) TEU and Article 101 TFEU, read in light of the principle of proportionality, preclude national legislation or practice that requires a national competition authority to calculate fines based solely on the turnover shown in a company's profit and loss account, without considering evidence that the turnover does not reflect the company's real economic situation?

Regel

Article 4(3) TEU (Treaty on European Union) (Principle of sincere cooperation and obligation of Member States to ensure effective application of EU law)
Article 101 TFEU (Treaty on the Functioning of the European Union) (Prohibition of agreements, decisions, and practices that prevent, restrict, or distort competition within the internal market)
Article 5, Regulation No 1/2003 (Empowers national competition authorities to apply Articles 101 and 102 TFEU and impose fines)
Article 23(2), Regulation No 1/2003 (Fines imposed by the European Commission for infringements of competition law must not exceed 10% of the total turnover of the undertaking in the preceding business year)
Principle of proportionality (Penalties must correspond to the gravity of the infringement and consider individual circumstances)

Conclusie

Article 4(3) TEU and Article 101 TFEU, read in light of the principle of proportionality, preclude national legislation or practice that requires a national competition authority to calculate fines based solely on the turnover shown in a company's profit and loss account, without considering evidence that the turnover does not reflect the company's real economic situation. The national competition authority must be able to examine such evidence to ensure that the penalties are proportionate and accurately reflect the undertaking's economic reality.

Tijdlijn

26-03-2012 Zenith Media Communications SRL and other undertakings allegedly began participating in a cartel to eliminate competing advertising networks.
17-10-2012 The alleged period of cartel activity by Zenith Media Communications SRL and other undertakings concluded.
03-12-2014 The Competition Council found Zenith Media Communications SRL guilty of participating in a cartel and imposed a fine of 2,146,199 Romanian lei (RON).
08-06-2016 The Curtea de Apel București (Court of Appeal, Bucharest) dismissed Zenith Media Communications SRL's appeal against the Competition Council’s decision.
01-03-2021 The Înalta Curte de Casaţie şi Justiţie (High Court of Cassation and Justice, Romania) made a decision to request a preliminary ruling from the Court of Justice of the European Union.
22-06-2021 The Court of Justice of the European Union received the request for a preliminary ruling from the Înalta Curte de Casaţie şi Justiţie.
10-11-2022 The Court of Justice of the European Union delivered its judgment, stating that national legislation or practice should not require the competition authority to solely rely on the turnover shown in the profit and loss account if it does not reflect the real economic situation of the undertaking.