On September 14, 2023, the Court of Justice of the European Union (CJEU) held that Volkswagen Group Italia SpA (VWGI) and Volkswagen Aktiengesellschaft (VWAG) may be protected from paying a fine of 5 million euros (about US$5.3 million) in Italy for “unfair commercial practices.” Volkswagen had already paid a fine of about 1 billion euros (about US$1.06 billion) in Germany in 2018 that was imposed on the basis of the same acts. The CJEU stated that the principle of “ne bis in idem” applies “to penalties, imposed for unfair commercial practices, that are classified as administrative penalties of a criminal nature.” The principle is codified, inter alia, in article 50 of the Charter of Fundamental Rights of the European Union (EU Charter).
Background to the Decision
Since September 2015, a scandal involving manipulated software in Volkswagen diesel vehicles has led to hundreds of lawsuits against the German automaker.
In 2016, the Autorità Garante della Concorrenza e del Mercato (AGCM), the Italian competition and markets authority, imposed a fine of 5 million euros (about US$5.3 million) on VWGI and VWAG jointly and severally for “unfair commercial practices” concerning the marketing in Italy of diesel vehicles with installed software that reduced the emission levels of nitrogen oxides in pollutant emissions inspection tests. AGCM also accused the defendants of disseminating promotional messages about the alleged compliance of the vehicles with the legal requirements for these types of emissions. (CJEU judgment, paras. 2, 16–17.) VWGI and VWAG brought an action against this decision before the Tribunale amministrativo regionale per il Lazio (Regional Administrative Court, Lazio). (Para. 18.)
In the meantime, VWAG was fined 1 billion euros (about US$1.06 billion) by a decision of the public prosecutor’s office of Braunschweig in Germany in June 2018 for installing and marketing the pollutant software. Volkswagen waived its right to appeal the decision and paid the fine. The decision included the statement that part of the fine, a sum of 5 million euros (US$5.3 million), was a penalty for the conduct and the rest of the amount was to deprive VWAG of the economic advantage derived from the installation of the software in about 10.7 million vehicles sold worldwide. (Paras. 19–22.)
Volkswagen considered the Italian fine unlawful, inter alia, because of an infringement of the principle “ne bis in idem,” as the company has already paid a fine in Germany on the basis of the same acts. The Tribunale amministrativo regionale per il Lazio dismissed the action, but VWGI and VWAG brought an appeal against that judgment before the Italian Consiglio di Stato (Council of State), which then asked the CJEU whether “unfair commercial practices” penalties may be “classified as criminal administrative penalties,” whether the principle “ne bis in idem” applies, and if it does, whether derogations may be justified. (Paras. 23–25, 33.)
In a preliminary ruling before the CJEU, the national court submits questions to the CJEU about the interpretation or validity of provisions of EU law that are considered necessary to enable a judgment of the referring court. (Treaty on the Functioning of the European Union (TFEU) art. 267, para. 2.)
The “Ne Bis In Idem” Principle
Article 50 of the EU Charter states that “[n]o one shall be liable to be tried or punished again in criminal proceedings for an offence for which he or she has already been finally acquitted or convicted within the Union in accordance with the law.” The “ne bis in idem” principle “prohibits a duplication both of proceedings and of penalties of a criminal nature, for the purposes of that article, for the same acts and against the same person.” (CJEU judgment para. 44.)
The CJEU determined that an administrative fine imposed for unfair commercial practices can still constitute a criminal penalty in this context. The relevant criteria “whether the proceedings and penalties at issue in the main proceedings are criminal in nature” are the legal classification of the offence under national law, the intrinsic nature of the offense, and the degree of severity of the penalty. (Para. 45.) In the case of Volkswagen, the CJEU stated that the fine “has a punitive purpose and has a high degree of severity” and can therefore be a criminal penalty, even if it is classified as an administrative penalty under national legislation. (Para. 55.)
Final and Binding Decision in Germany
According to the CJEU, even though Italy imposed the fine first, the decisive factor is which penalty became final first. To apply the “ne bis in idem” principle two conditions must be met. “[F]irst, there must be a prior final decision (the ‘bis’ condition) and, second, … the prior decision and the subsequent proceedings or decisions must concern the same facts (the ‘idem’ condition).” (Para. 57.)
The CJEU explained that the German decision became final and binding first — after “it appears, subject to a determination by the referring court, that … a determination had been made as to the merits of the case” by the public prosecutor’s office of Braunschweig. The second condition, whether both proceedings concern the same facts, is thus subject to determination by the Italian court. The principle of “ne bis in idem” would therefore apparently preclude national regulations that maintain a fine imposed on VWAG. It is not relevant that the Italian decision concerns VWGI in addition to VWAG, the CJEU ruled. (Paras. 58, 62–63, 65.)
The CJEU added that the principle may apply only if the facts of the two proceedings or penalties are identical; merely similar facts are not sufficient. (Para. 70.) The Italian Consiglio di Stato must still determine whether the two proceedings or penalties are identical in the case at issue, because the Italian proceedings were stayed while the CJEU made its decision. (Paras. 33, 76.)
Exceptions to the “Ne Bis In Idem” Principle
The CJEU further stated, however, that “ne bis in idem” does not apply without limitations. A “duplication of proceedings and penalties” can be justified if three conditions are met:
- The duplication “does not represent an excessive burden for the person concerned.”
- It is clearly foreseeable when and for which actions the duplication is possible.
- The proceedings “have been conducted in a manner that is sufficiently coordinated and within a proximate time frame. (Para. 96.)
The CJEU did not apply these principles to the case at issue.
Prepared by Lea Marie Ruschinzik, Law Library Intern, under the supervision of Jenny Gesley, Foreign Law Specialist
October 3, 2023
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