Abstract
This case note article examines the judgment of the Court of Justice of the European Union (Grand Chamber) in Case C-221/22 P Deutsche Telekom. In that judgment, the Court clarifies key aspects of the obligation to pay interest on returned fines, as well as the liability of the European Union in damages for violations of that obligation. The judgment is situated within the broader context of competition-law enforcement, specifically the power of the European Commission to impose fines on undertakings for abuses of dominance and anti-competitive agreements. Although the earlier case law had recognized the existence of an obligation to pay interest on refunded fines, in Deutsche Telekom, the Commission declined to act accordingly after the partial annulment of a fine that had been paid to it provisionally. In this case, as well as in others, the Commission advanced various arguments to avoid both the payment of interest and damages liability for the unpaid amounts. This contribution explains the Deutsche Telekom judgment in its legal context, highlighting its significance in confirming the prior case law, in supporting the reasoning of the General Court, and in resolving the lingering uncertainty about the obligation to pay interest on returned fines.
Introduction
The question of what should happen, moneywise, when the EU judicature annuls, fully or in part, a competition-law fine decision, has received increasing attention in recent years. 1 In the enforcement of EU competition law, the European Commission imposes fines on undertakings that it has found to have infringed Articles 101–102 of the Treaty on the Functioning of the EU (TFEU). These decisions may be appealed before the General Court (GC) and further to the Court of Justice (CoJ). 2 It is not unheard of for such decisions to be annulled or revised significantly on appeal. When that happens, the EU must return the payments that it has received previously because the new developments have shown them to lack a legal basis. 3
The practical significance of receiving interest when one’s competition-law fine is annulled or reduced and the principal amount is returned is obvious. The Commission can impose large fines on undertakings for competition-restricting agreements or abuses of dominance. Appealing these Commission decisions before the EU Courts can take years, and the interest that accrues on the fines may come to significant amounts of money.
Article 266 TFEU stipulates that an EU institution whose act has been declared void is required to take the measures that are necessary to comply with the relevant judgment of the EU judicature. In 2021, what came to be known as the Printeos Saga ended with the CoJ expressly confirming that, when it returns or reimburses payments of fines, the EU must also pay interest. 4 Although the key legal guidelines are now found in the Printeos case law, 5 the Commission has continued to reject claims for interest by citing various justifications, 6 which, in turn, have spurred new disputes about damages for breaches of the obligation to pay interest. The claims with which such compensation has been sought are for non-contractual liability of the EU, and it is the GC that hears them first. 7
This contribution discusses the CoJ Grand Chamber judgment in Deutsche Telekom, 8 a case that was about a fine that had been paid provisionally and the refusal of the Commission to pay interest after it was reduced. The judgment in Deutsche Telekom reaffirms earlier case law and provides additional support for the proposition that the Commission is subject to an obligation to pay interest when it refunds fines. 9 It also contains further clarifications of the nature and functions of interest, the applicable interest rate and the period over which interest accrues.
This case note first briefly summarizes the Deutsche Telekom judgment and its background in sections 2–4. Thereafter, we analyse the judgment and assess its significance and reasoning against the backdrop of other interest cases and the different kinds of arguments that the Commission has presented in them in order to avoid paying interest on returned monies.
Factual and legal background of the case
The first key fact of Deutsche Telekom is that the eponymous company was fined in virtue of a Commission decision which found that it had infringed Article 102 TFEU. Deutsche Telekom challenged the fine before the GC but also paid the full amount of the fine provisionally in 2015. On appeal, the GC did not annul the entire decision, but it reduced the amount of the fine significantly, by over €12,000,000. This appeal was decided in 2018. 10 In 2019, the Commission returned the nominal amount of the fine but refused to pay interest. Deutsche Telekom took the matter to the GC, claiming that the EU should compensate it for the loss of profit that it incurred because the money which it had paid had not been in its possession for several years. Alternatively, it claimed that the EU was liable for interest, which, in the view of Deutsche Telekom, should have been calculated at the rate which the European Central Bank (ECB) applies to its principal refinancing operations plus three and half percentage points. The claimant also requested that the Court order the Commission to pay interest on said compensation. 11
The GC upheld the damages claim of Deutsche Telekom partially in its judgment of 19 January 2022. The Court ordered the Commission to pay the amount of €1,750,522.83 in compensation for missing interest, a sum which is based on the ECB refinancing rate plus three and half percentage points. In reaching that conclusion, the Court reasoned by analogy from Article 83(2)(b) of Delegated Regulation 1268/2012. 12 This provision does not address interest rates in cases such as Deutsche Telekom expressly.
According to the GC, the refusal of the Commission to pay interest constituted a sufficiently serious breach of Article 266 TFEU, which requires the EU institutions to comply with court rulings. Deutsche Telekom had suffered loss of enjoyment of funds between 2015 and 2019 and compensation at a standard rate was necessary. 13 Furthermore, it was held that interest is due not from the time of the fine-altering ruling but from the date of the original provisional payment due to the ex tunc (retroactive) effect of annulments or reductions of fines. 14 The Commission appealed this judgment and that appeal has now been decided by the CoJ, which has confirmed the GC's decision. 15
Opinion of Advocate General Collins
Advocate General (AG) Collins recommended that the GC judgment be set aside. 16 The AG’s legal assessment diverged significantly from that of the CoJ. The AG was of the view that interest does not begin to accrue automatically from the date of the provisional payment of a fine; instead, it should only begin to accumulate once a fine-altering judgment is delivered. 17 Further remarks on the differences between the AG’s analysis and the reasoning of the Court are made in next sections. It suffices to note here that the differences between the two legal assessments further underscore the significance of the guidance on the interest obligation in Deutsche Telekom.
Judgment by the CoJ Grand Chamber
The Grand Chamber of the CoJ affirmed the GC judgment in its entirety. In essence, the CoJ observed that when a fine is annulled or reduced, Article 266 TFEU requires full restitution, including interest on the returned principal amount, from the date on which the undertaking has paid the fine. The GC had arrived at this finding correctly with the aid of the earlier case law. In addition, interest is not ‘punitive default interest’, as the Commission called it, but rather standard compensation for the loss of enjoyment of funds. The repayment of the fine by the Commission after the fine-altering judgment did not exempt it from paying interest for the period that had commenced with the provisional payment of the fine. While the appeal of the Commission in Deutsche Telekom could be read as an invitation for the CoJ to reconsider the guidance from the earlier Printeos case, there was no need to do so because the CoJ found no reason to depart from the position adopted in Printeos. 18
The CoJ upheld the analogy with the applicable rate from Article 83(2)(b) of Delegated Regulation 1268/2012, 19 noting that the rate which is based on that provision is reasonable in the absence of a directly applicable rule. Because the GC had applied that rate by analogy, it was irrelevant that said provision did not contemplate a case such as the one at hand. 20 The Court explained that said rate, which is equal to the ECB refinancing rate plus three and half percentage points, was not disproportionate and would serve as compensation for loss of enjoyment of funds. 21 The Commission argued that a lower rate which had been applied in cases about bank guarantees should have been employed instead. However, according to the Court, that lower rate would not have been appropriate on the facts because Deutsche Telekom had actually paid the funds and its situation was therefore not comparable to that of an undertaking which has provided a bank guarantee instead of paying a fine. 22
The CoJ additionally rejected the argument of the Commission that paying interest in the amount that Deutsche Telekom considered appropriate would enrich the latter unjustly or undermine the deterrent effect of fines. Importantly, the original fine had been found unlawful in part, and the CoJ indicated that arguments about the deterrent effect of unlawful measures could not be sustained. 23 The CoJ also commented on the notion of a ‘sufficiently serious breach of EU law’, which has emerged as a requirement for EU damages liability in the case law. Considering that the obligation of the Commission to comply fully with the judgment of the GC was, on the basis of Article 266 TFEU, automatic, the failure to pay interest was serious enough to trigger liability. 24 The Commission had denied that its breach of EU law was sufficiently serious. 25
Discussion
The CoJ judgment in Deutsche Telekom is a part of a series of interest judgments
The judgment clarifies that when an EU competition fine is reduced, the Commission must not only repay the principal but also pay interest from the date of payment, regardless of whether the funds have earned positive returns. When this interest is calculated, the application of the ECB refinancing rate, increased by three and half percentage points, is reasonable and acceptable (and, from now on, companies are likely to claim it). The judgment clarifies the rights of companies in cases of partially or entirely annulled EU-level fines and emphasizes the financial consequences of unlawful Commission decisions for the Union. The judgment also affirms that failure to pay the obligatory interest triggers the damages liability of the EU and that no additional proof of the sufficient seriousness of the breach of EU law is necessary.
The judgment is one of several fine-repayment cases that revolve around interest. In a sense, it closes the question about interest obligations and fine payments. Interestingly, despite prior GC and CoJ judgments pointing in the opposite direction, the Commission has, on several occasions, refused to pay full interest on returned fines, and it has denied that this course of action would trigger damages liability. 26 However, the Commission now appears to accept the message of the EU Courts. For instance, after the CoJ judgment in Deutsche Telekom, the Commission discontinued its appeal in a highly similar case, Campine. 27
The obligation to pay interest: Details and functions
In Printeos, the CoJ explained that the Commission must include interest in the repayment of fines. This obligation follows from Article 266 TFEU and the case law on that provision, in particular the judgment in IPK. 28 According to the CoJ, a right to restitution arises when the Union has received money pursuant to an EU measure that has later been declared invalid by the EU judiciary. The payment of interest gives effect to the judgment that annuls the original measure. 29 Accordingly, when a competition-law fine has been paid but later annulled and returned, interest accrues from the date on which the fine is paid to the date of its repayment. 30 Furthermore, the Printeos judgment indicates that if the Commission breaches its obligations under Article 266 TFEU, the breach is sufficiently serious for the victim to be entitled to compensation for harm from the EU. 31 The liability of the EU is non-contractual, as set out in Article 340 TFEU. An undertaking to which the principal amount of the fine is returned but which does not receive interest on that sum is entitled to damages that correspond to the shortfall; in addition, interest should accumulate on the compensation itself until the full repayment of the debt. 32
The GC in Deutsche Telekom 33 and Campine 34 followed Printeos. The Commission had tried to distinguish Deutsche Telekom and Campine from Printeos and put forward the argument that there is a relevant difference between complete annulment and the mere reduction of a fine. Therefore, the argument went, the guidance from Printeos should not apply to cases in which fines have only been reduced. The GC disagreed: the applicable legislation and the case law did not distinguish between these two types of events. The GC also noted that a reduction is due to the partial annulment of a decision. 35 The Grand Chamber of the CoJ in Deutsche Telekom confirmed that the GC had applied the law correctly. 36
Even before the CoJ resolved Deutsche Telekom, the obligation of the Commission to pay interest alongside principal when refunding provisionally paid fines did not appear to be particularly unclear. Printeos and IPK underscored it, and it is grounded in EU primary law. 37 Nevertheless, post-Printeos litigation has continued to raise questions about the scope of the obligation and about the possibility of non-compliance giving rise to liability in damages. 38 The arguments of the Commission, which concern both the existence of such an obligation and its contours, therefore merit detailed examination.
In Printeos, the Commission objected to the payment of interest by asserting that the interest which Printeos claimed was higher than the interest which the money had yielded while in the possession of the Commission. 39 There are rules that govern the manner in which the Commission should treat provisionally paid monies. The argument was based on the idea that, if the Commission had complied with the applicable rules governing the deposit and investment of the monies, and had consequently not received any interest, the obligation to pay interest when refunding the principal would not arise. However, the CoJ rejected this line of argumentation because the secondary law on the treatment of fine payments was a separate matter from the obligation of the Commission to pay interest and could not, in any event, be read as overriding the obligations that flow from the Treaties. 40 This holding has much to do with the functions of the interest payment, which we will discuss shortly. In Deutsche Telekom, the Commission additionally argued that it is not possible for the EU Courts to create an obligation to pay interest ex tunc. The EU Courts rejected this idea as well, noting the source of the obligation in question is Article 266 TFEU. Furthermore, the secondary law on provisionally paid fines indicates that a payment that turns out to lack a legal basis should be returned to the company that has made it. 41 When it decided the appeal in Deutsche Telekom, the CoJ affirmed its reasoning in Printeos and IPK. 42
The functions of the obligation to pay interest when returning fines were first addressed by the CoJ in Printeos and then discussed by the GC in Deutsche Telekom and Campine. Now, they have been expounded by the Grand Chamber in the appeal in Deutsche Telekom. In their earlier judgments, the EU Courts had indicated that this obligation serves three purposes. First, it provides compensation for the harm that an undertaking suffers as a result of being deprived of the use of its funds. 43 Second, the obligation is intended to encourage the Commission to comply promptly with judgments that annul or reduce fines. 44 Third, it serves as an incentive for the Commission to exercise particular care when it levies fines. 45 In resolving the Deutsche Telekom appeal, the CoJ expressly reaffirmed most of these observations, stating that the payment of interest is a way of giving effect to judgments that annul measures, in that it is intended to compensate companies – at a standard rate – for the loss of enjoyment of funds and, moreover, to encourage the debtor to comply with the annulment judgment as soon as possible after its delivery. 46
Some of the arguments of the Commission in the interest cases focused on the point in time when interest starts to accrue. In Printeos, the CoJ explained that interest begins to accrue when the fine is paid provisionally and continues to accumulate until its repayment. 47 The GC applied this approach in Deutsche Telekom and Campine. 48 The Commission, however, submitted that interest should accrue over a shorter period. One of the arguments was that default interest on a debt cannot accrue during a period when the principal amount of the debt is uncertain. When the Commission obtains a provisional payment for a fine but has not yet received any decision from the courts, it knows neither whether it has a restitutionary obligation nor what its amount may be. 49
The GC, however, explained that the restitution claim cannot be considered to be uncertain in a manner that would prevent interest from accruing from the provisional payment of the fine. 50 Under EU law, when a review court adopts a decision that annuls a fine in part or in full, that annulment operates ex tunc, that is to say, as if the original decision never existed. 51 The CoJ in Deutsche Telekom affirmed this principle. 52 The Court noted that if money is received in breach of EU law, that money must be repaid, and the interest on the refund must cover the entire period from the date of payment to the date of repayment. Furthermore, the foregoing is the manifestation of a general principle of recovery of sums that are paid but not due. 53
While one can appreciate the correctness of the reasoning of the EU Courts, it is also easy to understand why the Commission put forward the arguments that were described above. There is, in fact, a period of time – the period between the original payment of a fine by an undertaking and the decision of a court – during which the principal is with the Commission and the Commission does not know that it will have to return it. Furthermore, even the view of the AG differed from that of the Court. The argument of the former, specifically, was that default interest does not begin to accrue from the date of the provisional payment of the fine. A terminological confusion between default interest and interest can partially explain the different views. 54
At various stages of the Deutsche Telekom proceedings, the Commission presented the interesting argument that the obligation to pay interest starting from the provisional payment of the original fine would undermine the principle that fines should have a deterrent effect. The Commission submitted that if there is an obligation to pay interest when a provisionally paid fine is repaid in part and the amount of interest is greater than the actual time-value-of-money loss that the relevant undertakings have suffered, then the value of the remaining portion of the fine would be eroded, thus diminishing its deterrent effect. 55 The GC, however, stated that the different goals of EU law must be reconciled with each other, with the result that arguments such as the ones that the Commission put forward could not eliminate the obligation to pay interest. 56 On appeal, the CoJ rejected the deterrent-effect argument and endorsed the reasoning of the GC. 57
The applicable interest rate
Printeos did not explicitly determine a standard interest rate. The claimants in Printeos put forward a low rate, and the CoJ used it. 58 Accordingly, the Commission’s attempts to seek clarification on the matter of the applicable rate were not entirely without merit. When Deutsche Telekom was before the GC, that Court inferred from Printeos that the amount of compensation should correspond to lost interest and applied the rate from Article 83(2)(b) of Delegated Regulation 1268/2012 by analogy. 59 This was the rate which the CoJ had applied when ordering the payment of interest on compensation in Printeos. 60 The GC applied that rate in its judgment in Campine as well, 61 a decision which the Commission also appealed. 62 In both Deutsche Telekom and Campine, the GC emphasized that the applicable interest rate is a fixed standard rate unless the claimant seeks a lower one. 63
When hearing the appeal in Deutsche Telekom, the CoJ indicated that, in the absence of a provision that is clearly applicable to the situation at hand, the method that the GC had used was not erroneous and the interest rate which it had set was appropriate. 64 The AG held a different view on this matter, noting that the relevant provision of the Delegated Regulation was not applicable and that it was not appropriate to use it analogically, either. 65
The CoJ held that the applicable rate cannot be limited to what would be necessary to compensate for the actual depreciation of the value of money, that is, that said interest rate must be set so as to provide the compensation to which the undertaking that has paid that fine is entitled because it has been deprived of the use of the funds that the Commission has collected unduly. 66 We may note here that the goals of the obligation to pay interest on returned fines explain why a standard rate is reasonable. Those goals are to promote circumspection in the imposition of fines, as well as the prompt repayment of provisionally paid fines; consequently, a sufficiently large standard rate is justifiable. 67 Only if the sole goal were compensation would it be reasonable to adopt the Commission's argument for a more nuanced case-specific approach 68 which would reflect the actual loss that an undertaking suffers when it loses the possibility to enjoy monies. In addition, a standard rate is more easily applied to future cases than a varying rate that reflects the specificities of each case.
The case law now clearly establishes that an undertaking does not need to demonstrate actual harm to be entitled to interest on a returned fine payment; instead, the refund should automatically bear interest, which is determined on the basis of a standard rate. Consequently, the Commission may become more careful when it imposes fines in grey-area cases. 69 If an undertaking wishes to receive damages from the EU that go beyond this interest, it would have to establish actual and certain harm, a high threshold under the case law of the EU Courts. 70
Claims for compensation beyond interest
In Deutsche Telekom, the GC was also faced with a compensation claim that did not concern interest per se but additional economic harm, lost profit. This topic had not been addressed in Printeos. 71 The GC found that if the claimant is to receive compensation for economic harm, it must show that said harm is actual and certain, as well as demonstrate its extent. 72 The GC considered that, in the case before it, the claimant had not been able to discharge these burdens in respect of its lost profits because it had not shown that it would have invested the sum of which it was deprived in its business. Furthermore, it did not show that the lost opportunity to use of the amount of the fine that it had paid unduly to the Commission led it to abandon specific projects which were likely to result in specific earnings. 73 This strict approach to compensating lost profit (and loss of opportunity) and the requirement of concrete proof of the actual occurrence of harm are familiar from other EU liability cases before the CoJ as well, despite the expectation of concrete proof of such harms sometimes being unrealistic. 74 In hearing the appeal in Deutsche Telekom, the CoJ did not have the opportunity to discuss this matter further.
Terminology: Interest, default interest and standard compensation
The terminology of the interest cases is both confused and confusing. The EU Courts employ all of the terms ‘interest’, ‘default interest’ and ‘standard compensation’, sometimes interchangeably. 75 Notably, in the appeal of Deutsche Telekom, the Commission claimed that the GC had erred in law in imposing on the Commission ‘an absolute and unconditional obligation to pay retroactively “punitive default interest”’. 76 The CoJ reassured the Commission that the interest in question is not ‘punitive default interest’. 77 The Court noted that it was true that, in the judgment that was on appeal, the GC had called the interest that was payable by the Commission ‘default interest’ on a number of occasions. That term usually refers to situations in which a debtor delays a payment and interest is set so as to penalize them. However, that this terminology is ambiguous 78 does not, according to the CoJ, call into question ‘the validity (…) of the reasoning on the basis of which the [GC] held that the Commission was required to pay interest upon repayment of the amount unduly collected’. 79 To cut a long story about interest short, after Deutsche Telekom, the term ‘interest’ appears to be the appropriate one for the interest that is due on returned fines.
Implications for other cases
The CoJ judgment in Deutsche Telekom is the culmination of a series of interest cases in which the refusal of the Commission to pay interest on returned fine payments resulted in litigation. As indicated above, once the CoJ decided Deutsche Telekom, the Commission discontinued its appeal in, for instance, Campine. 80 The case law of the EU Courts on the interest that is payable on returned fines has paved the way for claims of significant monetary value. None of the existing interest judgments concern extraordinarily hefty fines, but it is obvious that the reasoning which animates them also applies to cases with record fines. Notably, at the end of 2024, Intel received €515,550,000 to cover interest on returned fines. 81 A €1,060,000,000 fine was levied on that company in 2009. In 2022, after many peripeties, the GC annulled it. 82 Intel then filed an action before the GC, seeking compensation for the interest that had accrued on the principal amount of the fine which it had paid originally. 83 After the CoJ judgment in Deutsche Telekom, the dispute about interest was discontinued because the parties settled. 84
Concluding remarks
This contribution has examined the CoJ Grand Chamber judgment in Deutsche Telekom. The judgment clarifies the obligation of the EU to pay interest on refunded competition-law fines. It confirms that such payments are legally required and grounded in primary law. By endorsing a standard rate and reaffirming liability for non-payment, the CoJ safeguards undertakings from suffering financial disadvantages from the prior no-interest practices of the Commission. The judgment also reinforces the core principles of good administration and fairness in competition enforcement.
Following the Deutsche Telekom judgment, the Commission appears to have resolved pending disputes concerning interest payments and compensation for missing interest through settlements reached with the undertakings involved.
Footnotes
Declaration of conflicting interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The authors received no financial support for the research, authorship, and/or publication of this article.
