THE NE BIS IN IDEM PRINCIPLE APPLIES TO PENALTIES IMPOSED FOR UNFAIR COMMERCIAL PRACTICES WHICH ARE CLASSIFIED AS ADMINISTRATIVE PENALTIES OF A CRIMINAL NATURE

#98The ne bis in idem principle applies to penalties imposed for unfair commercial practices which are classified as administrative penalties of a criminal nature

By the ne bis in dem principle we mean that it is not possible to initiate or conduct new criminal proceedings in respect of the same facts where there is a final decision, even if that decision was given at a later date. The principle of ne bis in dem is enshrined in Article 50 of the Charter of Fundamental Rights of the European Union.

On 04.08.2016, the Autorità Garante della Concorrenza e del Mercato (AGCM) imposed a fine of EUR 5 million on Volkswagen Group Italia SpA (VWGI) and Volkswagen Aktiengesellschaft (VWAG) for unfair commercial practices towards consumers. In particular, this concerned the sale of diesel vehicles in Italy which contained software that allowed the measurement of nitrogen oxide emission levels to be distorted during pollutant emission control tests. It also involved the dissemination of advertising messages emphasizing the compliance of these vehicles with the criteria laid down by environmental legislation. The above can be regarded as unfair commercial practices towards consumers.

VWGI and VWAG therefore challenged the decision before the Regional Administrative Court in Italy. In the meantime, the public prosecutor's office in Germany imposed a fine of EUR 1,000,000 € on VWAG on the grounds that it had infringed the provisions of the Administrative Offences Act.

However, the decision in Germany became final before the decision in Italy. Accordingly, VWGI and VWAG argued that the Decision issued in Italy was unlawful on the ground that it infringed the principle of ne bis in dem, which prohibits duplication of proceedings and the punishment of the same persons for the same acts.

Therefore, the Council of State in Italy, which was called upon to rule on the appeal, asked the Court of Justice whether the ne bis in dem principle could be applied in the present case.

The Court of Justice held that penalties imposed for unfair commercial practices can be classified as administrative penalties of a criminal nature and that three criteria are relevant for assessing whether the penalties are of a criminal nature, namely:

1. the application of Article 50 of the Charter of Fundamental Rights of the European Union is not limited to acts and penalties which are qualified as criminal under national law, but applies, irrespective of such qualification under national law, to acts and penalties which must be regarded as criminal,
2. verification that the sanction has a punitive purpose,
3. he degree of severity of the penalty that may be imposed on the person concerned shall be determined on the basis of the maximum possible penalty provided for in the relevant provisions.

Having regard to those criteria, the Court of Justice has held that a fine imposed on a company by the competent national consumer protection authority in order to punish unfair commercial practices constitutes a criminal sanction if it has a repressive purpose and a high degree of severity. Furthermore, the Court states that the principle of ne bis in idem precludes national legislation from convicting a person for acts for which he has already been punished in another Member State, even if that conviction took place after the decision imposing that fine was given but became final before the judgment in the proceedings in Italy became final. The ne bis in dem principle applies if the facts of the two proceedings are identical, so it is not sufficient that the facts are merely similar.

In conclusion, we submit that if the sanctions imposed for unfair commercial practices meet all 3 criteria for assessing the criminal nature of the sanctions, the facts and the persons involved in the two proceedings are identical and the decision in one proceeding has become final, this precludes the decision in the other proceeding, otherwise the above may be considered a breach of the principle of ne bis in dem.