Judgments nº T-203/18 of Tribunal General de la Unión Europea, July 08, 2020

• Resolution Date: July 08, 2020
• Issuing Organization: Tribunal General de la Unión Europea
• Decision Number: T-203/18

(Economic and monetary policy - Prudential supervision of credit institutions - Article 18(1) of Regulation (EU) No 1024/2013 - Administrative pecuniary penalty imposed by the ECB on a credit institution for infringement of Article 77(a) of Regulation (EU) No 575/2013 - Rules for publication on the ECB’s website - Article 18(6) of Regulation No 1024/2013 and Article 132(1) of Regulation (EU) No 468/2014) In Case T-203/18,

VQ, represented by G. Cahill, Barrister,

applicant,

v

European Central Bank (ECB), represented by E. Koupepidou, E. Yoo and M. Puidokas, acting as Agents,

defendant,

supported by

Council of the European Union, represented by I. Gurov and J. Bauerschmidt, acting as Agents,

and by

European Commission, represented by L. Armati, A. Steiblytė, K.-P. Wojcik and A. Nijenhuis, acting as Agents,

interveners,

APPLICATION based on Article 263 TFEU for annulment of Decision ECB-SSM-2018-ESSAB-4, SNC-2016-0026 of the ECB, of 14 March 2018, adopted pursuant to Article 18(1) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63), to the extent that, first, it imposed on the applicant an administrative pecuniary penalty of EUR 1 600 000 and, second, it decided to publish that penalty, without anonymising the name of the applicant, on the ECB’s website,

THE GENERAL COURT (Second Chamber, Extended Composition),

composed of S. Papasavvas, President, V. Tomljenović, F. Schalin, P. Škvařilová-Pelzl and I. Nõmm (Rapporteur), Judges,

Registrar: E. Coulon,

gives the following

Judgment

Background to the dispute

1 The applicant, VQ, is a credit institution that, due to its size, is subject to the prudential supervision of the European Central Bank (ECB).

2 On 27 December 2016, the ECB’s investigating unit sent the applicant a statement of objections pursuant to Article 126(1) and (2) of Regulation (EU) No 468/2014 of the ECB of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the ECB and national competent authorities and with national designated authorities (SSM Framework Regulation) (‘the SSM Framework Regulation’; OJ 2014 L 141, p. 1). The applicant was accused of having carried out repurchase transactions in respect of its own shares between 1 January 2014 and 7 November 2016, without having sought the prior permission of the competent authority, in breach of Article 77(a) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ 2013 L 176, p. 1, and corrigenda OJ 2013 L 208, p. 68, and OJ 2013 L 321, p. 6). In accordance with Article 521(1) and (2) of Regulation No 575/2013, that provision, which entered into force on 28 June 2013, became applicable only as from 1 January 2014.

3 On 10 February 2017, the applicant submitted its written observations on the statement of objections.

4 On 29 June 2017, the ECB’s investigating unit sent the applicant a draft decision, so as to enable it to submit its written observations on the amount of the proposed administrative pecuniary penalty of EUR 1 600 000.

5 On 17 and 18 July 2017, the applicant lodged written observations on that draft decision.

6 On 23 November 2017, the ECB adopted a decision, on the basis of Article 18(1) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the ECB concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63), by which the ECB, first, found that the applicant had committed an infringement consisting in the breach of the obligation contained in Article 77(a) of Regulation No 575/2013 to obtain the prior permission of the competent authority before repurchasing Common Equity Tier 1 instruments, in repurchasing its own shares between 1 January 2014 and 7 November 2016, second, imposed an administrative pecuniary penalty of EUR 1 600 000 on it and, third, decided to publish that administrative pecuniary penalty on its website, without anonymising the applicant’s name.

7 On 22 December 2017, the applicant requested a review of that decision pursuant to Article 24(1), (5) and (6) of Regulation No 1024/2013, read in conjunction with Article 7 of Decision 2014/360/EU of the ECB of 14 April 2014 concerning the establishment of an Administrative Board of Review and its Operating Rules (OJ 2014 L 175, p. 47). A hearing was held on 25 January 2018 before the Administrative Board of Review.

8 On 21 February 2018, the Administrative Board of Review issued an opinion finding the ECB’s decision to be lawful.

9 On 14 March 2018, the ECB adopted Decision ECB-SSM-2018-ESSAB-4, SNC-2016-0026, adopted pursuant to Article 18(1) of Regulation No 1024/2013, which, pursuant to Article 24(7) of that regulation, repealed and replaced the decision of 23 November 2017, while remaining identical in content (‘the contested decision’).

10 In the first place, the ECB found infringing conduct on the part of the applicant. It recalled that, since the entry into force of Regulation No 575/2013 on 1 January 2014, it had followed from Article 77(a) of that regulation, and from Article 29(1) and Article 31(1) of Commission Delegated Regulation (EU) No 241/2014 of 7 January 2014 supplementing Regulation No 575/2013 with technical regulations concerning the capital requirements applicable to institutions (OJ 2014 L 74, p. 8), that a credit institution wishing to repurchase Common Equity Tier 1 instruments had to obtain prior permission from the competent authority. It recalled that, since 4 November 2014, it had been the competent authority for the purposes of that regulation, that function having previously been exercised, in respect of the applicant, by the Banco de España (Bank of Spain).

11 The ECB observed that the applicant had repurchased its own shares without seeking prior permission from the competent authority, within the meaning of Regulation No 575/2013. It recalled that, on 16 March 2016, the applicant had requested the joint supervisory team for clarification on whether Article 77 of Regulation No 575/2013 applied to transactions in respect of its own shares, to which that team had responded in the affirmative on 23 March 2016. It noted that the applicant had nevertheless continued to repurchase its own shares, without permission, from 24 March to 7 November 2016.

12 The ECB inferred from this that the applicant had failed to comply with Article 77(a) of Regulation No 575/2013, read in conjunction with Article 29(1) and Article 31(1) of Delegated Regulation No 241/2014, from 1 January 2014 to 7 November 2016 and that that breach had been committed at least negligently from 1 January 2014 to 23 March 2016 and intentionally from 24 March to 7 November 2016.

13 In the second place, the ECB imposed an administrative pecuniary penalty of EUR 1 600 000 on the applicant, on account of its infringing conduct. It pointed out that it was entitled, by virtue of Article 18(1) of Regulation No 1024/2013, to impose an administrative pecuniary penalty in the event of breach of a requirement arising from relevant directly applicable acts of EU law for which the competent authorities were empowered to impose administrative pecuniary penalties under the relevant provisions of EU law. It recalled that, pursuant to Article 18(3) of that regulation, the penalties applied had to be ‘effective, proportionate and dissuasive’.

14 By way of mitigating circumstances, the ECB took into account the fact that the applicant itself had informed the joint supervisory team of the conduct constituting the breach and that it had, after 7 November 2016, fulfilled its obligations under Article 77(a) of Regulation No 575/2013. It also took into account the fact that, during the period of infringement, the applicant, in its statements concerning its capital requirements, had correctly deducted its share buybacks.

15 It took the view that an administrative pecuniary penalty of EUR 1 600 000, representing 0.03% of the applicant’s annual turnover, constituted a proportionate penalty.

16 In the third place, the ECB decided to publish the administrative pecuniary penalty imposed, without anonymising the applicant’s name, on its website. It recalled, in essence, that it followed both from recital 38 of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p. 338) and from Article 18(6) of Regulation No 1024/2013 that the principle was that of the publication of administrative penalties, for the purposes of preserving their dissuasive effect. It found that the applicant had not demonstrated that it met the conditions of Article 132(1) of the SSM Framework Regulation, which permitted the publication of an administrative pecuniary penalty anonymously.

17 On 15 March 2018, the applicant informed the ECB that it was considering bringing an action for annulment and an application for interim measures before the Court in relation to the publication of the penalty imposed.

18 On 20 March 2018, the ECB informed the applicant that it was intending to publish the administrative pecuniary penalty between the evening of Wednesday, 21 March 2018 and the morning of Thursday, 22 March 2018.

19 On the morning of 22 March 2018, the applicant informed the ECB of its intention to bring an action for annulment against the contested decision and an application for interim measures. On the same day, the ECB gave it until noon on 23 March 2018 to submit that application, failing which it would publish the penalty on its...