The European Commission announced on Monday 12 April that it is changing the method of calculating financial penalties for the Court of Justice of the EU (CJEU) in infringement proceedings to take account of the UK’s departure.
Since 1997, the Commission’s approach to setting penalties (a lump sum for the infringement and a daily penalty payment to induce compliance) has been applied by means of the ‘n’ factor, which takes into account a range of criteria, such as the Member State’s ability to pay and its weight in the European institution. This ‘n’ factor is calculated by taking into account, in addition to the seriousness of the offence, its duration.
More precisely, the Commission calculates the ‘n’ factor on the basis of two elements: gross domestic product (GDP) and the number of seats in the European Parliament allocated to each Member State. GDP figures are updated annually to reflect economic developments in the Member States.
However, the last update still took into account the UK’s GDP and the number of seats in the European Parliament allocated to the UK before its withdrawal from the Union, the institution said in its communication. Now that the transition period is over, the data used to calculate financial penalties must be adjusted.
Thus, the minimum lump sums for each Member State are calculated by multiplying a reference lump sum by the ‘n’ factor and the average inflation in the 27 Member States (EU27) in a given year. The Commission proposes to apply an adjustment factor of 0.836 to calculate the minimum lump sums, in order to smooth out the British departure.
As for the UK, the Commission can still propose sanctions against the UK under the Protocol on Ireland/Northern Ireland (Article 12(4)) and the Protocol Relating to the UK Sovereign Base Areas (Article 12).
However, the institution can no longer rely on the formula based on the ‘n’ factor, as the UK no longer has any seats in the European Parliament. As a result, the number of seats in the European Parliament is replaced by a fixed numerical factor of 2.8, corresponding to the share of seats allocated to the UK in the European Parliament in 2018 compared to the EU average.
For more information: https://bit.ly/32kQRZH (Original version in French by Pascal Hansens)