JUDGMENT OF THE GENERAL COURT (Second Chamber, Extended Composition)

8 July 2020 ( *1 )

(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 1600000 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 1600000.

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 1600000 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 1600000 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 1600000, 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 website on 26 March 2018.

20 On 8 May 2018, the pecuniary penalty imposed on the applicant was published on the ECB’s website.

Procedure and forms of order sought by the parties

21 By application lodged at the Court Registry on 23 March 2018, the applicant brought the present action. By letter lodged at the Court Registry on the same day, the applicant made an application for anonymity.

22 By separate document lodged at the Court Registry on 26 March 2018, the applicant submitted an application for interim measures, pursuant to Articles 278 and 279 TFEU, in which it, in essence, requested the President of the General Court, primarily, to suspend the operation of Section 5 of the contested decision, concerning the publication of the administrative pecuniary penalty imposed, and, in the alternative, to suspend the operation of Section 5 in so far as it provided for the publication of that penalty without anonymisation of the applicant’s name.

23 The applicant’s application was dismissed by the order of 3 May 2018, VQ v ECB (T‑203/18 R, not published, EU:T:2018:261), and costs were reserved.

24 By decision of 8 June 2018, the President of the Second Chamber (former composition) granted the applicant’s application for anonymity.

25 By documents lodged at the Court Registry on 15 June and 9 July 2018, respectively, the Council of the European Union and the European Commission applied to intervene in support of the form of order sought by the ECB. By decisions of 27 July and 17 August 2018, the President of the Second Chamber of the General Court (former composition) granted the Council and the Commission leave to intervene in support of the form of order sought by the ECB.

26 On a proposal from the Judge-Rapporteur, the Court, by way of measures of organisation of procedure provided for in Article 89 of its Rules of Procedure, requested the ECB to respond to a question and the other parties to make known their views. That request was acceded to within the periods prescribed.

27 Following a change in the composition of the Chambers of the Court, the case was assigned to a new Judge-Rapporteur, who was assigned to the Second Chamber, to which the present case was accordingly allocated.

28 On a proposal from the Second Chamber of the Court, the Court decided, pursuant to Article 28 of the Rules of Procedure, to refer the case to an extended formation.

29 The parties did not lodge a request for a hearing, in accordance with Article 106 of the Rules of Procedure, within the period prescribed.

30 The Court (Second Chamber, Extended Composition) decided, under Article 106(3) of the Rules of Procedure, to rule on the action without an oral part of the procedure.

31 The applicant claims that the Court should: – annul the contested decision; – declare, pursuant to Article 277 TFEU, that Article 18(6) of Regulation No 1024/2013 is unlawful and, consequently, annul the contested decision; – order the ECB to pay the costs.

32 The ECB and the Commission contend that the Court should: – reject the application; – order the applicant to pay the costs.

33 The Council contends, in essence, that the Court should reject the plea of illegality raised by the applicant against Article 18(6) of Regulation No 1024/2013 as manifestly unfounded.

Law

34 As a preliminary point, it should be noted that the applicant requests the Court, by its second head of claim, to declare, in accordance with Article 277 TFEU, that Article 18(6) of Regulation No 1024/2013 is unlawful and, consequently, to annul the contested decision.

35 That request must be understood as seeking a declaration, in an incidental manner, that Article 18(6) of Regulation No 1024/2013 is unlawful. It is therefore only in the context of the examination of the applicant’s head of claim seeking annulment of the contested decision that the plea of illegality raised by the applicant under Article 277 TFEU will be examined.

36 In support of its action, the applicant raises three pleas in law, the first alleging infringement of Article 18(1) of Regulation No 1024/2013 and of Article 49(1) of the Charter of Fundamental Rights of the European Union (‘the Charter’) as well as of the principle of proportionality, the second alleging infringement of Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation and the third alleging, in essence, infringement of the sixth paragraph of Article 263 TFEU and of Article 47 of the Charter. Under that third plea, the applicant also claims that Article 18(6) of Regulation No 1024/2013 is unlawful, in a complaint alleging, in essence, the absence of a legal basis for the contested decision.

First plea: infringement of Article 18(1) of Regulation No 1024/2013 and of Article 49(1) of the Charter as well as of the principle of proportionality

37 Under its first plea, the applicant puts forward, in essence, two complaints, the first alleging infringement of Article 18(1) of Regulation No 1024/2013 and of Article 49(1) of the Charter, and the second alleging infringement of the principle of proportionality.

First complaint: infringement of Article 18(1) of Regulation No 1024/2013 and of Article 49(1) of the Charter

38 In the contested decision, the ECB found that the applicant had infringed Article 77(a) of Regulation No 575/2013, having repurchased certain Common Equity Tier 1 instruments without obtaining the prior permission of the competent authority, for which it imposed an administrative penalty under Article 18(1) of Regulation No 1024/2013.

39 The applicant submits, in essence, that it was not required to comply with Article 77(a) of Regulation No 575/2013 when all the capital requirements laid down in Article 78(1) of that regulation were not applicable. It infers from this that, since the requirement of having capital conservation buffers prescribed by Directive 2013/36, to which Article 78(1) of Regulation No 575/2013 refers, has been applicable in Spain only since 1 January 2016, it could not infringe Article 77(a) of Regulation No 575/2013 before that date. It follows, in essence, that the ECB, in imposing on it an administrative pecuniary penalty for that conduct, was relying on provisions of Directive 2013/36 which were not yet applicable and infringed both Article 18(1) of Regulation No 1024/2013 and the principle that offences and penalties must be defined by law guaranteed by Article 49(1) of the Charter.

40 The ECB, supported by the Commission, disputes the applicant’s arguments.

41 According to Article 18(1) of Regulation No 1024/2013, ‘for the purpose of carrying out the tasks conferred on it by this Regulation, where credit institutions, financial holding companies, or mixed financial holding companies, intentionally or negligently, breach a requirement under relevant directly applicable acts of Union law in relation to which administrative pecuniary penalties shall be made available to competent authorities under the relevant Union law, the ECB may impose administrative pecuniary penalties …’.

42 It follows that, for the ECB to be able to impose an administrative pecuniary penalty, two cumulative conditions must be satisfied. The first condition relates to the origin of the breach, which must concern a relevant directly applicable act of EU law. The second condition is that the competent authorities must have the power to impose an administrative pecuniary penalty for that breach under the relevant provisions of EU law.

43 Under the present plea, the applicant is limited to disputing that the first condition of Article 18(1) of Regulation No 1024/2013 is satisfied, on the basis of the line of argument set out in paragraph 39 above.

44 Such a line of argument cannot succeed.

45 It is common ground between the parties that, between 1 January 2014 and 7 November 2016, the applicant repurchased its own shares, classified as Common Equity Tier 1 instruments, without seeking the prior permission of the competent authority, namely the Bank of Spain, and then, from 4 November 2014, the ECB.

46 Article 77 of Regulation No 575/2013, entitled ‘Conditions for reducing own funds’, provides as follows: ‘1. An institution shall require the prior permission of the competent authority to do either or both of the following: (a) reduce, redeem or repurchase Common Equity Tier 1 instruments issued by the institution in a manner that is permitted under applicable national law; (b) effect the call, redemption, repayment or repurchase of Additional Tier 1 instruments or Tier 2 instruments as applicable, prior to the date of their contractual maturity.’

47 Article 77 of Regulation No 575/2013 thus constitutes a provision of a directly applicable act of EU law which requires credit institutions to obtain prior permission from the competent authority before redeeming or repurchasing, inter alia, Common Equity Tier 1 instruments.

48 Moreover, Article 77 of Regulation No 575/2013 contains unequivocal wording requiring credit institutions to seek prior permission from the competent authority, an obligation which is conditional only upon the materialisation of the scenarios referred to in paragraphs (a) and (b) of that provision, and not the application of the provisions of other EU acts.

49 That conclusion is not invalidated by the line of argument of the applicant according to which the competent authority could not exercise its power of review under Article 78 of Regulation No 575/2013.

50 It is true that Article 77 of Regulation No 575/2013 seeks to enable the competent authority to carry out the task, entrusted to it by Article 78 of that regulation, of monitoring the effects of a reduction of own funds envisaged by an institution on compliance with its minimum capital requirements. However, contrary to what the applicant claims, the competent authority was in a position to carry out such monitoring in respect of the applicant before the provisions of Directive 2013/36 concerning capital buffers came into force.

51 According to Article 78(1)(b) of Regulation No 575/2013, entitled ‘Supervisory permission for reducing own funds’, provides as follows: ‘1. The competent authority shall grant permission for an institution to reduce, repurchase, call or redeem Common Equity Tier 1, Additional Tier 1 or Tier 2 instruments where any of the following conditions is met: … (b) the institution has demonstrated to the satisfaction of the competent authority that the own funds of the institution would, following the action in question, exceed the requirements laid down in Article 92(1) of this Regulation and the combined buffer requirement as defined in point (6) of Article 128 of Directive [2013/36] by a margin that the competent authority may consider necessary on the basis of Article 104(3) of Directive [2013/36].’

52 Accordingly, the assessment of the effects of a reduction of own funds envisaged by an institution is made in the light of the minimum level of own funds that must be held by a credit institution on the basis not only of Directive 2013/36, but also of Regulation No 575/2013.

53 Thus, in so far as the capital requirements laid down in Article 92(1) of Regulation No 575/2013 were in force as from the application of that regulation, the competent authority was in a position to verify the effects of the applicant’s repurchasing of its own shares on compliance with its minimum capital requirements, as stem from that provision.

54 In the light of the foregoing, it must be concluded that the ECB has not infringed Article 18(1) of Regulation No 1024/2013 or the principle laid down in Article 49(1) of the Charter according to which offences and penalties must be defined by law.

Complaint alleging infringement of the principle of proportionality

– Admissibility of the complaint

55 The ECB takes the view that the complaint alleging infringement of the principle of proportionality must be rejected as inadmissible, in that it was put forward for the first time at the stage of the reply.

56 In that regard, it should be recalled that, according to Article 84(1) of the Rules of Procedure, no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or fact which have come to light in the course of the procedure. However, a plea which constitutes an amplification of a plea previously made, either expressly or by implication, in the original application and is closely linked to it must be declared admissible. To be regarded as an amplification of a plea or a head of claim previously advanced, a new line of argumentation must, in relation to the pleas or heads of claim initially set out in the application, present a sufficiently close connection with the pleas or heads of claim initially put forward in order to be considered as forming part of the normal evolution of debate in proceedings before the Court (see judgment of 20 November 2017, Petrov and Others v Parliament, T‑452/15, EU:T:2017:822, paragraph 46 and the case-law cited).

57 In the reply, the applicant submits that the ECB infringed the principle of proportionality by imposing on it an administrative pecuniary penalty in view, first, of doubts as to the scope of Article 77(a) of Regulation No 575/2013, of its good faith, of the transparent nature of its actions, of its compliance with capital requirements and of the routine nature of the practice of repurchasing own shares in Spain and, second, of the existence of other less restrictive means at its disposal.

58 It is worth bearing in mind that, in the application, the applicant, first, highlighted, in paragraph 48, the fact that the ECB had a range of means at its disposal, second, argued, in particular in paragraphs 49, 59 and 60, that there was doubt as to the exact scope of Article 77(a) and of Article 78 of Regulation No 575/2013 and that no explanation had been provided as to the manner in which those provisions were to be interpreted and, third, maintained, in paragraph 64, that, as regards the imposition of an administrative pecuniary penalty, the ECB could not opt for the interpretation that was detrimental to it.

59 Thus, even though, in the application, the applicant did not expressly invoke infringement of the principle of proportionality due to the imposition of a penalty on it, the substance of its line of argument already contained such a criticism. Accordingly, the complaint alleging infringement of the principle of proportionality in the reply must be regarded as an amplification of a head of claim contained in the application, within the meaning of the case-law cited in paragraph 56 above.

60 In the light of the foregoing, the present complaint is, therefore, admissible.

– Substance of the complaint

61 According to settled case-law, the principle of proportionality, which is one of the general principles of EU law, requires that acts of the EU institutions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and do not exceed the limits of what is necessary in order to achieve those objectives; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (see judgment of 4 May 2016, Philip Morris Brands and Others, C‑547/14, EU:C:2016:325, paragraph 165 and the case-law cited).

62 In that regard, it is true that, pursuant to Article 18(1) of Regulation No 1024/2013, the ECB ‘may’ impose administrative pecuniary penalties and that it is thus not obliged to do so. The ECB must therefore observe the principle of proportionality not only when determining the amount of the penalty, so as to comply with Article 18(3) of the same regulation, which states that the penalties applied are to be ‘proportionate’, but also when deciding whether the breach committed justifies the imposition of a penalty.

63 However, it must be held that the ECB’s choice to impose an administrative pecuniary penalty on the applicant is not, as the applicant alleges, disproportionate.

64 In the first place, for the reasons set out in paragraphs 46 to 54 above, it must be considered that the scope of the applicant’s obligations could clearly be inferred from the wording of Article 77(a) of Regulation No 575/2013. There was therefore no reasonable doubt as to the interpretation of the legislation which could have rendered disproportionate the imposition of an administrative pecuniary penalty by the ECB in respect of the breach committed by the applicant.

65 In the second place, that conclusion is supported by the fact that the applicant continued its infringing conduct after having been informed by the joint supervisory team of the scope of its obligations under Article 77(a) of Regulation No 575/2013, on 23 March 2016, which led the ECB to conclude that the breach had, as from that date, been committed no longer negligently, but intentionally.

66 Moreover, the ECB is right to observe in its written submissions that the alternatives to the imposition of an administrative pecuniary penalty highlighted by the applicant, such as the exercise of the powers it derives from Article 16(2) of Regulation No 1024/2013, are irrelevant to the present complaint, since they cannot constitute appropriate measures within the meaning of the case-law cited in paragraph 61 above. Indeed, the purpose for which those powers were conferred on the ECB is to enable it to ensure compliance with prudential requirements by credit institutions and not to punish those institutions (see, to that effect, judgment of 13 December 2017, Crédit mutuel Arkéa v ECB, T‑712/15, EU:T:2017:900, paragraph 212).

67 Accordingly, the ECB did not infringe the principle of proportionality in deciding to impose an administrative pecuniary penalty on the applicant in the case at hand.

68 In the light of the foregoing, the second complaint and, consequently, the first plea must be rejected.

Second plea: infringement of Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation

69 In the contested decision, the ECB considered itself obliged to publish the administrative penalties it was imposing without anonymisation, unless the conditions of Article 132(1), first subparagraph, point (a) or (b), of the SSM Framework Regulation were satisfied. It found that the applicant had not demonstrated that the damage that could be caused to it by the publication of its name together with the penalty imposed on it would be greater than that inherent to that type of publication.

70 The applicant submits that the ECB, in deciding to publish the pecuniary penalty imposed without anonymising its name, infringed Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation, since it wrongly concluded that such publication was not such as to cause it disproportionate damage.

71 The ECB, supported by the Commission, disputes the applicant’s arguments.

72 According to Article 18(6) of Regulation No 1024/2013, ‘the ECB shall publish any penalty referred to paragraph 1, whether it has been appealed or not, in the cases and in accordance with the conditions set out in relevant Union law’.

73 Article 132(1) of the SSM Framework Regulation provides as follows: ‘1. The ECB shall publish on its website without undue delay, and after the decision has been notified to the supervised entity concerned, any decision imposing an administrative penalty, as defined in Article 120, on a supervised entity in a participating Member State, including information on the type and nature of the breach and the identity of the supervised entity concerned, unless publication in this manner would either: … (b) cause, in so far as it can be determined, disproportionate damage to the supervised entity concerned. In these circumstances, decisions regarding administrative penalties shall be published on an anonymised basis. Alternatively, where such circumstances are likely to cease within a reasonable period of time, publication under this paragraph may be postponed for such period of time.’

74 At issue, in the first place, is the meaning that ought to be attributed to the condition according to which the publication of the identity of the entity on which a penalty has been imposed must cause it ‘disproportionate harm’ in order for that publication to take place anonymously, in accordance with Article 132(1) of the SSM Framework Regulation.

75 According to the applicant, that condition should be interpreted as entailing a balancing of the gravity of the conduct in question against the effects of publication, in view of the punitive nature of such publication and in order to observe the presumption of innocence of the entity concerned.

76 The ECB, supported by the Commission, submits, in essence, that the gravity of the breach is not a relevant consideration when applying Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation.

77 To determine the meaning of Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation, it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it is part (see, to that effect, judgment of 7 June 2005, VEMW and Others, C‑17/03, EU:C:2005:362, paragraph 41 and the case-law cited).

78 In addition, it is apparent from equally well-established case-law that an implementing regulation must, if possible, be given an interpretation consistent with the basic regulation (judgment of 19 July 2012, Pie Optiek, C‑376/11, EU:C:2012:502, paragraph 34 and the case-law cited). Therefore, in so far as the SSM Framework Regulation was adopted on the basis of Article 33(2) of Regulation No 1024/2013, it must be interpreted in the light of that provision.

79 So far as concerns, first, the literal interpretation of Article 132(1) of the SSM Framework Regulation, it follows from its wording that it establishes as a matter of principle the publication of any decision imposing an administrative pecuniary penalty — without reference to the gravity of the breach in question — and that the identity of the supervised entity concerned is among the information made public. It is thus only exceptionally and in two exhaustively enumerated situations that decisions relating to administrative pecuniary penalties will be published anonymously or that their publication can be delayed.

80 In addition, Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation does not mention the degree of gravity of the breach in question as being a consideration that might be relevant to the grant of that exception.

81 It follows, therefore, from a literal interpretation of Article 132(1) of the SSM Framework Regulation that the gravity of the breach committed by a credit institution is not a relevant consideration where the ECB must decide on the grant of the derogation in Article 132(1), first subparagraph, point (b), of that regulation.

82 Second, it is appropriate to note that that conclusion is confirmed by the wording of Article 18(6) of Regulation No 1024/2013, according to which ‘the ECB shall publish any penalty referred to paragraph 1, whether it has been appealed or not’. It necessarily follows that every penalty must, in principle, be published, irrespective of the gravity of the breach in question.

83 Third, that conclusion is also supported by taking Directive 2013/36 into account.

84 In so far as Directive 2013/36 lays down the rules on penalties applicable to breaches of Regulation No 575/2013, it forms part of the legal context to which Article 18 of Regulation No 1024/2013 belongs, as is demonstrated by the references made in that article to the ‘relevant Union law’.

85 According to recital 38 of Directive 2013/36, ‘in order to ensure that administrative penalties have a dissuasive effect, they should normally be published except in certain well-defined circumstances’. It follows that the legislature intended, in principle, that every penalty be published, in order to ensure that those penalties would have a dissuasive effect.

86 In addition, it should be noted that Article 68 of Directive 2013/36, which concerns the rules governing the publication of administrative penalties by the competent authorities, follows in that regard a similar approach to Article 132(1) of the SSM Framework Regulation, since, first, that provision also introduces a principle of publication of all penalties imposed, without reference to the degree of gravity of the breach in question, and, second, there is no mention of that degree of gravity among the exceptions to that principle.

87 In the light of all the foregoing, it must be concluded that the evaluation of the condition set in Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation relating to the ‘disproportionate’ nature of the damage caused by publication without anonymisation of the entity at issue must be made solely on the basis of an assessment of the consequences of such a lack of anonymisation for the situation of that entity, without taking into account the degree of gravity of the breach found against it.

88 That conclusion is not invalidated by the applicant’s emphasis on the need to interpret that provision in the light of the principle of the presumption of innocence.

89 It is true that, in accordance with settled case-law, the provisions of EU law must be interpreted in the light of fundamental rights which form an integral part of the general principles of law whose observance the EU Courts ensure and which are now set out in the Charter (see judgment of 25 May 2016, Meroni, C‑559/14, EU:C:2016:349, paragraph 45 and the case-law cited).

90 Nevertheless, in view of the very clear meaning of both Article 132(1) of the SSM Framework Regulation and of Article 18(6) of Regulation No 1024/2013, it is not possible to depart from the interpretation which results from paragraphs 79 to 87 above. If that were the case, the principle that secondary EU law must be interpreted in conformity would serve as the basis for an interpretation contra legem, which could not be accepted (see, to that effect, order of 17 July 2015, EEB v Commission, T‑685/14, not published, EU:T:2015:560, paragraph 31 and the case-law cited). In the case of a provision whose meaning is clear and unambiguous, it is for the Court alone, where a plea of illegality within the meaning of Article 277 TFEU is raised, to review its consistency with the provisions of the Treaty and the general provisions of EU law.

91 Although the applicant has raised a plea of illegality against Article 18(6) of Regulation No 1024/2013, it is not on the ground that that provision provides as a matter of principle for the publication of administrative pecuniary penalties — whatever the gravity of the breach — but solely, in the context of the third plea, in so far as that provision provides for the publication of those penalties before the expiry of the period for instituting proceedings before the Court.

92 In the second place, it is appropriate to determine whether the ECB was right to find, in the contested decision, that publication of the penalty without anonymisation would not cause ‘disproportionate damage’ to the applicant within the meaning of Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation.

93 In that regard, it is necessary to reject, preliminarily, the line of argument of the applicant according to which the Court ought to conduct a review with unlimited jurisdiction of the proportionality of the publication of the penalty that has been imposed on it.

94 Indeed, even assuming that, as the applicant maintains, the Court has powers of unlimited jurisdiction, on the basis of Article 261 TFEU, in respect of penalties imposed by the ECB, by virtue of Article 18(1) of Regulation No 1024/2013, the scope of those powers of unlimited jurisdiction would be strictly limited, unlike the review of legality provided for in Article 263 TFEU, to the determination of the amount of the penalty (see, by analogy, judgment of 21 January 2016, Galp Energía España and Others v Commission, C‑603/13 P, EU:C:2016:38, paragraph 76 and the case-law cited).

95 The Court can therefore review only the legality of the application by the ECB of Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation.

96 The applicant takes the view that publication of the penalty is disproportionate given the significance of its consequences as compared with the minor nature of the breach and its short duration. In that regard, first, it highlights its good faith, the transparency of its activity on the market and its cooperation during the administrative procedure. Second, it considers that the amount of the administrative pecuniary penalty is, in itself, sufficient to ensure its dissuasive effect. Third, it stresses the severity of the effects of publication, which would entail reputational losses that would translate into a decrease of the market value of its shares. Referring to a study by Oxford University (United Kingdom) on the result of reputational losses sustained by a sample of regulatory enforcement actions, it argues that adverse effects on reputation are far greater than the amount of the penalty, if not entirely detached from it. It is therefore disproportionate to publish a penalty which has been limited to 0.03% of turnover. The applicant also refers to the consequences for the value of its shares of publication of a penalty imposed by the ECB on another credit institution.

97 As regards the arguments of the applicant concerning the allegedly minor nature of the breach it committed, for the reasons set out in paragraphs 74 to 91 above, those are not relevant to the review of the legality of the ECB’s refusal to grant the applicant the benefit of Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation.

98 So far as concerns the arguments of the applicant concerning the effects of publication of the penalty that has been imposed on it, those only maintain that publication of the administrative penalties imposed on credit institutions may have an adverse effect on their reputation. However, for the reasons set out in paragraph 85 above, it must be held that that is a circumstance which was taken into account, or indeed sought, by the legislature when it decided on the principle of publication of penalties imposed on credit institutions in order to ensure that those penalties would have a dissuasive effect.

99 Thus, for the ECB to be required to apply Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation, the effects of publication of the penalty without anonymisation would have to be liable to exceed those resulting from the reputational damage inherent in that publication. It must be stated, however, that the applicant puts forward no evidence to show that that might have been the case here.

100 The second plea must therefore be rejected.

Third plea: in essence, infringement of the sixth paragraph of Article 263 TFEU and of Article 47 of the Charter

101 The applicant claims, in essence, that the ECB, in prescribing the publication of the contested decision before the expiry of the period for instituting proceedings of the sixth paragraph of Article 263 TFEU, the ECB infringed both that provision and Article 47 of the Charter. It puts forward two complaints in that regard. In a first complaint, it raises a plea of illegality in respect of Article 18(6) of Regulation No 1024/2013, in so far as that provision is contrary to the sixth paragraph of Article 263 TFEU and to Article 47 of the Charter. In a second complaint, it criticises, in essence, the ECB for not interpreting and applying the expression ‘without undue delay’ in Article 132(1) of the SSM Framework Regulation in such a way as to render that provision consistent with the sixth paragraph of Article 263 TFEU and with Article 47 of the Charter.

First complaint, alleging, by way of exception, the illegality of Article 18(6) of Regulation No 1024/2013

102 According to the applicant, Article 18(6) of Regulation No 1024/2013, to the extent that it prescribes a rule of mandatory publication of administrative pecuniary penalties — whether or not the penalised credit institution brings an action — is contrary to the sixth paragraph of Article 263 TFEU and to the right to an effective remedy laid down in Article 47 of the Charter.

103 In that regard, it claims that the ECB’s refusal to allow anonymous publication of the penalty must be capable of being the subject of a legal action and that such an action becomes moot if the pecuniary penalty is published before the action is filed. It infers from this that the ECB cannot publish the pecuniary penalty before the expiry of the period for instituting proceedings laid down in the sixth paragraph of Article 263 TFEU.

104 The ECB, supported by the Council and the Commission, disputes the applicant’s arguments.

105 According to Article 18(6) of Regulation No 1024/2013, ‘the ECB shall publish any penalty referred to in paragraph 1, whether or not this penalty has been appealed’.

106 It must be pointed out that Article 18(6) of Regulation No 1024/2013, in prescribing the publication of the penalty decision — even if it is the subject of an action — merely applies the first sentence of Article 278 TFEU, which provides that ‘actions brought before the Court of Justice of the European Union shall not have suspensory effect’.

107 Accordingly, the plea of illegality raised by the applicant cannot succeed.

Second complaint, alleging, in essence, infringement of Article 18(6) of Regulation No 1024/2013 and of Article 132(1) of the SSM Framework Regulation as interpreted in accordance with Article 263 TFEU and with Article 47 of the Charter

– Admissibility of the complaint

108 The ECB and the Commission contend that the second complaint must be rejected as inadmissible, pursuant to Article 84(1) of the Rules of Procedure, in so far as it was put forward for the first time in the reply.

109 It should be noted that, in the submissions relating to the third plea set out in the application, the applicant does not merely claim that Article 18(6) of Regulation No 1024/2013 is contrary to the sixth paragraph of Article 263 TFEU and to Article 47 of the Charter. In paragraphs 117 to 122 of the application, it also criticises the ECB’s interpretation and application of the expression ‘without undue delay’ in Article 132(1) of the SSM Framework Regulation.

110 Accordingly, the submissions contained in the reply, by which the applicant claims that the ECB infringed Article 18(6) of Regulation No 1024/2013 and Article 132(1) of the SSM Framework Regulation, as interpreted in accordance with Article 263 TFEU and with Article 47 of the Charter, must be regarded as an amplification of a head of claim contained in the application, in accordance with the case-law cited in paragraph 56 above.

111 The present complaint is therefore admissible.

– Substance of the complaint

112 The applicant claims that Article 18(6) of Regulation No 1024/2013 and Article 132(1) of the SSM Framework Regulation must be interpreted in accordance with Article 263 TFEU and with Article 47 of the Charter. It follows that the ECB, when it is informed by a credit institution of the latter’s intention to bring an action for annulment of the decision which it has adopted, should allow that institution to enjoy fully the time limit for bringing an action for annulment before it publishes that decision on its website.

113 The applicant recalls having informed the ECB, on 15 March 2018 — the day after the adoption of the contested decision — of its intention to bring an action and apply for suspension of operation of that decision. It criticises the ECB for having informed it, initially, on 20 March 2018, that publication would take place between the evening of 21 March 2018 and 22 March 2018. It was only subsequently that the ECB decided that publication would not take place until 26 March 2018, on condition that an action be brought before the General Court before 23 March 2018. In essence, the applicant claims that the ECB, in limiting the time limit within which it could bring its action for annulment and in giving it conflicting instructions as to when the administrative pecuniary penalty would be published, infringed the principle of effective judicial review laid down in Article 47 of the Charter and in the sixth paragraph of Article 263 TFEU.

114 In Section 5.10 of the contested decision, the ECB decided that the penalty imposed on the applicant would be published, without anonymisation, on its website, as had been required by Article 132(1) of the SSM Framework Regulation.

115 As has been indicated in paragraph 73 above, Article 132(1) of the SSM Framework Regulation provides that the ECB is to publish on its website ‘without undue delay … any decision imposing an administrative penalty … on a supervised entity in a participating Member State, including information on the type and nature of the breach and the identity of the supervised entity concerned’.

116 In addition, as has already been mentioned in paragraph 72 above, Article 18(6) of Regulation No 1024/2013 provides that ‘the ECB shall publish any penalty referred to paragraph 1, whether it has been appealed or not, in the cases and in accordance with the conditions set out in relevant Union law’.

117 As has been recalled in paragraph 89 above, the provisions of EU law must be interpreted in the light of fundamental rights which form an integral part of the general principles of law whose observance the EU Courts ensure and which are now set out in the Charter.

118 In the present case, the applicant submits that, in the contested decision, the ECB should have applied Article 18(6) of Regulation No 1024/2013 and Article 132(1) of the SSM Framework Regulation by interpreting them in a manner consistent with the principle of effective judicial protection set out in Article 47 of the Charter, as meaning that the publication, without anonymisation, on the ECB’s website of the decision imposing a penalty taken against it could not take place before the expiry of the period for bringing an action for annulment of that decision, as provided for in the sixth paragraph of Article 263 TFEU.

119 It follows from a combined reading of Article 18(6) of Regulation No 1024/2013 and Article 132(1) of the SSM Framework Regulation that the obligation they impose on the ECB to publish — in principle non-anonymised — penalty decisions must be enforced ‘without undue delay’ and ‘whether [the penalty] has been appealed or not’, that is to say, irrespective of whether there might be the possibility of an appeal.

120 As has already been noted in paragraph 106 above, the obligation thus incumbent on the ECB merely gives effect to the presumption of lawfulness attaching, in general, to the acts of the EU institutions and bodies and to the binding nature of such acts.

121 In that regard, it should be recalled that, according to the final subparagraph of Article 297(2) TFEU, ‘decisions which specify to whom they are addressed, shall be notified to those to whom they are addressed and shall take effect upon such notification’. Furthermore, in accordance with the presumption that the acts of the institutions and bodies of the European Union are lawful, which is manifested in the principle, laid down in the first sentence of Article 278 TFEU, that actions brought before the Court do not have suspensory effect, those acts produce legal effects until such time as they are withdrawn, annulled in an action for annulment or declared invalid following a reference for a preliminary ruling or a plea of illegality (judgments of 15 June 1994, Commission v BASF and Others, C‑137/92 P, EU:C:1994:247, paragraph 48, and of 21 December 2011, France v People’s Mojahedin Organization of Iran, C‑27/09 P, EU:C:2011:853, paragraph 74).

122 The obligation on the ECB to publish penalty decisions, which are in principle non-anonymised, without undue delay and irrespective of whether there might be the possibility of an appeal follows in a sufficiently clear and precise manner from the combined provisions of Article 18(6) of Regulation No 1024/2013 and Article 132(1) of the SSM Framework Regulation, as well as, more generally, from the presumption of lawfulness and the binding nature of the acts of EU institutions and bodies so as not to be subject to an interpretation in conformity, of the type sought by the applicant, without resulting in an interpretation contra legem prohibited by the case-law.

123 In those circumstances, the interpretation in conformity advocated by the applicant, according to which the ECB was required to await the expiry of the period for bringing an action for annulment before publishing, without anonymisation, the penalty decision that had been imposed on it, cannot be followed, in that it runs counter to the clear and precise wording of the combined provisions of Article 18(6) of Regulation No 1024/2013 and Article 132(1) of the SSM Framework Regulation, which serve as the legal basis for the contested decision.

124 If such an interpretation were accepted, the mere threat of an action for annulment, brought on the basis of Article 263 TFEU, against decisions adopted by the ECB on the basis of the combined provisions of Article 18(6) of Regulation No 1024/2013 and Article 132(1) of the SSM Framework Regulation would mean that the ECB would defer implementing them until after the expiry of the period laid down in the sixth paragraph of Article 263 TFEU, thereby undermining the presumption of lawfulness and the binding nature of those decisions. It is apparent from the case-law that the right to bring proceedings before the EU Courts in no way undermines the presumption of lawfulness and the binding nature of the acts of the EU institutions and bodies (see, to that effect, judgments of 27 June 2000, Commission v Portugal, C‑404/97, EU:C:2000:345, paragraph 57; of 22 March 2001, Commission v France, C‑261/99, EU:C:2001:179, paragraph 26; and of 13 December 2001, Commission v France, C‑1/00, EU:C:2001:687, paragraph 84).

125 In the light of the foregoing, the second complaint and the third plea must be rejected and, consequently, the action must be dismissed in its entirety.

Costs

126 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the ECB’s costs, in accordance with the form of order sought by the latter, including those relating to the proceedings for interim measures.

127 Under Article 138(1) of the Rules of Procedure, the Member States and institutions which have intervened in the proceedings are to bear their own costs. Accordingly, the Council and the Commission shall bear their own costs.

On those grounds, THE GENERAL COURT (Second Chamber, Extended Composition) hereby:

1. Dismisses the action;

2. Orders VQ to bear, in addition to its own costs, the costs incurred by the European Central Bank (ECB), including those relating to the proceedings for interim measures;

3. Orders the Council of the European Union and the European Commission to bear their own costs.

Papasavvas Tomljenović Schalin Škvařilová-Pelzl Nõmm Delivered in open court in Luxembourg on 8 July 2020. E. Coulon Registrar S. Papasavvas President

Table of contents

Background to the dispute Procedure and forms of order sought by the parties Law First plea: infringement of Article 18(1) of Regulation No 1024/2013 and of Article 49(1) of the Charter as well as of the principle of proportionality First complaint: infringement of Article 18(1) of Regulation No 1024/2013 and of Article 49(1) of the Charter Complaint alleging infringement of the principle of proportionality – Admissibility of the complaint – Substance of the complaint Second plea: infringement of Article 132(1), first subparagraph, point (b), of the SSM Framework Regulation Third plea: in essence, infringement of the sixth paragraph of Article 263 TFEU and of Article 47 of the Charter First complaint, alleging, by way of exception, the illegality of Article 18(6) of Regulation No 1024/2013 Second complaint, alleging, in essence, infringement of Article 18(6) of Regulation No 1024/2013 and of Article 132(1) of the SSM Framework Regulation as interpreted in accordance with Article 263 TFEU and with Article 47 of the Charter – Admissibility of the complaint – Substance of the complaint Costs

( *1 ) Language of the case: English.