: The duality and complexity of the two legal regimes

In 2009, within a context of high fragmention of the sanctioning regimes in the supervisory field, the report of the High Level Group on supervision chaired by Jacques de Larosière concluded that “[i]t is essential that within the EU and elsewhere, all supervisors are able to deploy sanctioning regimes that are sufficiently convergent, strict, resulting in deterrence”. The establishment of the Banking Union reflects this concern about the diversity of sanctioning regimes. The granting of exclusive competence to the ECB to supervise credit institutions in the Member States participating in the BU appears at first sight as the appropriate approach to provide a definitive solution to this problem. Article 18 of the SSM Regulation confers a sanctioning power on the ECB for the performance of its prudential tasks. However, the decentralisation of the exercise of supervision of the less significant credit institutions implies the sharing of supervisory sanctioning powers between the ECB and national supervisors,⁵’ which leads to an inappropriate complexity.

: General power to sanction

In accordance with Article 132(3) TFEU and Article 34 of the Statute, the ECB has a general power to impose pecuniary penalties on undertakings which have failed to comply with its regulations or decisions. In addition to this general power, the Statute provides for the application of specific sanction regimes in the field of statistics (Article 5(4)) and of minimum reserves (Article 19(1)).

The granting of an autonomous power of sanction to a specialised institution on the basis of the Treaties is exceptional in the institutional framework of the Union.^[1] This notorious exception is justified by the concern of the authors of the Treaties to guarantee the functional autonomy of the ECB in the performance of its tasks. Nevertheless, with regard to political legitimacy issues, the European legislator, in this case the Council alone, is responsible for laying down the conditions and limits within which the ECB is entitled to exercise its powers. Three Council Regulations form the general framework of the ECB’s power to impose sanctions when carrying out its basic tasks. These are Regulations (EC) No 2532/98 on the powers of the ECB to impose sanctions, No 2531/98 on the maintenance of minimum reserves and No 2533/98 on the statistical powers of the ECB. On the basis of its autonomous regulatory power, the ECB may also adopt other types of sanctions, such as disciplinary sanctions against staff members who have infringed the General Conditions of Employment.

Council Regulation (EC) No 2532/98 aims to ensure consistency in the different areas of competence of the ECB and lays down the principles and procedures to be followed by the ECB in the exercise of its power to impose pecuniary penalties. It is an umbrella act for all legislation on the ECB’s sanctioning power that can nevertheless be derogated from by Council regulations in specific areas.

The ECB’s power to adopt directly applicable acts (regulations, decisions) and its power to impose sanctions are closely linked. In accordance with Article 132(3) TFEU and Article 34(3) of the ESCB Statute, the ECB shall be entitled to impose sanctions to undertakings which fail to comply with the obligations under its regulations and decisions. Non-compliance with a legal act adopted by another European institution or body, a national measure transposing or implementing a Union act or any other national measure are thus excluded from the scope of this ECB’s sanctioning power. Without prejudice to their legal qualification by the Court of Justice, guidelines and instructions issued by the ECB, although they may produce some external legal effects, constitute administrative acts^[2] and do not fall within the scope of Article 132(3) TFEU either.

The areas in which the ECB has regulatory powers are set out exhaustively in the ESCB Statute: definition and implementation of monetary policy (Article 3(1), 1st indent), minimum reserves (Article 19(1)), payment systems (Article 22), specific tasks in the field of prudential supervision (Article 25(2)). In a range of other specified areas, the Council may entitle the ECB to exercise its regulatory power within the limits of the relevant Council Regulation. The more the ECB’s regulatory and decision-making power is exercised, the more its power to impose sanctions materially expands. Actually, the ECB has made very moderate use of its regulatory power in the monetary area. Since its establishment in June 1998, the ECB has adopted 59 regulations, most of which relate to statistical collection (33) or reserve requirements (11). Only one regulation was adopted for the definition and implementation of monetary policy tasks, and it was of temporary application. This limited use of its regulatory power should be seen as an expression of the monetary authority’s preference for less intrusive acts that favour the involvement of NCBs and preserve the specificity of the different national banking markets. The situation is somewhat different when it comes to the adoption of decisions. By the end of 2019, the ECB has adopted 285 decisions.

Under Article 1(3) of Regulation (EC) No 2532/98 the ECB’s sanctioning power apply to ‘undertakings’, ie. “those natural or legal persons, private or public, with the exception of public persons in the exercise of their public powers, in a participating Member State, which are the subject of obligations arising from ECB regulations and decisions.” This broad definition is further clarified in Regulation (EC) No 2531/98 on reserve requirements and in Regulation (EC) No 2533/98 in statistical reporting.

In accordance with EU primary' law, the ECB may adopt a wide range of sanctions^[3] beyond the ‘fines’ and the ‘periodic penalty payments’ refered to in Article 132(3) TFEU: “penalty interest” and “other sanctions with comparable effect” (Article 19(1) of the Statute), or “the appropriate provisions for enforcement” (Article 3(4) of the Statute). Since the amendment of Regulation (EC) No 2532/98 in 2015 to enhance the consistency of the general sanctioning regime with the SSM Regulation,⁶⁴ ‘fines’ meant “a single amount of money which an undertaking is obliged to pay as a sanction”, and ‘periodic penalty payments’ meant “amounts of money which, in the case of a continued infringement, an undertaking is obliged to pay either as a punishment, or with a view to forcing the persons concerned to comply with the ECB supervisory regulations and decisions".³

With regard to the upper limits and the calculation methods of the fines and the pecuniary' penalty payments, the Council leaves the ECB little room for maneuver on this issue. As a matter of principle, the maximum fine is EUR 500 000 per infringement. The amount of daily penalty payments shall be limited to EUR 10 000 per infringement; periodic penalty payments may be imposed in respect of a maximum period of six months following the notification of the undertaking of the decision to initiate an infringement procedure. In order to strengthen the deterrent effect of the penalty and to deprive the infringing undertaking of any benefit, Regulation (EC) No 2531/98 and the SSM Regulation derogate from the maximum ceiling for fines provided for in Regulation (EC) No 2532/98. Conversely, Regulation (EC) No 2533/98 on statistical obligations limits the total cumulative amount of daily penalty' payments to EUR 100 000 and the amount of fines to EUR 200 000.

• [1] September 2012, conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, COM(2012) 511 final. 2 J.M. Fernandez Martin, P.G. Texieira, 'The imposition of regulatory sanctions by the European Central Bank’ (2000) 25 European Law Review 392. 3 Article 132(1) TFEU, in conjunction with Article 129(4) TFEU; and Article 34(1) of the Statute, in conjunction with Article 41 of the Statute. 4 See supra note 8 for the references. 5 See point 44 ff of the Conditions of Employement for Staff of the European Central Bank, adopted on 9 June 1998, latest amendments entered into force in 26 July 2019. 6 Article 6(1) Council Regulation (EC) No 2532/98; Recitals 4 and 16, and Article 11(1) Regulation (EC) No 2157/1999 of the ECB of 23 September 1999 on the powers of the ECB to impose sanctions, OJ L 264/21, 12.10.1999, as amended by Regulation (EC) No 985/2001 of the European Central Bank of 10 May 2001, OJ L 137/24, 19.5.2001; Regulation (EU) No 469/2014 of the European Central Bank of 16 April 2014, OJ L 141/51, 14.5.2014; and Regulation (EU) 2017/2095 of the European Central Bank of 3 November 2017, OJ L 299/22,16.11.2017.
• [2] R. Smits, The European Central Bank (Kluwer 1997), 103. 2 See Article 134(1), 2nd indent, TFEU and Article 34(1), 2nd indent, of the ESCB Statute. This concerns the exercise of the ECB’s advisory, statistical collection, minimum reserve requirements, the adoption of instruments of monetary control, as well as the financial provisions of the ECB. 3 Regulation (EC) No 1053/2008 of the European Central Bank of 23 October 2008 on temporary changes to the rules relating to eligibility of collateral (ECB/2008/11), OJ L 282, 25.10.2008. 4 J.-V. Louis, L’Union européenne et sa monnaie, Commentaire Mégret (Editions de l’Université de Bruxelles 2009), 204; F. Martucci, L’ordre économique et monétaire (Bruylant 2015), 353.
• [3] K. Magliveras (2018), ‘The sanctioning system of the European Central Bank: origins, analysis, comments and some suggestions’, Paper prepared for the 2018 Conference of the Journal of Law, Finance, and Accounting, available at: https://papers.ssrn.com/sol3/papers.cfmPabstract_ id=3132940, 5-6. 2 Section ‘General considerations’ in the explanatory memorandum of the Recommendation for a Council Regulation amending Regulation (EC) No 2532/98 concerning the powers of the European Central Bank to impose sanctions (ECB/2014/19), OJ C 144/2, 14.5.2014; also Commission opinion of 18 December 2014 on the ECB’s recommendation for a Council Regulation amending Regulation (EC) No 2532/98, OJ C 461/1,20.12.2014. 3 Article 1(1) of Council Regulation (EU) 2015/159 of 27 January 2015 amending Regulation (EC) No 2532/98 concerning the powers of the European Central Bank to impose sanctions, OJ L 27/1, 3.2.2015. The words in italics reproduces in almost identical terms the wording of Article 129 SSMFR. 4 Article 7(4) Regulation (EC) No 533/98.