EU demands substantial fines for late directive implementation in Estonia

European Commission building.
European Commission building. Source: SCANPIX/PANTHERMEDIA/Joris Van Ostaeyen

The European Commission is demanding hundreds of thousands of euros from Estonia in respect of the late implementation of two different directives.

The issue concerns two directives, one, the so-called whistleblower directive, which was supposed to have been transposed into domestic law by December 2021, and the other, known as the ECN+ Directive, which deals with EU anti-trust regulations and regarding which Estonia is also subject to infringement procedures.

No fines have yet been paid by Estonia, in respect of either directive.

While first dispute is still ongoing, ERR reports it is likely that Estonia will have to pay at least €168,000 to the European Commission, in respect of the whistleblower directive implementation.

According to Nele Grünberg, spokesperson from the Ministry of Foreign Affairs' legal department, it is still difficult to put an exact level on the fine, a fine which Estonia is appealing.

Ministry spokesperson: Fine of at least €168,000

Grünberg said: "The minimum the commission usually demands in such cases is €168,000 euros. Even if we contest this in court, this is the benchmark level below which the commission will certainly not go below, in the course of the court proceedings."

"There is a high probability that the court will still demand this minimum amount from us, because what is undisputed is that we have been late [in adopting the directive]," she added.

As for the new domestic competition law, this would grant more power to the Competition Authority (Konkurentsiamet). 

Heddi Lutterus, deputy undersecretary for legal policy at the Ministry of Justice, said that her ministry wants to set up a procedure whereby the Competition Authority can investigate market competition violations, for instance an abusive monopoly, or firms acting as a cartel.

Lutterus said: "Currently, competition violations are investigated via various independent procedures. The Competition Authority can, for instance, carry out supervision; it can investigate things as part of misdemeanor or criminal proceedings."

Justice ministry undersecretary: ECN+ directive would give Competition Authority greater powers

"In parallel, there can be several procedures, though these are actually burdensome for the entrepreneur. What we have proposed, and what has led to controversy, is that in the future competition violations would be investigated via one unified procedure. As a result, the Competition Authority would be able to issue an injunction or a fine, where necessary," Lutterus went on.

Evelin Pärn-Lee, director general of the Competition Authority, told ERR back in June that if the suspicion of firms acting cartel arises, it can, for example, be processed by the prosecutor's office; the issue is, people there know competition law, but are not experts on it, she said.

The development of the competition law has been hampered by business interests and also a lack of political will, Pärn-Lee added.

The form of the law EU, would damage both the Estonian business environment and the rule of law in the country, some legal experts and business people find.

As for fines, Grünberg said that so far Estonia has not yet had to pay any, in relation to EU law, even as in some cases EU legislation has not been adopted to schedule.

While Estonia has in the past paid €34.3 million to the EU in respect of sugar fines, due to an excess stock of goods on joining the bloc nearly 20 years ago, this was not an infringement procedure, she said.

"There was instead a question of interpretation of EU law with the Commission, but it was not the case that we had specifically violated EU law. It was stipulated in legislation that where there is excess stock, then a member state has to pay up," Grünberg went on.

European Commission started whistleblower infringement proceedings in January 2022

The fine in respect of the whistleblower directive, supposed to have been adopted in February 2021, could be up to €560,000, Grünberg said.

As reported by ERR News, back in January 2022, the European Commission initiated infringement proceedings against Estonia in respect of the whistleblower directive and is demanding, via the European Court, €600 per day.

On that basis, Estonia would be due a fine of close to €370,000, so far.

According to Nele Grünberg at the foreign ministry, if the European Court reaches a decision and Estonia has not adopted the whistleblower protection directive by then, that daily sum will rise to €2,340 for each day of delay.

The Ministry of Justice has as of now submitted a draft domestic whistleblower bill to the government for approval rounds and then, in the coming weeks, processing at the Riigikogu.

Justice minister: Both directives likely on table at government level in September

Minister of Justice Kalle Laanet (Reform) said: "We have in essence agreed within the coalition what the scope of this directive will be. I really hope that we can perhaps approve at government level next week, but I cannot guarantee that."

The time frame in respect the competition law draft is more or less the same, he added.

Ultimately, how much Estonia has to pay to the European Commission in terms of the fine for the whistleblower directive should be revealed later this year, Grünberg said.

According to minister Laanet, where Estonia will find the money to cover EU fines is currently an open question, adding that it would inevitably be related to the state budget and the taxpayer.

The European Parliament and the European Council adopted the whistleblower directive nearly four years ago, in October 2019. 

Whistleblower directive domestic legislation was subject of filibuster in early 2022

The directive is intended to ensure confidentiality for employees who report corruption violations at their workplaces, in respect of EU law.

All firms with 50 or more staff must create a channel which employees can report these violations through.

EU Member States were supposed to transpose the directive into domestic law by December 17, 2021 at the latest.

However, Estonia still has not adopted the whistleblower protection law at the time of writing.

The Ministry of Justice has already sent the whistleblower protection bill to the Riigikogu before, in December 2021, one day before the deadline for transposing the directive. The bill's first Riigikogu reading took place on January 26, 2022.

With nearly 300 amendments submitted to it at that time, the bill stalled at the legislature.

While most of the amendments were put forward by the Conservative People's Party of Estonia (EKRE), in opposition, the two other opposition parties at the time – the Social Democrats (SDE) and Isamaa – also made their contributions.

Markus Kärner, deputy undersecretary for criminal policy at the Ministry of Justice, said that much misunderstanding about the bill at the Riigikogu at the time was behind the lack of consensus.

These included erroneous claims that, for instance, whistleblowing could include an individual going to the authorities when they see their neighbor driving without wearing a seatbelt, and other issues outside the scope of the bill, Kärner said.


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Editor: Johannes Voltri, Andrew Whyte

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