Limitation period for the enforcement of penalties
Chapter 4|Supervision, Investigation, Enforcement and Monitoring of VLOPs and VLOSEs|📖 10 min read
1. The power of the Commission to enforce decisions taken pursuant to Articles 74 and 76 shall be subject to a limitation period of five years.
2. Time shall begin to run on the day on which the decision becomes final.
3. The limitation period for the enforcement of penalties shall be interrupted:
(a) by notification of a decision varying the original amount of the fine or periodic penalty payment or refusing an application for variation;
(b) by any action of the Commission, or of a Member State acting at the request of the Commission, designed to enforce payment of the fine or periodic penalty payment.
4. Each interruption shall start time running afresh.
5. The limitation period for the enforcement of penalties shall be suspended:
(a) for as long as time to pay is allowed;
(b) for as long as enforcement of payment is suspended pursuant to a decision of the Court of Justice of the European Union or a national court.
Understanding This Article
Article 78 establishes a separate 5-year limitation period for enforcing penalties that have already been imposed by the Commission, distinct from Article 77's limitation period for imposing penalties. While Article 77 governs how long the Commission has to adopt a decision imposing fines or periodic penalty payments, Article 78 governs how long the Commission has to actually collect those penalties after a final decision has been adopted. This distinction is crucial: once the Commission successfully imposes a penalty within Article 77's limitation period, Article 78's separate clock begins running for enforcement and collection activities.
The enforcement limitation period begins to run on the day the Commission's decision becomes final. A decision becomes final when it is no longer subject to judicial review - either because the time for appeal has expired without an appeal being filed, or because all judicial proceedings have concluded with a final judgment from the Court of Justice of the European Union (CJEU). This starting point differs fundamentally from Article 77, where the limitation period begins when the infringement occurs. Article 78's limitation period thus starts at the end of the adjudicative process, providing the Commission with five years from that point to collect the imposed penalties.
The interruption provisions under Article 78(2) are critical for understanding enforcement dynamics. The limitation period for enforcement is interrupted by two categories of actions. First, notification of a decision varying the original amount of the fine or periodic penalty payment interrupts the period. Such variation decisions typically occur when the platform pays part of the penalty or when circumstances justify modification of the penalty amount. Second, any action by the Commission or by a Member State acting at the Commission's request that is designed to enforce payment interrupts the limitation period. Enforcement actions include payment demands, asset seizure proceedings, garnishment orders, and other collection activities. Each interruption starts the limitation period running afresh from zero, similar to Article 77's interruption mechanism.
The practical effect of these interruption provisions is that the Commission has substantial flexibility in enforcement timing. If the Commission takes enforcement action every four years, the limitation period never expires, and penalties remain collectable indefinitely. However, if the Commission takes no enforcement action for five consecutive years after a decision becomes final, its power to enforce payment expires and the penalty becomes uncollectable. This creates an incentive for the Commission to maintain active enforcement efforts but also provides ultimate temporal certainty if enforcement is abandoned.
Unlike Article 77, Article 78 does not include an absolute maximum limitation period (Article 77 has a 10-year maximum). This means that with regular enforcement actions interrupting the limitation period, penalties theoretically remain collectable indefinitely. However, practical considerations limit indefinite enforcement: the Commission must allocate resources to enforcement activities; older penalties may become difficult to collect as platform financial situations change; and ongoing enforcement of very old penalties may be viewed as disproportionate or administratively inefficient. Nevertheless, the absence of an absolute maximum distinguishes Article 78 from Article 77 and provides the Commission with greater temporal flexibility in enforcement.
The interaction between Articles 77 and 78 creates a two-stage temporal framework. Stage one (Article 77): The Commission has 5 years from the infringement (up to 10 years maximum with interruptions) to adopt a penalty decision. Stage two (Article 78): Once the decision becomes final, the Commission has 5 years (with potential indefinite interruptions) to enforce and collect the penalty. A violation occurring in 2024 might result in a penalty decision in 2028 (within Article 77's limitation). If judicial proceedings conclude in 2030, making the decision final, the Commission then has until 2035 (Article 78's limitation) to begin enforcement, and each enforcement action restarts that period.
The distinction between imposition and enforcement limitations reflects different policy considerations. Article 77's limitation (with its 10-year absolute maximum) reflects the principle that sanctions should be based on relatively recent conduct and that investigations should proceed efficiently. Article 78's limitation (without an absolute maximum) reflects the principle that once penalties have been lawfully imposed and upheld through judicial review, the Commission should have reasonable time to collect them, and platforms should not escape payment obligations simply by delaying or evading collection efforts.
For legal professionals advising platforms, the distinction between Articles 77 and 78 affects litigation strategy. If a platform believes a penalty decision is substantively flawed, challenging it under Article 77 (arguing the Commission lacked authority to impose the penalty due to limitation expiration) may be viable if more than 10 years passed since the infringement. However, once a penalty decision becomes final, Article 78 governs, and limitation defenses focus on whether enforcement actions occurred within five years of the decision becoming final or the most recent enforcement interruption.
Article 78's enforcement limitation also has implications for financial planning and reserve allocation. Once a platform receives a penalty decision that it expects to become final, the platform must maintain financial reserves or liquidity sufficient to pay the penalty for at least five years (and potentially indefinitely if the Commission takes regular enforcement actions). Platforms cannot assume that penalties will become uncollectable after a fixed period; instead, they must monitor whether the Commission is taking enforcement actions that interrupt the limitation period.
Key Points
Establishes separate 5-year limitation period for enforcing/collecting penalties after they have been imposed, distinct from Article 77's period for imposing penalties
Limitation period begins when penalty decision becomes final (after judicial proceedings conclude or appeal deadline passes), not when violation occurs
Enforcement actions interrupt limitation period, restarting 5-year clock: payment demands, asset seizure, Member State enforcement requests, penalty variation decisions
Unlike Article 77, no absolute maximum limitation period exists; with regular enforcement actions, penalties remain collectible indefinitely
Two-stage temporal framework: Article 77 governs time to impose penalties (5-10 years), Article 78 governs time to collect after imposition (5 years plus interruptions)
Judicial review delays when penalty becomes final, but does not eliminate collection authority once proceedings conclude
Platforms must maintain financial reserves for penalty payment for at least 5 years after decisions become final, potentially longer with active enforcement
Successful limitation defenses require proving 5+ years passed since decision became final (or last enforcement action) with no interrupting Commission actions
Practical Application
For platforms subject to DSA penalty decisions, understanding the enforcement limitation period is essential for financial planning and compliance strategy. When the Commission adopts a penalty decision, platforms should immediately establish tracking systems to monitor: (1) When the decision becomes final (either when appeal deadlines pass or when judicial proceedings conclude); (2) All Commission enforcement actions that interrupt the Article 78 limitation period; (3) The current status of the enforcement limitation period; (4) Financial reserves allocated to satisfy potential payment obligations. This tracking enables accurate assessment of whether and when penalty obligations might become unenforceable.
Platforms pursuing judicial review of penalty decisions should understand how judicial proceedings affect both Articles 77 and 78. During judicial proceedings, Article 77's imposition limitation is suspended, preventing the underlying violation from becoming time-barred. However, Article 78's enforcement limitation does not begin running until the decision becomes final after judicial proceedings conclude. If judicial proceedings take several years, this delays the starting point for enforcement limitation but does not eliminate the Commission's collection authority. Platforms should not assume that lengthy judicial proceedings will result in penalties becoming uncollectable; instead, successful appeals on the merits or procedural grounds are necessary to eliminate penalty obligations.
When the Commission takes enforcement actions to collect penalties, platforms should document each action and analyze its effect on the limitation period. Enforcement actions that interrupt the limitation period include: (1) Formal payment demands from the Commission; (2) Proceedings before national courts to enforce payment; (3) Asset seizure or garnishment actions; (4) Requests to Member States to enforce collection; (5) Decisions varying the penalty amount; (6) Any other action designed to enforce payment. Each such action restarts the five-year limitation period from zero. Platforms should maintain chronological logs of all enforcement actions to track limitation status accurately.
If the Commission appears to have abandoned enforcement efforts, with more than five years passing since the decision became final or since the most recent enforcement action, platforms may have a limitation defense. Legal counsel should conduct thorough analysis before asserting limitation defenses, verifying that: (1) The decision actually became final (not merely adopted); (2) Five years have passed since the decision became final or the most recent interrupting action; (3) No Commission or Member State enforcement actions occurred during that period that might constitute interruptions; (4) Documentation exists supporting the limitation analysis. Successfully establishing that enforcement limitation has expired would render the penalty uncollectable, though platforms should be prepared for Commission challenges to limitation assertions.
Platforms facing substantial penalties should consider negotiation strategies regarding payment terms and amounts. The Commission has authority to vary penalty amounts under certain circumstances, and such variation decisions interrupt the enforcement limitation period. Platforms might propose: (1) Payment plans spreading penalties over time; (2) Reduced amounts in exchange for immediate payment; (3) Commitments to enhanced compliance measures in exchange for penalty reductions; (4) Settlements resolving both penalty obligations and underlying compliance issues. While the Commission is not obligated to negotiate, demonstrating willingness to pay substantial amounts voluntarily may be preferable to protracted enforcement proceedings.
Financial officers should understand that Article 78 penalties represent actual financial liabilities that may persist indefinitely if the Commission maintains enforcement efforts. Unlike Article 77's limitation which provides ultimate certainty through the 10-year maximum, Article 78's limitation can be interrupted indefinitely through regular enforcement actions. Platforms must account for penalty liabilities in financial statements, reserves, and liquidity planning for at least five years after decisions become final, and potentially longer if the Commission indicates intention to pursue active enforcement.
Member States play an important role in enforcement under Article 78, as Commission requests to Member States for enforcement assistance constitute actions that interrupt the limitation period. When the Commission requests a Member State to enforce collection within that State's jurisdiction, platforms subject to enforcement should: (1) Monitor enforcement proceedings in the relevant Member State; (2) Assert any available defenses under national law; (3) Track how Member State enforcement actions affect the Article 78 limitation period; (4) Maintain communication with both the Commission and national authorities to understand enforcement status and explore resolution options.
Platforms that successfully pay penalties in full should obtain explicit confirmation from the Commission that payment is complete and no further amounts are owed. This confirmation serves multiple purposes: (1) Documenting satisfaction of the penalty obligation; (2) Establishing that no further enforcement limitation period is running; (3) Providing evidence that subsequent enforcement actions by the Commission or Member States are improper; (4) Clarifying the platform's financial obligations and enabling closure of reserve accounts allocated to penalty payment. Platforms should retain payment confirmation indefinitely as evidence that obligations were satisfied.
In rare circumstances where platforms face genuine financial distress or insolvency, Article 78's enforcement limitation interacts with bankruptcy and insolvency laws. If a platform enters insolvency proceedings, the Commission must file claims within the insolvency process. If the Commission fails to take enforcement actions interrupting the limitation period during insolvency proceedings, and five years pass, enforcement limitation might expire. However, insolvency administrators and legal counsel should carefully analyze whether insolvency proceedings themselves constitute circumstances suspending limitation periods, as interpretations may vary based on EU and national insolvency laws.
Legal professionals should maintain separate tracking for Article 77 and Article 78 limitations. For each potential DSA penalty exposure, counsel should document: (1) The date of the underlying violation (Article 77 starting point); (2) All Commission actions interrupting Article 77 limitation; (3) The date of penalty decision adoption; (4) Judicial proceedings affecting Article 77 suspension and Article 78 starting point; (5) The date the penalty decision became final (Article 78 starting point); (6) All enforcement actions interrupting Article 78 limitation; (7) Current status of both limitation periods. This comprehensive tracking enables accurate legal advice regarding penalty exposure and potential limitation defenses.
From a compliance perspective, the best approach is to avoid penalty decisions entirely through proactive DSA compliance. However, when penalties are imposed, platforms should engage constructively with enforcement processes rather than attempting to evade payment, as evasion strategies merely result in repeated enforcement actions that interrupt limitation periods indefinitely. Platforms that demonstrate good faith efforts to satisfy penalty obligations, even if payment requires time due to financial considerations, are more likely to achieve favorable outcomes than platforms that refuse engagement and force the Commission to pursue aggressive collection actions.