In accordance with Article 261 TFEU, the Court of Justice of the European Union has unlimited jurisdiction to review decisions by which the Commission has imposed fines or periodic penalty payments. It may cancel, reduce or increase the fine or periodic penalty payment imposed.
Article 81
Review by the Court of Justice of the European Union
Understanding This Article
Article 81 implements TFEU Article 261, granting the Court of Justice of the European Union (CJEU) "unlimited jurisdiction" (also called "full jurisdiction" in some legal contexts) over penalty decisions imposed under the Digital Services Act—a power significantly broader than standard judicial review procedures. This provision is fundamental to ensuring effective judicial protection under Article 47 of the Charter of Fundamental Rights, guaranteeing that providers of very large online platforms (VLOPs) and very large online search engines (VLOSEs) subject to Commission enforcement actions have access to meaningful judicial remedies against financial penalties that may reach up to 6% of global annual turnover under Article 74.
Distinction Between Standard Judicial Review and Unlimited Jurisdiction: Under normal circumstances, judicial review of Commission decisions under Article 263 TFEU is limited to assessing legality: whether the Commission correctly applied the law, followed proper procedures, accurately established facts, and avoided manifest errors of assessment or abuse of discretion. The reviewing court cannot substitute its own judgment for the Commission's policy choices or discretionary assessments within the bounds of lawful action. Unlimited jurisdiction under Article 261 TFEU fundamentally alters this relationship. The Court exercises de novo review of the appropriateness and proportionality of the penalty amount itself, substituting its own independent assessment for that of the Commission even in the absence of any legal error. This creates a qualitatively different form of judicial protection specifically for penalty decisions imposing financial sanctions.
Scope of Unlimited Jurisdiction Powers: The Court's unlimited jurisdiction enables three distinct forms of intervention: (1) Cancellation—The Court may cancel penalties entirely if it determines that violations were not proven to the requisite legal standard (preponderance of evidence or, in some cases, the higher standard applicable to quasi-criminal penalties), that procedural violations during the investigation invalidated the proceedings (such as breach of defense rights under Article 79), or that the alleged conduct does not actually constitute an infringement of DSA obligations. Cancellation differs from annulment under Article 263 TFEU in that it specifically addresses the penalty while potentially leaving the underlying compliance decision intact. (2) Reduction—The Court may reduce penalties if it determines that the Commission's calculation was disproportionate to the violation's actual severity, failed to adequately consider mitigating factors (such as good faith compliance efforts, cooperation with investigations, limited harm caused, or genuine financial difficulties), applied incorrect mathematical calculations, inappropriately aggregated separate violations, or failed to properly account for ability to pay per Article 74(2)(e). Reduction is the most commonly exercised form of unlimited jurisdiction, with EU courts frequently moderating Commission fines in competition law cases under analogous provisions. (3) Increase—The Court possesses theoretical authority to increase penalties if it determines the Commission's calculation was too lenient, failed to adequately reflect violation severity, or insufficiently deters future non-compliance. However, this power is rarely if ever exercised in practice, as providers are unlikely to appeal decisions seeking penalty increases, and courts are generally reluctant to impose harsher sanctions than those sought by the enforcement authority.
Relationship to Article 74 Proportionality Factors: When exercising unlimited jurisdiction, the Court independently assesses all Article 74 proportionality factors that the Commission must consider when calculating penalties: (a) the nature, gravity, recurrence and duration of the infringement; (b) whether the infringement was committed intentionally or negligently; (c) actions taken to comply with obligations; (d) financial situation of the provider; and (e) aggravating or mitigating circumstances such as financial benefits obtained or losses avoided through the infringement. The Court does not defer to the Commission's assessment of these factors but conducts its own independent evaluation based on the evidence in the case file. This enables meaningful judicial correction of disproportionate penalties even when the Commission acted within its legal discretion.
Procedural Framework and Standards of Review: Appeals under Article 81 are brought before the General Court of the European Union in first instance (for Commission decisions imposing penalties), with further appeals on points of law to the Court of Justice. The burden of proof regarding the underlying infringement remains on the Commission, which must establish violations to the requisite standard. However, parties seeking penalty reduction bear the burden of demonstrating that specific mitigating factors warrant lower sanctions. The Court has access to the full Commission case file, can request additional evidence, may appoint expert witnesses on technical or financial matters, and can adjust penalties based on its own proportionality assessment without being constrained by the Commission's methodology or calculation approach. The Court applies a proportionality test examining whether the penalty is appropriate to achieve the legitimate aims of enforcement (ensuring compliance, deterring future violations, punishing serious breaches), necessary (no less restrictive alternative would achieve the same objectives), and proportionate stricto sensu (the burden imposed is reasonable given the importance of the regulatory objective).
Interaction with Right to Effective Judicial Protection: Article 81's unlimited jurisdiction provision ensures compliance with Article 47 of the Charter of Fundamental Rights, which guarantees everyone whose rights under EU law are violated the right to an effective remedy before a tribunal. The European Court of Human Rights has held that when administrative authorities impose substantial fines with quasi-criminal characteristics, effective judicial protection requires that courts be able to review not merely the legality of decisions but also the appropriateness of penalty amounts. Unlimited jurisdiction satisfies this requirement by enabling courts to conduct full proportionality review and adjust penalties as necessary to ensure they are fair, appropriate, and proportionate to the violation committed. This is particularly important given that DSA penalties can reach extraordinary amounts (up to 6% of global annual turnover, potentially exceeding €10 billion for the largest platforms), making meaningful judicial oversight of penalty calculations essential to fundamental fairness.
Comparison to Competition Law Precedents: Article 81's unlimited jurisdiction provision mirrors similar provisions in EU competition law (Regulation 1/2003 Article 31) and other regulatory frameworks imposing administrative fines. Extensive case law from competition law enforcement provides guidance on how courts exercise unlimited jurisdiction: courts frequently reduce fines based on reassessment of proportionality factors, have developed detailed methodologies for calculating appropriate penalties, regularly adjust Commission calculations when they find methodological errors or disproportionate results, and balance the need for effective deterrence against fairness to individual undertakings. This established jurisprudence will inform how courts exercise unlimited jurisdiction over DSA penalties, though differences in the DSA's regulatory objectives and penalty framework may lead to some variations in approach. The Court of Justice has consistently held that unlimited jurisdiction is not incompatible with the principle of separation of powers, as courts remain bound by the substantive legal standards in the DSA while exercising independent judgment on penalty appropriateness.
Strategic Implications for Enforcement: The existence of meaningful judicial review with unlimited jurisdiction influences both Commission enforcement strategy and provider compliance behavior. The Commission must carefully document proportionality assessments and apply consistent penalty calculation methodologies, knowing that courts will independently evaluate these determinations. Providers facing penalties have strong incentives to appeal and present evidence of mitigating factors or disproportionality, as courts regularly reduce fines in EU administrative enforcement. The prospect of judicial reduction may lead the Commission to impose higher initial penalties anticipating some reduction on appeal, while conversely the threat of judicial oversight may constrain Commission penalties within ranges courts are likely to uphold. This dynamic interaction between administrative enforcement and judicial review shapes the practical implementation of the DSA's penalty regime.
Key Points
- Court of Justice has unlimited jurisdiction per TFEU Article 261
- Applies to Commission decisions imposing fines or periodic penalty payments under Articles 74 and 76
- Court may cancel penalties entirely if violations not proven to requisite standard or procedural violations occurred
- Court may reduce penalties if disproportionate to violation severity or Commission failed to consider mitigating factors
- Court may increase penalties if Commission calculation too lenient (rarely exercised in practice)
- Enables independent judicial assessment of penalty appropriateness beyond mere legality review
- Not limited to legal error review - enables full factual and proportionality assessment
- Provides critical check on Commission enforcement discretion preventing excessive or arbitrary penalties
- Differs from standard Article 263 TFEU judicial review limited to legality challenges
- Court independently evaluates all Article 74 proportionality factors without deference to Commission
- Ensures compliance with Article 47 Charter right to effective judicial protection
- Appeals must be filed within time limits specified in Rules of Procedure of the Court of Justice
Practical Application
Comprehensive Penalty Reduction Scenario: The European Commission conducts an Article 67 investigation of a major social media platform designated as a VLOP finding systematic violations of Article 35 (risk mitigation obligations). The investigation, lasting 18 months, documents that the platform failed to implement adequate systems to address identified systemic risks related to the dissemination of illegal content and disinformation affecting democratic processes. Following Article 73 non-compliance decision proceedings, the Commission issues an Article 74 penalty decision imposing a fine of €1.2 billion (calculated as 4% of the platform's €30 billion global annual turnover). The Commission's penalty calculation considers: (a) gravity—very serious violation affecting core DSA obligations protecting fundamental rights and democratic discourse; (b) duration—violations persisted for 14 months despite multiple Commission warnings; (c) intent—at minimum negligence, possibly intentional deprioritization of compliance to maintain user engagement metrics; (d) recurrence—this was not the platform's first DSA violation, having previously been fined €50 million for transparency reporting deficiencies under Article 42; (e) lack of meaningful remediation despite repeated Commission requests.
The platform appeals to the General Court under Article 81, arguing the penalty is grossly disproportionate and fails to adequately consider significant mitigating circumstances. The platform's appeal submission includes: (1) Evidence of Good Faith Compliance Efforts—documentation of €500 million invested in risk assessment systems, hiring of 2,000 additional content moderators, implementation of new algorithmic detection systems, and development of transparency tools, demonstrating genuine commitment to compliance despite systems proving initially inadequate; (2) Financial Impact Analysis—expert economic testimony that while the platform's parent company has €30 billion turnover, the platform division itself operates at narrow margins, and the €1.2 billion fine represents 400% of the division's annual profit, threatening viability of European operations and potentially forcing workforce reductions of 3,000 employees; (3) Proportionality Comparisons—analysis of Commission penalty decisions in analogous cases showing that previous Article 35 violations by similarly-sized platforms resulted in fines of €400-600 million, suggesting the €1.2 billion penalty represents an unexplained and unjustified departure from established practice; (4) Post-Investigation Remediation—evidence that immediately upon receiving the Commission's Article 73 non-compliance decision (before the penalty decision), the platform implemented comprehensive remediation achieving substantial compliance within 90 days, demonstrating responsiveness to regulatory findings.
The General Court exercises its unlimited jurisdiction conducting independent proportionality review. The Court's assessment: Violation Established—The Court affirms the Commission's factual findings that Article 35 violations occurred and were serious, rejecting the platform's challenges to the underlying compliance determination. The evidence clearly demonstrates systemic failures to implement adequate risk mitigation measures. Proportionality Analysis—However, the Court finds the €1.2 billion penalty disproportionate. While the violation was serious, the Commission failed to adequately weight several mitigating factors: (a) the platform's substantial pre-violation compliance investments demonstrate good faith effort, even though systems proved inadequate; (b) this was the platform's first serious DSA violation, with the prior Article 42 violation being relatively minor and technical in nature; (c) the platform achieved substantial remediation within 90 days of the non-compliance decision, limiting the period of actual harm; (d) the financial impact analysis credibly demonstrates that €1.2 billion would cause severe financial distress potentially harming the platform's ability to maintain compliance systems. Comparative Assessment—The Court reviews Commission penalty decisions in seven comparable cases involving Article 35 violations by VLOPs of similar size and market position, finding that penalties ranged from €350-700 million. While the Commission has discretion to adjust penalties based on case-specific factors, the Court identifies no adequate justification for the 70-240% increase reflected in the €1.2 billion penalty. Independent Penalty Calculation—Exercising unlimited jurisdiction, the Court conducts its own penalty calculation: Base amount of €600 million (2% of turnover) reflecting serious nature of violations; +€100 million for 14-month duration; +€50 million for negligent conduct; -€100 million for substantial compliance investments demonstrating good faith; -€50 million for rapid post-investigation remediation. Final penalty: €600 million. The Court issues judgment reducing the penalty from €1.2 billion to €600 million. The reduction does not invalidate the underlying non-compliance finding—the platform remains obligated to maintain Article 35 compliance and is subject to ongoing Commission monitoring. The judgment creates binding precedent establishing that penalties for first serious Article 35 violations by large platforms should generally not exceed 2% of turnover absent aggravating circumstances.
Penalty Cancellation for Procedural Violations: The Commission investigates a VLOSE for alleged Article 40 violations (denial of researcher data access). During the investigation, the Commission conducts an Article 69 inspection of the VLOSE's offices, seizing email communications between company executives and external legal counsel. The Article 79 Statement of Objections incorporates privileged attorney-client communications as evidence of intentional non-compliance. The VLOSE's defense submissions arguing that the attorney-client communications should be excluded as privileged material are summarily rejected without reasoned explanation. The Commission issues an Article 74 penalty decision imposing €500 million fine, partly based on evidence of intentionality derived from the privileged communications. The VLOSE appeals to the General Court, arguing fundamental breach of defense rights. The Court's analysis under Article 81: Procedural Violation Established—Attorney-client communications are protected by legal professional privilege, a fundamental principle of EU law. The Commission's seizure and use of privileged communications violated the VLOSE's defense rights guaranteed under Article 79 and Article 47 Charter. Materiality Assessment—The privileged communications were material to the Commission's finding of intentional violation, which increased the penalty by approximately €200 million. Without this evidence, the Commission's case would establish at most negligent non-compliance. Remedy—The Court exercises unlimited jurisdiction to cancel the penalty entirely. While the Court could theoretically reduce the penalty by €200 million to reflect only negligent conduct, the fundamental nature of the procedural violation—breach of attorney-client privilege—warrants complete penalty cancellation to vindicate the violated right and deter future Commission overreach. The underlying Article 73 non-compliance finding is annulled and remanded to the Commission for new proceedings respecting privilege. Judgment establishes important precedent that procedural violations affecting fundamental rights warrant penalty cancellation even when some evidence of violations exists from non-tainted sources.
Penalty Adjustment Based on Ability to Pay: A medium-sized VLOP (45 million EU users, just above the Article 33 designation threshold) violates Article 42 transparency reporting requirements, failing to publish required risk assessment reports for three consecutive reporting periods. The Commission imposes a €180 million fine (3% of the platform's €6 billion annual turnover). The platform appeals, presenting detailed financial evidence: the platform operates at a loss (€400 million annual deficit), survives on venture capital funding that is increasingly difficult to secure, has limited financial reserves, and would likely be forced into insolvency by the €180 million fine. The General Court exercises unlimited jurisdiction with specific attention to Article 74(2)(e) requiring consideration of financial situation: Ability to Pay Analysis—The Court appoints an independent financial expert to assess the platform's financial condition. Expert testimony confirms the platform's precarious financial situation and concludes that any fine exceeding €50 million would likely trigger insolvency. Proportionality Balancing—The Court balances competing considerations: (a) deterrence requires penalties sufficient to incentivize compliance; (b) however, forcing insolvency would be disproportionate to the violation (failure to publish reports, not harm to users); (c) a going-concern platform subject to enhanced oversight may better protect users than an insolvent platform forced to cease operations. Adjusted Penalty—The Court reduces the penalty to €45 million (0.75% of turnover), an amount that provides meaningful deterrence while remaining within the platform's financial capacity. The judgment includes conditions: the penalty may be paid in four quarterly installments of €11.25 million to avoid liquidity crisis, and the platform must submit to enhanced Article 72 monitoring for 24 months to ensure ongoing compliance. This illustrates how unlimited jurisdiction enables courts to craft tailored remedies balancing enforcement effectiveness with financial reality.
Multi-Violation Aggregation Review: The Commission finds a VLOP committed five separate DSA violations over an 18-month period: (1) Article 16 notice-and-action failures; (2) Article 24 dark pattern violations; (3) Article 27 recommender system transparency deficiencies; (4) Article 35 risk mitigation inadequacies; (5) Article 42 reporting violations. The Commission imposes separate penalties for each violation totaling €2.3 billion: €400M (Art 16), €600M (Art 24), €300M (Art 27), €800M (Art 35), €200M (Art 42). The platform appeals arguing that while each individual penalty might be proportionate in isolation, the aggregate €2.3 billion is disproportionate and fails to account for interconnections among violations (many violations stemmed from common root cause of inadequate compliance infrastructure investment). The General Court exercises unlimited jurisdiction assessing aggregate proportionality: Individual Violation Review—The Court affirms that each individual violation occurred and was properly categorized. Aggregate Proportionality Assessment—However, the Court identifies problematic aspects of the Commission's aggregation methodology: (a) several violations (Articles 24, 27, 35) stemmed from common systemic compliance deficiencies, suggesting overlapping culpability; (b) the aggregate penalty represents 7.7% of turnover, exceeding the 6% statutory maximum if violations were considered collectively; (c) Commission failed to apply appropriate discount for interconnected violations. Reconsidered Penalty Structure—Exercising unlimited jurisdiction, the Court restructures penalties: Articles 24, 27, and 35 violations treated as interconnected systemic failures warranting aggregate €1.2 billion penalty (rather than separate penalties totaling €1.7 billion); Articles 16 and 42 violations treated as separate administrative failures warranting maintained penalties of €400M and €200M. Total adjusted penalty: €1.8 billion. The €500 million reduction reflects appropriate accounting for interconnected violations while maintaining strong deterrence. Judgment establishes precedent that aggregate penalties for multiple related violations must undergo proportionality review considering collective impact.