European Union: EU Data Protection Advisory Body Issues Guidance On Setting "Effective, Proportionate And Dissuasive" Fines Under The GDPR

Last Updated: December 28 2017
Article by Rohan Massey

The EU's data protection advisory body, the Article 29 Data Protection Working Party (WP29), has adopted Guidelines on the application and setting of administrative fines for the purposes of the General Data Protection Regulation 2016/679/EU. Administrative fines are described in the introduction as central to enforcement and "a powerful part of the enforcement toolbox of the DPAs". The Guidelines are intended for use by data protection authorities (DPAs) to ensure better application and enforcement of the GDPR. They set out principles that DPAs must observe when addressing non-compliance from a controller or processor, as well as assessment criteria they should use when considering both whether a fine should be imposed and if so, the amount. Although not targeted at organisations looking to comply with the GDPR, the Guidelines provide a valuable insight into which areas organisations should focus on in order to mitigate risk arising from any breach of the GDPR.

Principles

Equivalent sanctions

Article 58(2)(b)-(j) of the GDPR sets out which tools DPAs can employ in order to address non-compliance from a controller or a processor. When using these powers, the DPAs must impose "equivalent sanctions". The concept of "equivalence" is, the Guidelines explain, "central in determining the extent of the obligations of the DPAs to ensure consistency in their use of corrective powers".

Effective, proportionate and dissuasive

The Guidelines explain that DPAs should employ administrative fines that are "effective, proportionate and dissuasive", both in national cases and in cases involving the cross-border processing of personal data.

The Guidelines recognise that national legislation may set additional requirements on enforcement procedures, which may for example include address notifications, deadlines for making representations appeals and payment. However, any such requirements should "not hinder in practice the achievement of effectiveness, proportionality or dissuasiveness". Precisely what this means will, the Guidelines state, be generated by emerging practice within DPAs (on data protection, as well as lessons learned from other regulatory sectors) as well as case law.

Each individual case

The Guidelines explain that the GDPR requires assessment of each case individually when deciding whether to impose an administrative fine and it is the responsibility of the competent DPA to make an assessment "in each individual case".

The DPA has the responsibility of choosing the most appropriate measure(s). This choice must include consideration of all corrective measures, which includes the imposition of the appropriate administrative fine.

DPAs are encouraged to use a considered and balanced approach in their use of corrective measures, in order to achieve both an effective and dissuasive, as well as a proportionate, reaction to the breach. The point, the Guidelines explain, is not to make fines a last resort, nor to shy away from issuing fines, and equally not to use them in such a way that would devalue their effectiveness.

Active participation and information exchange among DPAs

Finally, the Guidelines state that DPAs should cooperate with each other and where relevant, with the European Commission, in order to support formal and informal information exchange, such as through regular workshops.

Assessment criteria

Article 83(2) provides a list of criteria DPAs are expected to use in the assessment both of whether a fine should be imposed and, if so, the amount to be fined.

Nature, gravity and duration of the infringement

The GDPR sets two different maximum amounts that undertakings can be fined (€10 million/2% of global turnover or €20 million/4% of global turnover), which reflects the fact that that some breaches will be considered more serious than others. Supervisory authorities must assess the facts of the case in light of the general criteria provided in Article 83(2). Where it chooses to impose a fine, the tier system set out in the GDPR should be applied in order to identify the maximum fine that can be imposed.

Recital 148 of the GDPR introduces the concept of "minor infringements". The Guidelines explain that if the breach does not pose a significant risk to the rights of individuals, the fine may be (but does not have to be) replaced by a reprimand. Likewise, where the data controller is a natural person, and the fine would constitute a disproportionate burden, the authorities can replace the fine with a reprimand.

The Guidelines explain that the nature of the infringement, but also "the scope, purpose of the processing concerned as well as the number of data subjects affected and the level of damage suffered by them", will be indicative of the gravity of the infringement. If several different infringements are committed together the DPA can apply administrative fines "at a level which is effective, proportionate and dissuasive within the limit of the gravest infringement".

The number of affected individuals should also be assessed in order to identify whether the breach is an isolated event or symptomatic of a more systemic breach or lack of adequate procedures in place.

The purpose of the processing must also be assessed and the Guidelines refer to WP29 Opinion 03/2013 on purpose limitation (WP 203) which analysed the two main building blocks of this principle in data protection law: purpose specification and compatible use. DPAs should look at the extent to which the processing upholds these two key components.

The damage suffered by individuals should also be taken into account when determining which corrective measure to apply, the Guidelines state, although DPAs are not able to award compensation to individuals themselves. DPAs are encouraged to consider the damage suffered, or likely to be suffered, as suggested by examples of the "risks to rights and freedoms" in Recital 75.

It is important to note that the Guidelines state that the imposition of a fine is not, however, dependent on the ability of the DPA to establish a causal link between the breach and material loss.

The duration of the infringement should be considered. This, the Guidelines explain, may be illustrative of: (i) wilful conduct on the part of the data controller; (ii) a failure to take appropriate preventative measures; or (iii) an inability to put in place the required technical and organisational measures.

The intentional or negligent character of the infringement

The Guidelines explain that, in general, "intent" includes both knowledge and wilfulness in relation to the characteristics of an offence, whereas "unintentional" means that there was no intention to cause the infringement although the controller/processor might have breached the duty of care which is required by law.

Intentional breaches are more likely to warrant a fine. Circumstances indicative of intentional breaches might include unlawful processing authorised explicitly by top management, or in spite of advice from the data protection officer or in disregard for existing policies. Other examples include amending personal data to give a misleading (positive) impression about whether targets have been met (e.g. hospital waiting times) or the trade of personal data for marketing purposes.

Other circumstances, such as failure to read and abide by existing policies, human error, failure to check for personal data in information published, failure to apply technical updates in a timely manner, failure to adopt policies (rather than simply failure to apply them) may be indicative of negligence, the Guidelines state.

Mitigating factors

When a breach occurs and the individual has suffered damage, the responsible party should do whatever it can to reduce the consequences of the breach for the individual(s) concerned. Whether such action has been taken or not should be considered by the DPA when choosing which corrective measure(s) to apply, and in the calculation of any fine it chooses to impose.

The Guidelines explain that it can be appropriate to show some degree of flexibility to those data controllers/processors who have admitted to their infringement and taken responsibility to correct or limit the impact of their actions and should take into account the following:

  1. Degree of responsibility of the controller/processor. The DPA should consider whether and to what extent the controller "did what it could be expected to do" given the nature, the purposes or the size of the processing. Due account should be taken of any "best practice" procedures or methods (where these exist and apply), as well as industry standards and codes of conduct.
  2. Relevant previous infringements
  3. Degree of cooperation with the DPA
  4. The categories of the personal data affected by the infringement
  5. The manner in which the infringement became known to the DPA - The Guidelines note that a controller has an obligation under the GDPR to notify the DPA about any personal data breach (notification is mandatory unless the breach is unlikely to result in a risk to the rights and freedoms of individuals). Where the controller merely fulfils this obligation, compliance should not be interpreted as a mitigating factor. Similarly, a data controller/processor who has acted carelessly without notifying the DPA, or has not notified all the details of the infringement, could be considered to merit a more serious penalty.
  6. Previously ordered measures for same subject matter
  7. Adherence to approved codes of conduct - The Guidelines note that adherence to an approved code of conduct can be used by the controller or processor as a way to demonstrate compliance. Such adherence might be indicative of how comprehensive the need is to intervene with an effective, proportionate, dissuasive administrative fine or other corrective measure. Further, the DPA can decide that the body in charge of administering the code can take the appropriate action itself.
  8. Any other aggravating or mitigating factor – notably, the Guidelines suggest that information about profit obtained as a result of a breach may be particularly important and may constitute a strong indication that a fine should be imposed.

Comment

Little insight can be gained at this stage into the actual level of fines DPAs might apply in any given circumstances under the GDPR but it is good for organisations to know how the DPAs may be assessing and weighting elements of non-compliance in determining both whether to fine and the level of any required fine.

For organisations, whether controller or processor, the key to ensuring that any fines imposed are as small as possible is clearly compliance with all aspects of the GDPR. For example, if a mistake happens leading to a data security breach, it is important that policies and procedures are in place to conform with GDPR required notifications to DPAs and any subsequent follow-up or breach remediation actions. Being able to show that organisational as well as technical measures were in place to comply with obligations under the GDPR throughout the data lifecycle, will be helpful in limiting the risk and quantum of any fine imposed. Systemic failings are likely to attract higher fines so care should also be given to operational activities as failings such as the omission of a data protection impact assessment, may not come to light until a data security breach has occurred and been notified to a DPA, which means that even a low level breach could arguably trigger stiffer sanctions for accountability non-compliance at the end of any related investigation.

Data controllers and processors may take some comfort that, even with the power to issue headline-grabbing maximum fines of 4% of global of revenue under the GDPR, DPAs have been reminded by WP 29 to ensure that any fines they do impose are "effective, proportionate and dissuasive".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions