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The contested decision is incompatible with the regulation on fees and charges because the defendant is entitled only to impose administrative charges, whereas the imposition of dissuasive fines is a matter for the Member States. Administrative charges must be appropriate in relation to the scope of the work carried out by ECHA. An administrative charge of EUR 20 700 for incorrect declaration of the undertaking’s size has a punitive function and equates to a fine. The defendant thereby encroached upon the powers of the Member States, which is incompatible with the principle of conferral laid down in Article 5 TEU and constitutes action where there is a lack of competence within the meaning of Article 263 TFEU.

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The principle of equality laid down in Article 5 of the European Code of Good Administrative Behaviour and Article 41 of the Charter of Fundamental Rights of the European Union is infringed where the amount of an administrative charge is made conditional upon the size of an undertaking. Since an administrative charge serves by definition to cover the costs of the administration’s services, there can be no objective justification for the introduction of a distinction according to the size of the undertakings registered. The administrative burden in verifying the size of the undertakings is similar. Accordingly, large undertakings which have incorrectly declared themselves as SMEs pay a charge which covers the costs not only of the service connected with the procedure for verifying their size but also of verifying the size of other undertakings, or which even covers the costs of other ECHA services.

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In declaring that its undertaking was small, the applicant acted on the basis of the mistaken belief that that was the correct classification of the company’s size, but without culpability. According to the information contained, under ‘charges’, on the website of the national REACH helpdesk, the size of an undertaking is defined by the national Law on freedom of business activity. Under that law, when determining the size of an undertaking the shareholding structure is not material; instead, account must be taken of the number of workers employed and the net annual turnover, which the applicant did. The obligation to take account of Commission Recommendation 2003/361/EC of 6 May 2003 when determining the size of an undertaking was not correctly communicated to the persons concerned. Nor did ECHA inform undertakings of the amount of the administrative charges which may be imposed for incorrect classification of an undertaking’s size, thereby infringing the principle of legal certainty.

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The defendant misused its powers in setting clearly excessive rates of charges in Decision MB/D/29/2010, and also in according itself very broad powers in the form of the ability to use all legal remedies to recover charges and the impossibility of avoiding those charges. Article 13(4) of Regulation No 340/2008 cannot justify those powers. The imposition of the administrative charge pursues in reality an objective other than that stated in recital 2 in the preamble to Regulation No 340/2008 (covering the cost of ECHA services) and the charge does not correspond to ECHA’s work burden but constitutes an illegitimate fine imposed on the defendant.