Month: April 2018

On 30 April 2018, less than a month before the date of which the new European Data Protection Regulation – Regulation 2016/679 (GDPR) begins to apply, a Bill on Amendment and Supplement to the Personal Data Protection Act, currently in force in Bulgaria, was published in the public domain (the Bill). The Bill aims at harmonizing the Bulgarian legislation on the protection of personal data with the European one.

In this publication we will only focus on some of the most important and interesting elements of the Bill, and the whole Bill should be subject to detailed analysis and evaluation by all stakeholders in the following days:

• The Commission for Personal Data Protection (CPDP), which had so far fulfilled this function, was officially appointed as a supervisory body within the meaning of GDPR. It will be the independent body that will monitor the protection of individuals in the processing of their personal data and the enforcement of the Regulation.
• GDPR introduced a new figure to society, namely the Data Protection Officer. With the Bill, the Bulgarian legislator provided for a new ground for appointing such a person, setting precise limits for his appointment, namely the processing of personal data of “10,000 individuals”.
• The Bill provides that the CPDP should organize and conduct trainings of the persons designated for taking the position of a “data protection officer” or of persons wishing to be trained to take up this position. The trainings will be paid at a rate set by the Minister of Finance. This is a specific national solution that has no analogue in GDPR and which is rather controversial, because the European legislation does not require specific certification/mandatory registration for this position.
• One of the Bill’s interesting innovations relates to following obligation: in case data is received without a legal basis, whether by a controller or a processor, the latter has to return it immediately or deleted it within one month of getting aware of the fact.The age threshold for obtaining children’s consent f
• or the provision of information society services is reduced (from 16 years under GDPR to 14 years under the Bill). Here the change is quite reasonable considering the “total incapacity” institute, established for persons under 14 years of age under Bulgarian law.
• According to the Bill, public access to National Identification Number / Foreigner Identification Number will be provided solely if required by law. Therefore, controllers providing electronic services will need to take technical and organizational measures to avoid National Identification Number to be the only identifier for the provision of the service.
• The Bill contains specific rules for balancing the freedom of academic, artistic and literary, expression with the protection of personal data.

Important changes also stand with regard to employers. The legislator took advantage of the opportunity provided by Art. 88 of the GDPR, by establishing special rules in this respect.

• The Bill provides for the prohibition of copying the national ID document, the driving license, the worker / civil servant residence permit, with only one admissible hypothesis, namely the existence of an explicit legal obligation on the controller or the processor.
• Employers will also need to provide for a number of rules and procedures to show compliance with the new law and to ensure that these rules and procedures are brought to the attention of employees. Such will be needed, for example, in the framework of: (i) a system of evidence of breaches, (ii) restrictions on the use of in-house resources, and (iii) access control, working time and labor discipline.
• The employer will be able to store personal data of participants in personnel selection procedures for up to 3 years.

With the Bill, in addition to synchronizing national provisions with GDPR requirements, the legislator will also transpose the Directive (EU) 2016/680 of the European parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data by competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and on the free movement of such data, and repealing Council Framework Decision 2008/977/JHA, and has dedicated a whole chapter of the Bill to this end.

Interestingly, the legislator set out minimum thresholds (such do not exist under the GDPR) of BGN 10,000 for infringements punishable with a fine of up to EUR 20,000,000 and BGN 5,000 for infringements punishable with a fine of up to EUR 10,000,000.

For offenses other than those specified in the GDPR, a fine of BGN 1,000 to 5,000 is introduced. For failure to comply with the CPDP’s prescription, the sanctions will also vary in quite high amounts, namely between BGN 2,000 and BGN 200,000.

It remains to be seen whether this Bill will be adopted according to the proposed draft version. In any case, the positive intention of the Bulgarian legislator to settle the issue of bringing national legislation in line with the new rules on personal data protection before 25 May 2018 should be appreciated. Unfortunately, however, the short deadlines for public discussion (opinions on the Bill can be submitting by 14 May 2018) may be a barrier to the possibility of a detailed and comprehensive national discussion of the proposed measures.

Link to the Bill

Following our previous publications regarding the GDPR, we shall now look into the most sensitive GDPR-related topic, namely fines and penalties.

We shall discuss the limits for these administrative fines, the criteria applicable to determining the amount thereof, as well as the specificities in work when determining fine amounts in case of undertakings and how group corporate structures shall be affected by the specificities in question.

The Regulation provides for two limits of administrative fines depending on the type of infringement:

• Infringements of any of the obligations of the controller/processor (stipulated in Article 8, 11, 25-39, 42 and 43 of the GDPR) are subject to administrative fines up to 10 000 000 EUR, or up to 20 % of the total worldwide annual turnover of the preceding year of an undertaking.
• Infringements of the principles of processing inherent in the Regulation, the data subjects’ rights, the transfers of personal data to a recipient in a third country, any obligations pursuant to Member State law and pertinent to special processing situations, as well as non-compliance with an order or a temporary definitive limitation by the supervisory authority are subject to administrative fines up to 20 000 000 EUR, or up to 4 % of the total worldwide annual turnover of the preceding financial year of an undertaking.

The aforementioned amounts are the upper limits of administrative penalties to be imposed. Depending on the specific infringement and the ratio between due care and care actually exercised, the amounts of administrative fines may vary greatly. Different circumstances weigh in when assessing amounts. For instance, in case of infringement of several provisions of the Regulation for the same or linked processing operations, the total amount of the administrative fine shall not exceed the amount specified for the gravest infringement. In case of a minor infringement or if the fine likely to be imposed would constitute a disproportionate burden to a natural person, a reprimand may be issued instead of a fine.

This raises the question of the criteria for setting the amounts of fines. The Regulation allows for a number of interpretations, but the Article 29 Working Party considers that assessment must depend on the degree of interference and remedy needed for any wrongful conduct or on whether any such interference or remedy is dissuasive or punitive in nature.

So far as the general rules and conditions for imposing administrative fines are concerned, those are detailed in Article 83 of the Regulation. A key element is the requirement to impose effective and proportionate fines. Such fines may be settled based on a number of circumstances such as:

• The nature and duration of infringement;
• The purpose of the processing concerned as well as data categories affected thereby. Certain special data categories, such as the ones revealing racial or ethnic origin, political opinions and religion are subject to higher protection[1];
• The circumstances surrounding the infringement, namely if it is of intentional or negligent character;
• The degree of responsibility of the controller/processor when establishing the infringement and upon termination thereof. Notification to the supervisory body and cooperation with the supervisory body in order to mitigate the infringement constitute mitigating factors;
• Any other mitigating or aggravating factors also matter, such as previous infringements, financial benefits from the infringement, etc.

The amounts of fines imposed to undertakings may be significant. It is, therefore, reasonable to specify what is meant by “undertaking” in the Regulation. Here the legislator refers to Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).

Although not explicitly defined therein, the term is given a broader interpretation in the case law of the Court of Justice of the EU, and according to it, for the purposes of Articles 101 and 102, the term “undertaking” is to be understood as an economic unit that may consist of a parent unit and any subsidiaries thereof. Any structures where one company exerts control over another company, whereby both companies are economically and organizationally related, shall constitute one undertaking. Such an interpretation of “undertaking” is likely to result in significant increase in the amounts of fines based on the total worldwide annual turnover of the entire corporate group, not the turnover of the specific business entity to have committed the infringement.

In conclusion, we would like to specify that the amounts of administrative fines discussed above and stipulated in the Regulation, are the upper limits of fines and sanctions that may be imposed in case of graver infringements. The Regulation reads that any case of infringement has to be subjected to extensive evaluation with due consideration of any mitigating or aggravating factors.[2] We would like to reiterate that due to the broad interpretation of the term “undertaking”, the annual turnover of the entire group of companies may be considered when determining the amount of the fine, thus significantly increasing thereof. That is why compliance with the requirements of the Regulation is of paramount importance.

THE TEAM OF DIMITROV, PETROV & CO.

[1] Articles 9 and 10 of the Regulation provide definitions of these special categories.

[2] Guidelines of the Article 29 Working Party on the application and setting of administrative fines for the purposes of the Regulation 2016/679.