Picture two companies that broke the same rule. One is a corner shop taking £100,000 a year. One is a giant taking £10 billion. A fixed fine of £1 million would close the shop and be lunch money for the giant. So many rules write the fine as a share of what the company takes, not as a sum.
Data law, top fine4 in 100 of turnover
Competition law, top fine10 in 100 of turnover
People call a company's yearly sales its turnover. The word just means all the money that came in before anything was paid out. The UK's data law says a fine can be up to 4 in every 100 pounds of worldwide turnover, or £17.5 million, whichever is bigger. Competition law goes up to 10 in 100.
£500 million turnover→4 in every 100→? million
A company has a turnover of £500 million. What is 4 in 100 of that, in millions of pounds?
million pounds
Four in a hundred is the same as 4%: divide by 100, then multiply by 4.
Right. Twenty million. That is the ceiling, not the bill; the watcher decides how much of it to charge. Against £500 million of sales, £20 million is about two weeks of takings.
Move the company's turnover and compare a fixed £1 million fine with a share of 4 in 100. The companies are made up; the 4 is the law's number.
Fixed £1 million£1 million
4 in 100 of turnover£0.04 million
Turnover a year: £1 million
Turnover £1 million. A fixed £1 million fine is a whole year's sales. The share is £40,000.
Fixed £1 million£1 million
4 in 100 of turnover£0.40 million
Turnover a year: £10 million
Turnover £10 million. The fixed fine is a tenth of the year. The share is £400,000.
Fixed £1 million£1 million
4 in 100 of turnover£4 million
Turnover a year: £100 million
Turnover £100 million. The fixed fine is one per cent of the year. The share is £4 million.
Fixed £1 million£1 million
4 in 100 of turnover£40 million
Turnover a year: £1 billion
Turnover £1 billion. The fixed fine is about a third of a day's takings. The share is £40 million.
Fixed £1 million£1 million
4 in 100 of turnover£400 million
Turnover a year: £10 billion
Turnover £10 billion. The fixed fine is under an hour's takings. The share is £400 million.
For whom is the fixed £1 million the bigger bill?
The giant. A million is a million.
Not yet. A million is a million, and a bill is felt against what comes in. Against £10 billion, £1 million is under an hour's takings; against £1 million it is the year.
Both the same. The law treats everyone alike.
Not yet. A fixed sum treats the number alike and the companies very differently. That is the whole reason the share exists.
The small company. For the one taking £1 million it is a whole year's sales.
Right. A bill is felt against what comes in. At £1 million of turnover the fixed fine is everything; at £10 billion it is under an hour's takings. The share is the same fraction of a year for both.
Move the control.
Intended, 2019£183 million
Charged, 2020£20 million
In 2018 thieves got into British Airways' website and took the details of more than 400,000 customers and staff. The watcher first proposed a fine of £183 million. In 2020 it settled on £20 million, after hearing the airline's case and partly because of the pandemic. The first number is where a watcher starts; even that was under the ceiling.
In 2023 Ireland's data watcher fined Meta, the owner of Facebook, for sending Europeans' data to America. How big was the fine?
Pick one. Nothing is scored.
MetaEuropeans' data to America
↓→
The fine€1.2 billion
€1.2 billion.The biggest data fine there has been, and it is still under the law's ceiling, which for a company that size runs to billions. A share is what makes a billion possible. The watcher still chooses how far up the share to go, and the company is appealing.
A banka licence
++
A care homea licence
++
An airlinea licence
There is a bill bigger than any fine. Many trades need a licence: a bank, an airline, a care home. The watcher gave the licence and can take it back. A fine is a bad year. Losing the licence is the end of the business, and that is what a company's board, the few people who run it, fears.
Each card is something a watcher can do. Is it a fine, or is it about the licence?
One card at a time. Tap the pile it belongs to.
Card 1 of 6
Order the company to pay 2 in 100 of its turnover
Tell a bank it may not take on new customers until its checks are fixed
Ban a director from running any company for ten years
Charge £500 for every day a fault is left unfixed
Make a care home stop taking new residents
Take away the permission to sell insurance
Order the company to pay 2 in 100 of its turnover → A fine
Not yet. A fine. It is money, worked out as a share, and the company goes on trading once it has paid.
Tell a bank it may not take on new customers until its checks are fixed → The licence
Not yet. The licence. The bank keeps its permission, but a piece of it is switched off; the watcher is holding the door, not sending a bill.
Ban a director from running any company for ten years → The licence
Not yet. The licence, a person's. No money changes hands; what is taken is the permission to do the job at all.
Charge £500 for every day a fault is left unfixed → A fine
Not yet. A fine, with a clock on it. It is money that grows by the day, which is a bill shaped to make the fix happen sooner.
Make a care home stop taking new residents → The licence
Not yet. The licence. The home still runs, but the watcher has closed the front door, and a home that cannot admit anyone is shrinking.
Take away the permission to sell insurance → The licence
Not yet. The licence, all of it. There is no sum here; the trade itself has been taken away.
2A fine
vsvs
4The licence
Right. Two fines, four pieces of licence. A fine is money; everything that touches permission, a door, a person's job or the trade itself, is the licence. The second pile is the one companies fear.
Turnover£2 billion
++
4 in 100?
++
The licencealso at stake
A board is deciding how much to spend on compliance. Turnover is £2 billion. The data law's top fine is 4 in 100 or £17.5 million, whichever is bigger. Which is true?
The ceiling is £80 million, and the board also knows a licence can be taken, so the fine is not the whole risk.
Right. Four in 100 of £2 billion is £80 million, which is bigger than £17.5 million, so the share wins. And a board that counts only the fine has left out the licence.
The ceiling is £8 million.
Not yet. That is 4 in 1,000. Four in 100 of £2 billion is £80 million, ten times more. One zero is the difference between a day and a half of sales and two weeks of them.
The fine is capped at £17.5 million for any company.
Not yet. £17.5 million is the smallest the top fine can be, not the biggest. The law takes whichever is bigger, and for a company this size the share is bigger.
Lesson complete
A fine written as a share bites the giant and the corner shop alike. Losing the licence bites harder.