On October 5, 2020, the General Court of the European Union partially annulled decisions of the European Commission ordering dawn raids on the premises of French supermarkets Casino and Intermarché and their joint purchasing alliance INCA Auchats (see cases T-249/17, T-254/17 and T-255/17).
The EC ordered the inspections based on suspected concerted practice concerning information exchange on (i) discounts obtained in the supply markets for certain commonly used consumer products and the market prices for the sale of services to manufacturers of branded products and (ii) future commercial strategies, in particular in terms of product mix, retail expansion, e-commerce, and promotional policy. In light of the suspected conduct, the EC ordered the abovementioned companies to submit to inspections, and during those inspections the EC visited the relevant premises and seized content from their computer equipment. The information uncovered in the raids led to a formal EC investigation into alleged potential collusion between retailers through purchasing alliances.
The supermarket companies brought action against the EC seeking annulment of the decisions ordering the inspections. Specifically, they claimed violation of(a) Article 20 of Regulation No. 1/2003, which concerns the general power of the Commission to carry out all necessary inspections in the event of suspected infringement of antitrust law; (b) the obligation to state reasons for inspection decisions; and (c) of their right to the inviolability of the home.
As a preliminary matter, the General Court confirmed that the Commission has extensive powers of investigation, but that such powers are not unlimited and due weight must be given to the fundamental rights of the companies being investigated. In the case at-issue, the Court rejected the plea of infringement of the right to an effective remedy, as set forth in Article 47 of the Charter of Fundamental Rights of the European Union and article 6 of the ECHR. In fact, the Court found that the system put in place to monitor the progress of inspection operations satisfied all four conditions required by ECHR case law (namely, effectiveness, efficiency, certainty, and reasonable time). Moreover, the Court noted that the conditions under which an inspection takes place can be challenged with an action for annulment brought against the final decision that ascertains a breach of Article 101 TFEU. Based on the case-law cited by the Court, it appears that such control over the legality of the inspection is not subject to particular restrictions as to the pleas that may be raised, since it allows for verification of the Commission’s compliance with all the limits imposed on its powers. In addition, the decision ordering the inspection can be subject to an autonomous action of annulment, pursuant to Article 20, par. 4 and 8 of Regulation No. 1/2003.
The General Court then rejected a large number of arguments brought forward by the companies, including the alleged infringement of the principle of equality of arms (raised in cases T-249/17 and T-254/17). In fact, the court stated that the Commission cannot be required to specify all of the evidence that justifies the inspection of an undertaking suspected of anticompetitive practices, as this would seriously hinder the effectiveness of the investigation. However, the court held that it must have sufficiently strong evidence to prove that an inspection decision is not arbitrary.
In this regard, the court noted that there is a difference between the threshold at which it is recognized that the commission has sufficiently strong evidence of anticompetitive conduct to justify inspections and the level of evidence required to prove a concerted practice, with the former being significantly lower than the latter. However, the judge found that the EC did not have sufficiently strong evidence to launch dawn raids in relation to one of the suspected practices (the exchange of information concerning future commercial strategies). Thus, it agreed with the applicants that the Commission infringed their right to the inviolability of the home. In relation to this, some applicants also disputed the legality of the seizure and copying of data relating to the private lives of employees and managers. The court found that raided companies have a duty to claim protection against the Commission’s inspections if necessary to protect the private lives of employees and managers. Considering that in this case, however, there was no prior request for protection filed by the applicants, the judge declared the plea inadmissible.
On the procedural side, the General Court clarified that interviews held with suppliers prior to issuing a dawn raid decision can be used as evidence, even when those interviews have not been recorded. If that were not the case, the detection of anticompetitive practices would be seriously hindered due to the dissuasive effect that recorded formal questioning may have on the willingness of witnesses to report infringement.
Generally speaking, dawn raids remain a cornerstone of antitrust investigative practices, at the European as well as at the national level. However, there are still many gray areas and complexities in the law and conduct governing dawn raids, as proven by the close scrutiny exerted by the General Court over the powers of the European Commission. The judgement of the General Court in the case in question provides a timely reminder that the EC is not entitled to go on “fishing expeditions,” as already clarified in Czech Railway (T-325/16), Prysmian (T-140/09), and Nexans (T-135/09) and referenced by Advocates General Wahl and Kokott in their respective opinions on Deutsche Bahn (C‑583/13) and Nexans (Case C‑37/13 P). This reinforces the importance for undertakings to instruct their employees and managers on how to cooperate with the authorities in order to avoid the consequences of obstruction while preserving the rights of the company and its workforce.