Austria: Austrian Supreme Court Rules That Scope Of Initial Search Warrant Can Be Extended Based On File Note Made After First Dawn Raids

On 26 November 2013, the Austrian Supreme Court ("Supreme Court") upheld a decision of the national Cartel Court that had extended the scope of a search warrant given to the Austrian Federal Competition Authority ("FCA") to cover not only vertical price coordination between a dairy producer and certain food retailers as well as horizontal price coordination between those food retailers via the dairy producer, but also vertical price coordination between all companies concerned and food wholesalers.

On the basis of an initial search warrant issued by the Cartel Court on 30 April 2013, the FCA searched on 15 May 2013 the business premises and the vehicles of the dairy producer and the food retailers concerned. The following day, 16 May 2013, the FCA applied to the Cartel Court for an extension of the search warrant to also cover vertical price coordination between the companies concerned and food wholesalers. According to a file note by the FCA dated 15 May 2013, the review of documents during the dawn raids carried out on 15 May 2013 suggested the existence of regular price coordination with various food wholesalers. On 16 May 2013, the Cartel Court accepted an extension of the scope of the search warrant to cover these additional practices.

In their appeal against the Cartel Court's decision of 16 May 2013, the companies argued that the execution of a search warrant may not go beyond the initial suspicions on which it is based and that any evidence outside the scope of the warrant must be disregarded.

In its judgment, the Supreme Court first recalled that out-of-scope evidence cannot be used in the proceedings covered by the initial search warrant. On the other hand, it considered that out-of-scope evidence accidently discovered can be relied upon in order to initiate new proceedings. The Supreme Court explained that the FCA had not used the out-of-scope documents as supporting evidence for its request to extend the search warrant, which would have been contrary to established case-law of the Court of Justice of the European Union ("ECJ"), such as the AEB judgment. Rather, the FCA had based its request on an internal file note in which FCA officials had declared that they had seen documents during the search that also supported the suspicion of price coordination in the wholesale sector. According to the Supreme Court, this approach is in line with EU case-law and the rights of defence.

The Supreme Court then examined whether the investigating authority was required to formally initiate new proceedings or whether the scope of the ongoing proceedings could simply be broadened by extending the scope of the search warrant. It held that it was at the discretion of the investigating authority to decide whether it was more appropriate to initiate new proceedings or to extend the scope of the ongoing proceedings.

The Supreme Court went on to hold that its findings did not contradict the recent judgment of the EU General Court in Nexans, in which the General Court held that competition authorities may not embark on a "fishing expedition" in the course of on-site investigations (see VBB on Competition Law, Volume 2012, No. 11, available at www.vbb.com). The Supreme Court held that both the initial search warrant and the extended search warrant were sufficiently precise and not unlimited. Furthermore, the Supreme Court considered that, in the course of dawn raids, it is generally unavoidable and permissible to review additional documents not covered by the search warrant in order to assess whether or not they must be seized.

The Supreme Court added that this approach was not problematic in Austria where, unlike at the EU level, companies subject to on-site inspections have the possibility to immediately and effectively object to the review and seizure of certain documents. In such case, the Cartel Court has indeed to decide on the objection before the review can proceed. The Cartel Court's decision on the objection can then be appealed.

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.

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