Following dawn raids on the premises of electric cable
manufacturers, the European General Court has partially overturned
two EU Commission inspection decisions, finding the scope of
inspection to be overreaching in scope. This is the first
time that a court has annulled (albeit partially) a Commission
decision authorizing a dawn raid, which must specify the
subject-matter and purpose of the inspection. The General
Court set out that the Commission cannot proceed with a dawn raid
unless it has reasonable grounds to believe that an infringement of
EU competition law took place - with specific reference to the
products or activities mentioned in the inspection decision.
These rulings reinforce the rights of defense of parties and place
the Commission under greater scrutiny in conducting dawn raids.
They also remind companies to carefully verify the
subject-matter and purpose of a dawn raid decision and to pay close
attention to all circumstances surrounding the dawn raid to
determine to what extent the Commission has the power to conduct
the inspection.
Background
In pursuit of a broad investigation implicating some 20 power
cable manufacturers, in 2009 the Commission initiated dawn raids at
the headquarters of Nexans (France) and Prysmian (Italy).
Nexans and Prysmian subsequently challenged the inspection
decisions of the Commission on three grounds: (1) the broad
scope of the product markets described in the authorization of the
dawn raid, (2) the removal from company premises of copies of
employee hard drives for review in Brussels, and (3) the
Commission's far-flung search for documents on other business
lines, without reasonable grounds of suspicion. Two of these
Commission decisions were upheld, one overturned:
(1) Broad scope of product markets concerned by the
inspection decision - upheld by the Court.The General
Court dismissed the argument that the inspection authorization had
imprecisely set out the product and geographic scope of the markets
to be covered by the investigation. The Court acknowledged that the
subject-matter of the inspection was defined particularly broadly,
as it could cover activities relating to very different sectors.
Nevertheless, the Court found that the Commission had met its
obligation to define the subject-matter of its investigation, which
enabled the companies in question to assess the scope of their duty
to cooperate during the inspection.
(2) Removal of copies of employee hard drives -
upheld by the Court.During the course of the three-day
inspection, the Commission made copies of computer hard-drives
belonging to certain employees of the two companies. These
were taken back to Brussels for review. Nexans and Prysmian
asserted that the Commission should have examined such data at
their premises and that the Commission should have only removed
documents relevant to the investigation. In rejecting these
claims as inadmissible, since the challenged facts can be reviewed
only in an action against a final decision adopted by the
Commission, the General Court noted that the applicants had
essentially only taken issue with the Commission for reviewing the
documents in Brussels and for keeping them until the time of such
examination.
(3) Commission's far-flung search for
documents - overturned by the Court. While finding
that the inspection decision had adequately set forth the
investigation's subject-matter, the General Court agreed with
the claim that the Commission had conducted a "fishing
expedition" during the dawn raid in the absence of reasonable
grounds of suspicion of an infringement in all product markets
covered by the inspection.
In overturning the overbroad search by the Commission's
investigators, the Court held that the Commission should have
limited its inspection to the high voltage cable sector, which was
the only sector for which the Commission had "reasonable
grounds" for suspecting the two investigated companies of an
infringement. As evidence that such reasonable grounds
existed only in relation to high voltage cables, and not to low and
medium voltage cables, the two companies pointed to the particular
employees targeted for interviews during the dawn raid, the focused
conduct of the inspectors during the dawn raid, the differences
between the various products, and the content of a Commission press
release following the inspection.
The General Court thereby annulled portions of the inspection
decisions insofar as these concerned power cables other than high
voltage cables. The Court found that, without such restraints
being imposed on Commission investigators, the Commission could
pursue any indication of an infringement of antitrust rules in any
part of a company's activities but then carry out an inspection
of all the activities of that company. The General Court
found that such approach would violate the fundamental right of
protection of private activity.
The General Court did not define the consequences of its rulings
on the Commission investigation, which remains ongoing.
However, its decision does preclude the Commission from using
information that was gathered during the inspections but falls
outside the scope of the authorized investigation.
The General Court judgments can be found here: Nexans v. European Commission, Case T-135/09, 14
Nov 2012; Prysmian v. European Commission, Case T-140/09, 14
Nov 2012 (in French)
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