European Union: Dawn Raids By French Competition Watchdog Trampled On Fundamental Rights

Dawn raids by French competition watchdog trampled on fundamental rights

The European Court of Human Rights (ECtHR) recently ruled that dawn raids carried out at the premises of two French construction companies by the DGCCRF (French Department for Competition, Consumer Protection and Fraud) violated both the rights of defense and the right to privacy, due to inadequate judicial review of both the decision authorizing the raids and the scope of documents seized. The ECtHR held that if, during a dawn raid, companies are unable to halt the seizure of out-of-scope or privileged documents, then they should at least have an effective judicial remedy to seek the removal of such documents from the file.

Background

In 2007, the DGCCRF (an investigative body of the French Ministry for the Economy) obtained a search warrant from the JLD (Juge des Libertés et de la Détention or Liberties and Detention Judge) of the Paris Tribunal de Grand Instance to carry out inspections at the premises of two construction companies suspected of bid-rigging public works contracts. The DGCCRF seized a large number of documents and electronic files, as well as the entire contents of the electronic mailboxes of several employees.

The companies unsuccessfully appealed the inspections and seizures before the JLD and subsequently (restricted to points of law only) before the French Supreme Court (Cour de Cassation).

Complaint before the ECtHR

The companies then sought relief from the ECtHR, filing a complaint in October 2010 against the inspections and seizures. The objections were two-fold:

  1. Lack of effective remedy

    The companies complained that their right to an effective remedy (Article 13 ECHR) had been violated because (i) the judge who ruled on the lawfulness of the inspections and seizures was the same judge who had authorized the inspections (i.e., the JLD), and therefore could not sufficiently guarantee an impartial review, and (ii) the appeal before the French Supreme Court against such ruling was limited to points of law.

    Lack of impartiality. The ECtHR dismissed the first allegation, noting that the companies had not raised such argument before the French Supreme Court and therefore had not exhausted all domestic remedies.
     
    Inadequate legal review. Regarding the second allegation, the ECtHR affirmed its earlier decision-making recognizing the failure of the French Commercial Code's (then-applicable) procedural provisions to satisfy the right to a fair trial (Article 6 ECHR). Such provisions have since been modified to allow parties to challenge the JLD's decision, both on the law and the merits, before the President of the Court of Appeal.
  2. Violation of rights of defense and right to privacy

    The companies also complained that the "indiscriminate" seizure of documents and electronic data had violated their rights of defense (Article 6 ECHR) and their right to privacy (Article 8 ECHR), particularly with respect to correspondence covered by lawyer-client confidentiality. The ECtHR then assessed this complaint solely on the basis of the right to protection of one's private and family life, home and correspondence (Article 8 ECHR). Pursuant to its previous case law, it held that on-the-spot inspections at company premises constitute an "interference" with this right. Such interference is only allowed if, in pursuit of a public interest objective, it is "in accordance with the law" (i.e., with a proper legal basis) and is "necessary in a democratic society" (i.e., proportionate) (Article 8.2 ECHR).

    Interference had a proper legal basis.... The ECtHR found that the inspections and seizures had a proper legal basis, as these were governed by specific statutory provisions and pursued a legitimate aim. ...

    But was not proportionate. As to the proportionality issue, the ECtHR found that the inspections and seizures had not been "widespread and indiscriminate." This is because the authorities carefully confined their searches to the object and purpose of the investigation, as described in the search warrant, and prepared a sufficiently detailed inventory of the seized documents and electronic files.

Nevertheless, the ECtHR found that the applicants had not been given an opportunity to review the documents during the inspections, and therefore had been unable to object to the seizure of out-of-scope or privileged documents. The applicants therefore should have had the right to seek review of the seizure's lawfulness after the inspections. However, the JLD only examined the lawfulness of the formal framework in which the seizures had been conducted, without carrying out a specific review of their proportionality. The ECtHR held that, when a judge is called upon to assess the seizure of specifically identified documents that are unrelated to the purpose of the inspection or legally privileged, he must rule on the fate of these documents. Such ruling shall be based on a concrete proportionality assessment, and a judge should order the restitution or destruction of documents where appropriate.

The ECtHR therefore concluded that the seizures had been disproportionate, violating Article 8 ECHR.

In summary, the ruling confirms that meaningful and effective judicial review should be available to companies subject to dawn raid searches and seizures. It clarifies that companies should be able to challenge the seizure of individual documents deemed as out-of-scope or legally privileged, and that the judge ruling on such claims should have the power to order the removal of such documents from the file, thus preventing their use as evidence. The judgment also confirms that the decisions of the judge overseeing the inspections and seizures should be subject to an appeal on issues of law and fact.

National courts scrutinizing dawn raids

Ensuring procedural safeguards. Several recent national cases also illustrate that dawn raids are increasingly attracting judicial scrutiny regarding procedural rights. For example:

  • In Belgium in February 2015, the Brussels Court of Appeal ordered that all documents seized during a dawn raid at the premises of certain tour operators be expunged from the investigation file, since the then-applicable legislation did not provide for effective judicial review of the inspections and seizures. 
  • In France in June 2014, the French Cour de Cassation annulled a dawn raid at the premises of a French bank, finding a violation of the bank's right to a fair trial due to denial of access to legal counsel during the dawn raid (Cass. Crim., n°13-81.471). 

Preventing "fishing expeditions." Other national cases spotlight the significant challenges faced by competition authorities, whose investigations often entail vast quantities of documents and electronic files and e-mails. Therefore, the "seize first, sift later" approach is often relied upon. Without adequate safeguards, however, such an approach easily can become an unlawful "fishing expedition":

  • In Spain, in April 2015, the Audiencia Nacional (National Court) annulled fines of €61 million imposed in 2011 by the Spanish competition authority CNC (now CNMC) on five major electricity companies and their industry association (UNESA). The Court ruled that the dawn raids at UNESA were null and void, as the inspection order failed to adequately define the investigation's scope. Since CNC's entire case had been built on evidence seized during this dawn raid, the Court said it had no choice but to annul the findings against the companies, as well as the fines. 
  • In France, in April 2013, the French Cour de cassation held that when investigators seize large amounts of documents (in particular, electronic mailboxes), a breach of legal professional privilege occurs as soon as a protected document is taken, irrespective of the investigators' intention not to rely on the document and to return it at a later stage of the investigation (Cass. Crim. n° 12-80331). 

These national decisions follow in the wake of the EU General Court's judgments of November 2012 (Case T-135/09 and T-140/09), where the Court partially annulled decisions ordering dawn raids conducted by the European Commission at the premises of two cable manufacturers, in France and in Italy, as these decisions defined an overly broad scope of investigation. These were hailed as landmark judgments reining in the inspection powers of competition authorities, although the subsequent rejection of Nexans' appeal by the Court of Justice (Case C-37/13) seemed to mark a return to a more deferential review (see Jones Day Antitrust Alert of 14 September 2014).

Another landmark EU judgment is anticipated in the Deutsche Bahn case (Case C-583/13 P). In this matter, Advocate General Wahl has advised the Court of Justice to rule that the European Commission may seize documents revealing anticompetitive conduct, even if these were outside of the scope of the decision ordering the inspection, but only where such discovery is "truly fortuitous." In his view, this means that the Commission cannot seize documents relating to a separate suspected infringement (i.e., not covered in the concerned inspection decision) where Commission staff were told, prior to the inspection, to pay specific attention to information relating to such potential separate infringement (i.e., no fortuitous discovery).

Implications

All of these cases remind that competition authorities should carefully define the scope of the inspection and apply proper procedures for dealing with potential out-of-scope or privileged documents. Some European countries may also face amending their legislation to ensure proper judicial review of searches and seizures by competition or similar authorities (e.g., tax authorities). Finally, for companies, these cases illustrate the importance of dawn raid preparedness and that a fundamental rights-based defense against inappropriate inspections can be effective. While compensation awards before the ECtHR are generally modest (in the present case, €15,000), this is never the primary focus of an ECtHR claim or judgment. At stake is an affirmation of fundamental rights, towards rectifying the law applied by public authorities in relation to private parties.

In the French construction case, the European Court of Human Rights' judgment of April 2, 2015, can be found on its website

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions