On 25 and 26 November 2014, the EU General Court ("GC") handed down two judgments dismissing in their entirety claims against the European Commission's investigative powers with regard to dawn raids carried out on the premises of French telecom company Orange (previously France Télécom) and Czech energy company Energetický a průmyslový holding ("EPH").
Orange: the discretion of the Commission to conduct dawn raids in the presence of prior national inspections
In September 2012, the French Competition Authority ("FCA") had adopted a decision against Orange in the sector of reciprocal interconnection services for internet connectivity, considering that from all examined practices only margin squeeze could be a potential competition concern. In that context, it adopted a commitment decision. In June 2013, the European Commission ordered an inspection on the premises of Orange with regard to practices very similar to the ones examined by the FCA. Orange challenged the Commission inspection decision before the GC.
First, Orange argued that the Commission decision was unnecessary and disproportionate, since the FCA had conducted an investigation covering identical practices and adopted a commitment decision without finding an infringement of Article 102 TFEU. Therefore, the objectives sought by the contested decision had already been achieved. The Commission was required, under the principles ne bis in idem and good administration, to first consult the file of the FCA and then, only if necessary, conduct an inspection. Moreover, it could only legally seek information additional to that in the file.
Concerning the suitability of the decision, the GC stated that Orange's reasoning was in conflict with the case-law according to which the Commission is not bound by the decisions of national authorities, and is always capable of taking individual decisions under Articles 101 and 102 TFEU. Moreover, a decision by which an NCA accepts commitments or refuses to intervene could not be considered as a decision confirming the absence of an infringement. Also, the GC confirmed that the absence of intervention from the Commission, upon receipt of the FCA's notification that it has decided to accept commitments, does not amount to an acknowledgement of the merits of that decision.
On the necessity of the contested decision, the GC accepted that the conduct examined by the FCA and the Commission were very similar, only the geographic and temporal scope differed. The GC also accepted that it was "desirable" for the Commission to consult the FCA's case file, particularly since the Commission could in principle use the elements in it as evidence. The duty of the competent institution to examine carefully and impartially all the relevant aspects of the individual case was all the more important, first, in light of the margin of appreciation of the Commission in the application of its power to conduct inspections, and, second, given that this power constituted an obvious interference with the right to privacy. Nonetheless, the GC concluded that the examination of the FCA's file could not constitute an alternative to the Commission's inspection, insofar as the FCA itself had not conducted dawn raids and its decision was taken only on the basis of voluntarily submitted information. It was sufficient that one of the Commission's aims was to find evidence of proof of intention or plan to violate competition law, notwithstanding that the notion of abuse does not require bad faith. Moreover, even in the presence of evidence relating to the existence of an infringement, the Commission could legitimately consider it necessary to order further inspections.
Secondly, Orange raised the arbitrary character of the Commission decision, in view of the identity of the contested decisions with the decision of the FCA and the conduct of the Commission during the inspection (its research on the seized computers was based on keywords related to the FCA investigation and commitment decision). The GC reiterated that the Commission's obligation to specify the subject matter and purpose of the inspection constitutes a fundamental guarantee of the undertakings' rights of the defence, but held that it could not be imposed on the Commission to indicate, at the preliminary investigation stage, the elements leading it to envisage the existence of a violation of Article 102 TFEU.
EPH: the powers of the Commission to impose fines for refusal to submit to a dawn raid
In this second case, which led to a judgment delivered on 26 November 2014, EPH contested the legality of a Commission decision imposing a procedural fine of € 2,500,000 for a refusal to submit to an inspection by negligently allowing access to a blocked e-mail account and intentionally diverting e-mails to a server. In the course of the dawn raid, the Commission inspector had requested that the e-mail accounts of four persons holding key positions at EPH be blocked and re-set with new passwords, so that inspectors would have exclusive access to them during the inspection. Several hours later, an IT employee of the company unblocked one of those accounts upon request of its owner. The IT department was also asked to prevent the e-mails addressed to those four accounts from arriving in the respective inboxes. Thus, new e-mails stayed on the group server and could not be seen by the inspectors.
EPH did not challenge the evidence on which an infringement was found but argued that the Commission had not proven that its conduct during the inspection resulted in the production to the inspectors of incomplete business records. The conduct resulted from "mere inadvertence" and was neither negligent nor intentional. With regard to the negligent access to a blocked e-mail account, the GC held that the mere fact that the inspectors did not obtain, as requested, exclusive access to this account, was sufficient to characterise the incident as a refusal to submit to the inspection decision. The Commission had the burden of proving that access was granted to the data in the blocked account – a fact not contested by EPH – but was not required to prove that those data were manipulated or deleted. With regard to the argument that negligence was not demonstrated to the requisite legal standard, the GC considered that the omission of the company to ensure exclusive access was sufficient, insofar as it had received detailed instructions from the inspectors. Furthermore, once EPH was informed of the inspection decision, it was not for the Commission to inform each person of their duties but for the undertaking to ensure that the persons authorised to act on its behalf did not impede the implementation of the Commission's instructions.
Concerning the intentional diversion of incoming e-mails, the GC rejected the claim that since the e-mails destined for the blocked account remained stored on the group server, the inspectors had access to them at all times. On the contrary, the GC found that the inspectors should have been able to access all the e-mails normally to be found in the inbox, without being obliged to gather data from other places. Moreover, pursuant to its duty of cooperation, EPH was required to make the e-mails from the account available to the inspectors and not merely claim that they could have found the data elsewhere at its premises. For establishing an infringement, it was thus sufficient for the diverted e-mails to be covered by the inspection decision and the fact that the diversion related only to a limited number of non-essential emails for an inspection dating back to 2006 was considered irrelevant.
Furthermore, with regard to EPH's claim of infringement of its rights of defence, the GC considered that the applicant was clearly informed of the scope of its duty to cooperate by the inspection decision and the accompanying explanatory note. The inspectors were under no obligation to point out that infringements could result in a fine. Notably, the GC rejected the claim that for the protection of the rights of defence the Commission had a greater obligation to inform because, unlike the affixing of a seal, the blocking of an e-mail account was not apparent as such to everyone: after receiving the unequivocal instructions from the inspectors, it remained for the undertaking to implement them.
Finally, EPH argued that it did not understand how the fine was calculated. The Commission had stressed the importance of a fine with a deterrent effect, emphasised the higher risk of manipulation of electronic records, noted that the infringement comprised two separate incidents of a serious nature and considered that the infringement had continued for a significant period of time. The GC considered that in the absence of Commission guidelines on the method of calculation of procedural fines, the Commission's reasoning was "disclosed in a clear and unequivocal fashion" and it was not required to express, in absolute figures or as a percentage, the basic amount of the fine and any aggravating or mitigating circumstances. Also, the GC insisted that the deterrent effect of the fine was all the more important in the case of electronic files, which were much easier and quicker to manipulate than paper files. Lastly, in comparing the fine imposed to that in case E.ON Energie AG for a breach of seal (0.14% of the relevant turnover as compared to 0.25% in the present case), the GC concluded that similarly the infringement was particularly serious by its own nature but consisted of two separate actions, one of which deliberate.
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