Slovenia: Do Companies Have The Right To Be Heard During A Dawn Raid?

The Slovenian courts were recently asked to rule on companies' right to be heard during unannounced investigations (so-called 'dawn raids') by the Competition Protection Agency.

Facts

The agency conducted a dawn raid due to a suspicion that the company in question was in a dominant position, during which the company allegedly refused to cooperate with the agency's officials. Based on this, the agency issued a fining decision stipulating that the company had violated its duty to cooperate and imposed a significant fine on it. The agency's allegations were largely based on the following factors:

  • Agency representatives had to wait 54 minutes to begin the inspection. 
  • They were denied access to computers. 
  • The company employees refused to give information on the location of certain documents.

Notably, the agency's report on the investigation, which was the basis for issuing the decision, neither included a detailed description of the dawn raid, nor listed or described the alleged failures.

Against this background, the company filed an action against the agency's decision, arguing that its ability to comment on the agency's findings was unlawfully limited, as the agency did not describe the alleged infringements or provide for their legal qualification in its report. By doing so, the agency violated the company's right to be heard on the facts and circumstances before the adoption of the decision, and consequently the company had no opportunity to present its opinions on the allegations, which could have shed a different light on the case.

The administrative court confirmed the agency's decision and set aside all the allegations; however, its decision was later reversed by the Supreme Court. A retrial before the administrative court followed, in which the Supreme Court's decision was incorporated accordingly and some important procedural safeguards were clarified.

Legislative framework

According to the Prevention of Restriction of Competition Act, the agency must prepare a report after completing a dawn raid. This report must include, among other things:

  • a brief description of the investigation; 
  • a list of statements given by representatives or employees; and 
  • a list of documents and other items that the agency obtained during the investigation.

Following delivery of the report, the company under investigation has 15 days to provide its comments.

In its first decision, the administrative court held that the facts established in the decision derived from the report and that the company had an opportunity to be heard by providing its comments; hence, its right to be heard was not violated. However, this position was overturned by the Supreme Court, which reviewed the agency's report in detail in order to determine whether this was sufficient to guarantee the company's constitutional rights, including the right to be heard.

Agency's report 

The Supreme Court confirmed that the company had indeed had an opportunity to provide its comments to the report. However, it looked more closely at the content and established that it did not contain a description of the alleged failures, but only a brief description of the investigation as a whole.

Although the legal prerequisites were therefore fulfilled, the Supreme Court went further and emphasised the importance of an effective adversarial proceeding before issuing a fining decision and stressed that this can be guaranteed only by giving companies an opportunity to provide their comments to the agency's description of the facts relevant to the fining decision. For this purpose, the report should include all legally relevant facts and a company should have an opportunity to review the legal relevance or special meaning of these facts. The Supreme Court also acknowledged that the purpose of the report is not only to form a basis for issuing a fine, but also to ensure that companies can actively participate in proceedings.

Further, the right to be heard includes a right for the company to indicate all the facts that support its case, rather than simply being able to declare whether a particular statement is true. Thus, the right to be heard can be exercised effectively only where the company understands:

  • the context in which the established facts will be used; and 
  • which additional circumstances regarding the facts can be presented in support of its legal position.

The Supreme Court further noted that the right to be heard not only refers to actual aspects of the case, but also legal aspects.

What next?

According to the administrative court's second decision, the agency will have to repeat the proceeding and ensure that the company's right to be heard is upheld. This means that the respective company will have an opportunity to comment on all relevant facts, circumstances and evidence.

It will be interesting to see how this decision affects future cases. Following the Supreme Court's rationale, the agency must now apply a broader interpretation to the existing provision in the Competition Act regarding the right to be heard and include further details in its investigation reports, as it would be difficult to argue that the case at hand does not set a precedent for future cases.

This article first appeared on http://www.internationallawoffice.com

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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