Dawn raids at Red Bull: General Court clarifies preconditions for adopting an inspection decision and confirms the Commission’s wide discretion in conducting its antitrust investigations

On the morning of March 20, 2023, a state of emergency suddenly prevailed at the Red Bull locations in Fuschl am See, Paris, and Amsterdam: Officials of the Commission appeared unannounced with a so-called inspection decision. What followed was a dawn raid of Red Bull's premises lasting several days, during which not only file folders and laptops were inspected but also extensive documents and electronic data were seized. The actual analysis of these documents then continued for months at the Commission's offices. 

The inspection decision was based on three key suspicions: First, Red Bull was alleged to have used financial incentives to persuade retailers and wholesalers to delist energy drinks larger than 250 ml – primarily competing products. Secondly, the Commission suspected that the company had initiated a disparagement campaign against competitors’ larger can formats. Thirdly, the focus was on alleged anti-competitive agreements within the industry association "Energy Drinks Europe" (EDE) to curb the distribution of larger containers.

The investigation was triggered by a complaint from US competitor Monster Energy. However, the Commission went beyond the competitor's allegations: It requested additional information from the competitor and thoroughly examined the plausibility of the evidence before taking its inspection decision. At that point, it had more than 500 pages of statements and information from the complainant in its file.

In its action, Red Bull sought, first, the annulment of the inspection decision itself (first head of claim) and, second, the annulment of all measures imposed in the context of the dawn raid (second head of claim)

The General Court dismissed the second claim concerning the measures taken during the dawn raid as inadmissible. It justified this on the grounds that the claim was not sufficiently specific. Red Bull's statement of claim did not contain any further details of the measures that the Commission was alleged to have ordered during the inspection and which were now requested to be declared invalid. Instead, the application merely referred to "any measure [...] taken in the course of the inspection." The General Court made clear that identifying the relevant measures was not its task. Red Bull had "in particular" requested that the continuation of the inspection on the Commission's premises be declared inadmissible and that the return of all copies of documents be ordered. However, the General Court declared that it had no jurisdiction in this regard because, within the framework of the review of legality under Article 263 TFEU, the Courts of the European Union had no jurisdiction to issue declaratory judgments or instructions to EU institutions. 

Red Bull based the first remaining claim regarding the inspection decision on five grounds: First, they claimed that the decision was manifestly unfounded; second, that there was insufficient evidence for its adoption; third, that the decision was inadequately reasoned and vague; fourth, that it violated the principle of proportionality; and fifth, that it violated essential procedural requirements and rights of defense. Ultimately, the company did not succeed with any of these arguments:

With regard to the alleged lack of reasoning and vagueness of the inspection decision, the General Court applies the standard set out in Article 20(4) of Regulation No 1/2003. This provision stipulates that the inspection decision must specify the subject matter and purpose of the dawn raid. The General Court emphasizes that, at the early stage of the proceedings, it is sufficient for the Commission to describe the grounds for suspicion as precisely as possible; it is not necessary to precisely define the market or to provide a legal classification of the alleged conduct, nor is it necessary to prove the suspected infringement(s). Besides that, the Commission was under no obligation to prove Red Bull’s dominant position. Overall, Red Bull was able to comprehend the allegations against it on the basis of the decision "without undue effort of interpretation". This satisfies the requirements of justification and specificity. The use of adverbs such as "in particular" or "possibly" does not preclude the specificity of the inspection decision. 

With regard to the plea alleging insufficient evidence for the adoption of the decision, Red Bull achieved a procedural victory, but failed on the merits: The General Court partially followed the company’s request and initially required the Commission to disclose all evidence supporting the serious grounds for ordering the inspection. After the Commission pointed out the confidentiality of these documents, the General Court allowed the Commission to submit a list and a summary of the evidence, which only the applicant’s legal counsel was allowed to inspect after signing a confidentiality agreement. However, this did not help Red Bull to win on this point. In particular, the company was unable to convince the General Court that the evidence did not justify the issuance of an inspection decision. The General Court found that, in adopting the inspection decision, the Commission had essentially relied on the aforementioned informal complaint submitted by Monster Energy. This complaint was coherently formulated and provided sufficient grounds. In the view of the General Court, such a complaint is sufficient to justify ordering an investigation. Referring to the case law of the European Court of Justice (ECJ), the General Court emphasizes that at such an early stage of the investigation, the Commission only needs to have sufficiently sound evidence. Concrete and confirmed evidence is not yet required – after all, finding such evidence is precisely the purpose of the inspection.

Neither did the General Court follow Red Bull's argument that the decision was manifestly unfounded. The General Court considered that the conduct referred to in the inspection decision, if confirmed, could constitute an infringement of Articles 101 and 102 TFEU.

Red Bull also challenged the proportionality of the inspection decision. 

Firstly, the company argued that the dawn raid was unnecessary because the Commission should first have resorted to less intrusive measures such as a request for information. The General Court rejected this complaint. The Commission has a wide margin of discretion in choosing the means it uses. Even if, as in this case, there is already a lot of circumstantial evidence or even proof, the Commission can "rightly consider it necessary to order additional checks." Also, less intrusive measures, like a voluntary request for information, are less likely to be successful than a search. 

Secondly, Red Bull considered the continuation of the dawn raid at the Commission's premises over several months to be disproportionately long (six months) and intensive (in particular due to the comprehensive seizure of documents and emails without pre-filtering for relevance). In this respect, the General Court refrained from conducting an in-depth examination: Since this complaint relates to events that occurred after the contested inspection decision was issued, they cannot affect the legality of the decision. According to established case law, the legality of the decision depends solely on the factual and legal situation at the time it was issued.

In its final plea, Red Bull alleged a violation of essential procedural requirements and an infringement of its rights of defense, in particular the right to legal assistance and attorney-client privilege. Specifically, Red Bull complained, among other things, about the (alleged) aggressive behavior of the Commission officials at the beginning of the inspection. They alleged that the officials refused to identify themselves, yet demanded access to the management and prevented an employee from contacting the security service. In addition, it was claimed that Red Bull employees were initially prohibited from contacting an external lawyer; only after 45 minutes were they reportedly allowed to do so under supervision. The company further accused the Commission of arbitrarily damaging its reputation by publishing a press release naming Red Bull during the ongoing searches. In this respect, too, the General Court refused to examine the substance of the allegations: "It must be noted that the conduct alleged by the applicants, even if proven, cannot call into question the legality of the contested decision."  

The General Court thus dismissed all of Red Bull's pleas and fully confirmed the legality of the Commission's inspection decision. 

Companies should be prepared that competition authorities need to fulfill a low threshold when deciding to carry out a dawn raid. "Sufficiently sound indications" are enough to justify an inspection. The General Court expressly emphasizes that even a single, coherent and substantiated complaint – e.g. from a competitor – may be sufficient, provided that it is substantiated by the Commission's own investigations. 

It is worth noting from a company’s perspective that the General Court has obliged the Commission to disclose the evidence on which the inspection decision is based – while safeguarding legitimate confidentiality interests, for example by granting access only to legal counsel.

For procedural reasons, the General Court did not rule on the allegedly rough manner in which the inspection was carried out, which the Commission largely denied. As a result, it remains unclear whether inspections have actually become "rougher" in comparison with the past. 

Ultimately, in practice, the key question appears to be which legal remedies companies can use to challenge the conduct of dawn raids in court. The General Court’s judgment makes clear that the manner in which the dawn raid was conducted cannot simply be challenged in an action for annulment against the inspection decision itself; a separate application must be initiated. However, as the General Court explains 

in its decision  Casino, Guichard-Perrachon and AMC v. Commission, EU law provides various legal remedies for this purpose:

Actions for annulment are also possible against actions taken following the inspection decision, in particular during the course of the search, but only if the subject matter of the action concerns acts with binding legal effects that are capable of affecting the interests of the applicant by clearly altering its legal position (e.g., a request for protection of communications between lawyer and client rejected by the Commission). 

Another possible and particularly relevant (provisional) legal remedy is the application for suspension of the inspection measures (cf. Art. 278 TFEU) within the framework of the procedure under Art. 157(2) of the Rules of Procedure of the General Court. However, this must also relate to measures with binding legal effects. 

In addition, companies can later challenge certain actions taken during a previous dawn raid by bringing an action for annulment against the Commission's final decision (imposing a fine) concluding the proceedings (see General Court judgment Nexans France and Nexans v. Commission from 2012, para. 132), which may lead to retroactive prohibitions of the use of evidence and thus also to possible reductions in fines. 

Last but not least, it is conceivable that an action for annulment could be brought against a sanction imposed by the Commission under Article 23(1)(c) to (e) of Regulation No. 1/2003 for obstructing the dawn raid on the grounds that the measure that the company is alleged to have obstructed was itself unlawful. However, one should be wary of provoking such sanction decisions just for the purpose of being entitled to then have it reviewed in court individually and, in case of doubt, should rather comply with the measures in the specific situation. 

In any case, the judgment of the General Court leaves no doubt that the threshold for antitrust dawn raids, including the requirements for justification and evidence, is comparatively low. It therefore remains crucial for companies to know their rights and actively exercise them: The judgment also confirms that companies can effectively have the legality of the measures reviewed by the courts both in advance and during the course of the proceedings, provided that certain procedural particularities are observed.

Furthermore, the General Court’s ruling confirms that disparagement campaigns by market leaders can also constitute abuse within the meaning of Article 102 TFEU outside the pharmaceutical industry (see Commission Decision Teva Copaxone from 2024).