On 5 October 2020, the General Court of the European Union (“General Court”) declared that the decisions made by the European Commission (“Commission”) in 2017 authorising a dawn raid against three French supermarket chains were in part illegal.
The Commission suspected that the undertakings Casino, Les Mousquetaires, Intermarché and Intermarché Casino Achats, a joint subsidiary of Casino and Intermarché, had engaged in anticompetitive practices and thus violated Article 101(1) TFEU. According to the Commission, the undertakings had exchanged information about various data that was sensitive from a competition perspective, including prices, discounts as well as future commercial strategies and developments since 2015. As part of its investigation, the Commission conducted a dawn raid at the headquarters of said undertakings and made copies of, inter alia, laptops, mobile phones and other storage media.
In response to these decisions, the undertakings brought actions for annulment before the General Court. They claimed in particular that (i) the Commission had failed to state sufficient reasons to conduct the dawn raids as regards the subject matter of the inspection, (ii) the dawn raids infringed their right to inviolability of the home, and (iii) the seizure and creation of copies infringed the right to privacy and data protection.
The decision against Les Mousquetaires (case T-255/17) is of particular importance for companies, as the General Court, in its legal assessment, commented on how an undertaking must act during an inspection in order to preserve its option to seek legal protection by way of a subsequent action for annulment.
General Court, decisions of 5 October 2020 in the cases T-249/17, T-254/17 and T-255/17.
The General Court has, at least in part, found in favour of the applicant undertakings with regard to the right to inviolability of the home/business premises, as the Commission had partly failed to show that it had sufficiently strong evidence to suspect the alleged exchange of information. In fact, the requirements for stating reasons to justify a decision ordering a dawn raid are not that high. Such a decision merely requires a suspicion (and, hence, a factual situation that is per se imprecise) that a violation took place. It is crucial, however, that the dawn raid does not result in a so-called “fishing expedition”, i.e. the subject matter and goals of the inspection must not be defined too broadly and may not merely serve the purpose of discovering (new) facts. Furthermore, the requirements are not high with regard to the nature of the facts that have given rise to the suspicion either. For example, the existing circumstantial evidence need not qualify as evidence (see, for example, General Court, decision of 20 June 2018, case T‑325/16 – České dráhy v Commission). Instead, the circumstantial evidence or source referred to by the Commission must merely be sufficiently strong or sufficiently credible.
These requirements were met by the circumstantial evidence that was presented by the Commission to justify the suspicion that information had been exchanged regarding discounts and prices, but not with regard to the suspected exchange of information about future commercial strategies and developments of the undertakings. The Commission believed that the circumstance that the director of Casino attended a convention with its competitor Intermarché constituted sufficient evidence of such an exchange. In the opinion of the General Court, however, this did not suffice as circumstantial evidence of the alleged antitrust violation in the case in question for several reasons. Firstly, the director had not attended the convention in his capacity as director of Casino, but as co-director of a joint subsidiary. Secondly, the alleged exchange of information during that convention took place in the context of a round-table discussion intended for the general public, various journalists from specialist magazines were present, and the information was of a very general nature.
By contrast, the application for annulment of the seizure of documents, which, in the opinion of the applicant undertakings, infringed their employees’ right to privacy, was declared inadmissible as it did not constitute the appropriate subject matter for an action. According to the established case law of the European courts, such an application can only be based on an act of binding legal effect, i.e. an act capable of adversely affecting the applicant’s interests by clearly changing the applicant’s legal position. Consequently, the situation would have been different if a complaint had been made about the inadmissibility of the seizure during the inspection, which the Commission had ignored and, therefore, had implicitly rejected the request for protection. The same applies to the request for the surrender of the documents concerned, which has not yet been decided upon by the Commission and probably is also too vague for a decision to be made.
These judgments are an example that undertakings are not without defence in the face of a decision of the Commission to conduct a dawn raid. Even though the Commission continues to have a broad margin of discretion when evaluating circumstantial evidence and issuing such decisions, it turns out that the European courts will be looking into the details and will demand that decisions ordering a dawn raid should not be made lightly without any initial suspicion that is based on sufficient evidence.
These judgments are part of a series of partial annulments which are based on too broadly defined subject matters for the dawn raids. Thus the General Court had already found in the cases of Power Cables (decision of 14 November 2012, case T‑135/09, paragraphs 72 et seq., 91 – Nexans France and Nexans v Commission) and Rail Passenger Transport (decision of 20 Jun 2018, case T‑325/16, paragraphs 73 et seq. – České dráhy v Commission) that the circumstantial evidence only covered parts of the subject matter of the investigation. The European Court of Justice has also already fully annulled two Commission decisions ordering a dawn raid (cf. decision of 18 June 2015, case C‑583/13, paragraph 66 – Deutsche Bahn v Commission) because said decisions were based at least in part on information that had been obtained illegally.
In light of the strong decline in leniency applications, these judgments are likely to become important in practice. After the introduction of the leniency programme, a large amount of evidence that gave rise to an initial suspicion of the Commission had generally been provided to the Commission “for free”, as it could be gathered from the leniency applications. However, in the future the Commission will have to conduct its investigations to an increasing extent without such support and, in this context, will have to carefully consider whether it is in possession of sufficiently strong circumstantial evidence.
If, during future dawn raids, undertakings want to preserve the possibility to defend themselves in court against the seizure of data or records that are attributable to the private lives of their employees, they must exercise this right during the actual inspection. They must be rather specific and raise their objections in relation to specific data or records – as is already the case with infringements of the legal privilege (also known as attorney-client privilege). If they raise no or only very general objections, they risk that the removal of such data or records cannot be challenged with an action for annulment before the General Court.