The Commission should think twice before conducting a dawn raid. The General Court partially annulled three Commission decisions ordering dawn raids at the premises of French supermarkets for a lack of sufficiently strong evidence with regard to one of the suspected anticompetitive practices. In addition, the General Court clarified that interviews held with suppliers prior to the issuing of a dawn raid decision can be used as evidence, even when these interviews have not been recorded.
However, raided companies may claim protection against the seizure of certain data that harms the private lives of their employees. The setting up of a separate virtual data room would be one way to ensure adequate protection in this regard.
Companies should therefore keep a close eye on whether the Commission’s collected evidence, questions posed and press releases issued afterwards, are in line with the subject matter and purpose of the dawn raid decision. Acting early may help turn the tables for the remainder of the proceedings.
Lack of sufficiently strong evidence: no dawn raid allowed
The Commission issued the dawn raid decisions because it suspected the French supermarkets Casino, Intermarché and their joint purchasing alliance INCA Auchats of participating in a concerted practice. The suspected concerted practice concerned information exchanges about (i) discounts obtained on the supply markets and (ii) future commercial strategies. The supermarkets appealed these decisions, arguing that the dawn raids infringed their right to inviolability of the home.
The General Court ruled that a dawn raid does not infringe the right to inviolability of the home if the suspicion of an antitrust infringement is supported by sufficiently strong evidence. A distinction must be made between evidence that is sufficiently strong to prove a concerted practice, and evidence that is sufficiently strong to justify dawn raids for gathering such proof. Necessarily, the threshold for the latter is lower than for the former.
In relation to the suspected information exchange concerning future commercial strategies, the Commission largely based its evidence on a single document. However, that document made clear that the information exchanged consisted of genuinely public information and could therefore not serve as sufficiently strong evidence.
As a result, the General Court annulled the dawn raid decisions relating to suspected information exchanges on future commercial strategies. With that, the Commission may not use the evidence it gathered during its investigation for that purpose. This might be problematic for the remainder of the investigation, as the formal probe issued last year interestingly only seems to refer to alleged information exchanges on future commercial strategies – and thus not on discounts obtained on the supply market. Even more interesting, Casino filed another appeal at the General Court just four days before this judgment was rendered. Details of Casino's new appeal are not available, but it is understood to relate to certain requests for information it received in the formal probe, of which the dawn raid has now been found unlawful.
It is not yet clear whether the Commission intends to appeal the General Court’s ruling. For now, however, the ruling seems to affect the Commission’s investigation as a whole.
Requirement to record interviews does not apply prior to dawn raids
The French supermarkets further submitted that the Commission had acted unlawfully by not recording the interviews it carried out with suppliers prior to its dawn raid decisions. However, the General Court made clear that the requirement to record interviews does not apply prior to the formal opening of an investigation by the Commission, e.g. a decision ordering dawn raids. According to the General Court, the willingness of witnesses to provide information and report infringements would be negatively impacted if such requirement were in place. Therefore, the Commission was permitted to use the interviews carried out with suppliers before it opened the investigation as evidence from the date on which they took place.
Private lives of employees and managers matter
Intermarché also argued that the Commission did not respect their employees’ right to a private life. The General Court held that in general raided parties may indeed request the Commission to not seize or return certain data that harms the private lives of their employees or managers. The Commission’s decision refusing such request can be challenged before the General Court. However, as the French supermarkets failed to make a sufficiently clear and precise request, the Commission did not have to take a decision refusing their request. Since there was no decision to challenge, the General Court considered this challenge inadmissible.
However, two recent EU court orders shed light on how the Commission could effectively deal with claims on grounds of privacy. In the context of two ongoing antitrust investigations, Facebook pushed back on the data it had to provide following a number of information requests by the Commission. According to Facebook, the vast majority of the data requested related to wholly irrelevant and/or personal documents. To protect the right to privacy pending the General Court’s ruling on this claim (see cases T-451/20 and T-452/20), the General Court’s President has ordered an ad hoc procedure for the examination of documents likely to contain sensitive personal data.
Under this procedure, a separate virtual data room is to be set up for the documents Facebook has identified as to likely contain sensitive personal data. This data room will be accessible only to a limited number of Commission officials, in the presence of an equivalent number of Facebook’s lawyers. In case of a disagreement between the officials and lawyers on the classification of a document, it is for the Director for Information, Communication and Media at DG Competition to decide upon the matter before the document can be placed in the Commission’s file.
Companies should act pre-emptively during dawn raids. It is up to them to closely scrutinise the subject matter and purpose of the dawn raid decision so as to verify whether the Commission, in light of the collected evidence and questions posed during the dawn raid as well as the issued press release after the fact, has sufficiently strong evidence to suspect an antitrust infringement.
In addition, companies should ensure to make a clear and precise request to the Commission for the protection of the private data of their employees or managers. With more and more privacy related claims ending up at the EU courts, the above-mentioned ad hoc procedure may likely resonate in a permanent mechanism in antitrust proceedings.
This article was published in the Competition Newsletter of November 2020. Other articles in this newsletter: