European Commission’s Investigative Powers In Dawn Raids Clarified by European Court of Justice

Author: Meri Vanhanen

Competition authorities have the power to conduct competition dawn raids, i.e. unannounced inspections on companies, if there is a suspicion of a cartel or other activity restricting competition. In Finland, dawn raids are conducted by the Finnish Competition and Consumer Authority and/or the European Commission. In an interesting judgment of 16 July 2020 in case C-606/18 P Nexans France and Nexans v Commission, the European Court of Justice (the “ECJ”) clarified certain aspects regarding the Commission’s investigative powers in competition dawn raids.

To provide some background, in 2014, the Commission found 11 producers of underground and submarine high voltage power cables, including the present appellant Nexans, guilty of operating a cartel and imposed fines totalling EUR 302 million. In Nexans’ view, however, there was no legal basis for the inspection and the Commission was not authorised to continue the inspection of the seized documents at its own premises.

The ECJ dismissed Nexans’ appeal against a General Court judgment which had upheld the EUR 70.6 million fine imposed by the Commission.

• Copying data without prior examination. Nexans claimed that the Commission was not entitled to make copies of a hard drive and certain emails without carrying out a meaningful examination of these documents beforehand. Nexans argued that the principle of legal professional privilege was jeopardised due to the mass copying of data without prior examination as to whether the data was relevant to the subject matter of the inspection. Indeed, Nexans claimed that the Commission’s powers of investigation were to be interpreted narrowly.

The ECJ is of the view that although the Commission’s powers of investigation are strictly circumscribed, that does not mean that they must be interpreted narrowly. Companies’ rights are safeguarded when the Commission copies their data, even without a prior examination, and then assesses whether the data is relevant to the subject matter of the inspection in strict compliance with the companies’ rights of defence.

• Continuing the inspection at the Commission’s premises. Nexans also claimed that the General Court had erred in law in finding that the Commission was allowed to remove the copies of data and continue the inspection at its own premises in Brussels. Nexans argued that the inspection should have been carried out at the company’s premises.

According to the ECJ, however, the Commission had the right to continue the inspection at its own premises, thereby avoiding extending the duration of the inspectors’ presence at Nexans’ premises, in the interest of effectiveness and to avoid excessive interference in the company’s operations. An investigation must begin at company premises but does not have to be exclusively conducted there in all circumstances.

The Nexans judgment is of relevance to all EU Member States, including Finland. In this respect, it is good to note that following the 2019 amendments, the Finnish Competition Act now allows for the Finnish competition authority to conduct searches in temporary copies of inspection data at the authority’s own premises.