The European Court of Justice published three rulings on Thursday, 9 March 2023, related to the investigatory powers of the European Commission, in particular how the Commission makes the decision to carry out ‘dawn raids’ to gather information.
The European Commission made several decisions in February 2017, ordering that a number of French retailers submit to unannounced inspections as per Article 20 of Regulation No 1/2003. There was a suspicion that the retailers were involved in concerted anti-competitive practices and these ‘dawn raids’ were intended to obtain evidence of these practices. The inspections took place at the retailers’ offices and copies of relevant digital files related to their investigation were made by the Commission.
Three of the retailer’s Casino, Guichard-Perrachon, Intermarché Casino Achats and Les Mousquetaires brought actions before the European Court of Justice’s General Court appealing against the Commission’s decisions to carry out the dawn raid inspections. In particular, the retailers were concerned with the reach of the inspections and the fact that the Commission conducted interviews with suppliers before a formal investigation was opened and that these interviews were not recorded. The Commission instead summarised the content of the interviews after the fact and used this as proof of evidence justifying the dawn raids.
In October 2020, the General Court partially annulled the Commission’s decision to require the inspection on the grounds that those inspections compromised the right to the inviolability of the home. However, the General Court rejected the other grounds of appeal largely upholding the decisions of the Commission. The retailers further appealed the decision of the General Court on points of law.
Appeals by the Retailers
Casino’s appeal focused on the requirement of protection against arbitrary interference by public authority with the private activity of an individual. The General Court held that the Commission was not required to record the interviews used to justify the inspections and the summaries of these interviews were sufficient. Casino further claimed that fundamental right to inviolability of the home had been infringed because the dawn raid was not sufficiently limited in powers of inspection or the persons and premises that could be inspected.
Casino also argued that there was no effective remedy available to them when dealing with conduct of Commission inspectors in violation of Article 47 of the Charter of Fundamental Rights of the European Union.
Intermarché also appealed the decision of the General Court on the basis that there was an absence of appropriate remedies against the conduct of the inspections. They further claimed that the General Court erred in law by allowing the summaries of the interviews conducted with suppliers to be used as sufficient evidence to justify the dawn raids. The decision made by the Commission of the basis of those interviews infringed the right to inviolability of the home enshrined in EU law. Intermarché further claimed that the General Court erred by stating that the right to inviolability of the home did not demand that the Commission limit the duration of an inspection.
Les Mousquetaires’ appeal followed similar grounds claiming that the General Court erred in law by failing to state reasons as to why they considered that the legal remedies available against the conduct of inspectors were effective. Les Mousquetaires also claimed that the General Court failed to properly classify the procedural phase of the investigation as it had ruled that this phase took place ‘before the adoption of any measure alleging that an infringement has been committed’. Therefore the General Court had held that when the supplier interviews were carried out they were not subject to the requirements of Regulation No 1/2003.
The rulings of the European Court of Justice on these appeals, published on 9 March 2023, partially set aside the earlier rulings of the General Court but importantly annul the decisions of the Commission to carry out the dawn raids on the French retailers.
The Court has held that the Commission must record all interviews that it conducts in relation to an investigation regardless of the stage at which those interviews are conducted. Following from this, the Court concluded that the failure of the Commission to record interviews taken before the formal opening of the investigation into the conduct of the French retailers meant that they did not have sufficient indications of anti-competitive conduct to make the decisions to order the dawn raid inspections.
The Court held that the General Court had erred in law in determining that the summarised interviews sufficiently indicated an infringement of EU competition law and therefore justified further inspection. The General Court should have taken into consideration that the objective of the Commission in carrying out those interviews was to obtain information relating to the subject matter of the investigation.
This ruling is important in understanding the scope of dawn raid investigations. In this case the Commission was found to be at fault for not conducting their investigation properly before making the decision to carry out inspections of the retailers’ premises. This decision by the European Court of Justice will likely cause investigatory bodies across the EU and in the UK to carefully consider how they conduct investigations and perhaps tighten working practices to avoid accusations of procedural impropriety.