The EC’s principal powers of investigation under Regulation No. 1/2003 are the power to require companies to provide information (article 18), and the power to conduct voluntary or mandatory on-the-spot investigations (dawn raids) on company premises (article 20) and to inspect employees’ homes and cars and suchlike (article 21). It also has the power to take voluntary statements from natural or legal persons under article 19.
Generally, the EC has a wide discretion to collect any information that it considers necessary. The EC may also request a member state’s NCA to undertake any investigation or other fact-finding measure on its behalf (article 22). These powers are, however, subject to the general principles of proportionality and the rights of the defence. Certain documents will be protected by the principle of lawyer-client confidentiality (or legal professional privilege, LPP), although what this covers is limited and is ultimately for the courts to decide. In September 2010, the ECJ in Akzo Nobel confirmed its decision in AM&S (1982), which excluded the advice of in-house legal counsel from LPP. The ECJ clarified that, for the confidentiality of legal advice to be protected by LPP, such communication must emanate from independent EEA-qualified lawyers, and that the requirement of independence means the absence of any employment relationship. The adherence of many in-house lawyers to professional and ethical obligations was not sufficient to render them independent from their employers for this purpose. National rules may, however, continue to recognise LPP for in-house lawyers (see, eg, the UK and Netherlands chapters).
Information requests (‘article 18 requests’ under Regulation No. 1/2003) are widely used by the EC as a means of obtaining all necessary information from undertakings and associations of undertakings. A company that is the subject of an investigation can receive several such requests. Information requests may also be addressed to third parties, such as competitors and customers. These requests are addressed in writing to the companies under investigation and must set out their legal basis and purpose, as well as the penalties for supplying incorrect or misleading information. The requests must also be adequately reasoned. The statement of reasons cannot be excessively brief, vague or generic, having regard in particular to the length of the questions asked (ECJ, Heidelberg Cement (2016)).
The EC can either issue simple information requests or require undertakings and associations of undertakings to provide all necessary information by way of a formal decision. The addressees of a formal decision are obliged to supply the requested information. This is not the case for simple information requests. The EC’s choice whether to issue a simple information request or a formal decision needs to be proportionate (ECJ, Schwenk Zement (2014)). With respect to non-EU companies, the EC is often able to exercise its jurisdiction by sending the information request to an EU subsidiary of the non-EU parent company or group. Otherwise, it sends out letters requesting information, to which the non-EU addressees usually respond.
Undertakings or associations of undertakings that supply incorrect or misleading information in reply to a simple information request or incorrect, misleading or incomplete information to a formal decision, or who do not supply information within the time limit set by a formal decision, are liable to fines that may amount to up to 1 per cent of their total annual turnover.
The EU courts have recognised a privilege against self-incrimination, albeit one limited in scope. In Orkem (1989), the ECJ held that undertakings are obliged to cooperate actively with the ECs investigation. The Court also observed, however, that the EC must take account of the undertaking’s rights of defence. Thus, the EC may not compel an undertaking to provide it with answers that might involve an admission on its part of the existence of an infringement that it is incumbent on the EC to prove. In this respect, the Court distinguished between requests intended to secure purely factual information, on the one hand, and requests relating to the purpose of actions taken by the alleged cartel members on the other. Whereas the former type of questioning is generally permitted, the latter infringes the undertaking’s rights of defence. The approach taken in Orkem was confirmed in Mannesmannröhren-Werke (Court of First Instance 2001, now the General Court (GC) after the entry into force of the Lisbon Treaty) and Tokai Carbon (GC 2004, ECJ 2006). The European courts have refused to acknowledge the existence of an absolute right to silence, as claimed by the applicants by virtue of article 6 of the European Convention on Human Rights. However, the GC held in Tokai Carbon (2004) that the EC may not request undertakings to describe the object and the contents of meetings when it is clear that the EC suspects that the object of the meetings was to restrict competition. The same applies to requests for protocols, working documents, preparatory notes and implementing projects relating to such meetings. On the other hand, in Tokai Carbon (2006), the ECJ clarified that undertakings subject to a EC investigation must cooperate and may not evade requests for production of documents on the grounds that, by complying with the requests, they would be required to give evidence against themselves.
Dawn raids may be conducted on two grounds: pursuant to a written authorisation only (article 20(3) of Regulation No. 1/2003) and pursuant to a formal EC decision (article 20(4)). In an investigation made pursuant to a decision, the company must allow the investigation to proceed, and fines may be imposed for refusal to submit to the investigation. However, if the investigation is by request only, the company is not obliged to comply but is asked to submit to the investigation voluntarily.
According to the EC’s Explanatory Note on Inspections Pursuant to Article 20 (4) of Council Regulation 1/2003, when carrying out a dawn raid, EC officials may:
- enter the premises, land and means of transport of undertakings or an association of undertakings;
- examine the books and other business records of the company (including computers, private devices used for professional purposes, external hard drives and cloud-computing services) falling within the scope of their investigation;
- take copies of books and records; and
- require on-the-spot oral explanations of facts or documents relating to the subject matter and purpose of the inspection.
The EC may also seal any business premises and books or records for the time necessary for the investigation. The breach of a seal is considered a violation of the undertakings’ obligation to cooperate and can lead to significant fines, with a fine of €38 million imposed on E.ON confirmed by the GC in 2010 and by the ECJ in 2012, and fines of €8 million imposed on Suez Environnement and Lyonnaise des Eaux in 2011. The Czech company EPH was also fined €2.5 million in 2012 for obstructing the EC’s inspection. The EC can also - subject to obtaining a court warrant - inspect private premises, land and means of transportation, including the homes of directors, managers and other members of staff of the undertaking concerned, if there is reasonable suspicion that books and other records related to the business and to the subject matter of the inspection are located there. During the investigation procedures in Marine Hose (2009), the EC carried out an on-the-spot investigation in a private home.
EC officials have no power of forcible entry under Regulation No. 1/2003. They may, however, rely on the cooperation of member states’ NCAs, who may use force to enter premises according to national procedural law. Forcible entry may require a court warrant under the applicable national law. In practice, officials will have obtained such a warrant before conducting the search. Under Regulation No. 1/2003, a national court called upon to issue such a warrant cannot call into question the legality of the EC’s decision or the necessity of the inspection. It may only assess whether the EC decision is authentic and verify that the coercive measures envisaged are neither arbitrary nor excessive having regard to the subject matter of the inspection. To that end, it may ask the EC for detailed explanations, in particular on the grounds the EC has for suspecting infringement of article 101 TFEU, as well as on the seriousness of the suspected infringement and on the nature of the involvement of the undertaking concerned. It cannot demand that it be provided with the information contained in the EC’s file.
The EC team conducting a dawn raid usually consists of between five and 10 officials, of whom at least one is likely to be a technical expert who will aim to concentrate on electronically stored information. The EC officials are normally accompanied by two or three officials from the relevant NCA assisting the EC in its investigation.
As is the case for information requests, the undertaking concerned is only required to cooperate if the EC has taken a formal decision. The EC usually issues such a decision in the case of a dawn raid. The decision must specify the subject matter and the purpose of the inspection, so that the undertakings understand the scope of their duty to cooperate (ECJ, Nexans (2014)). Apart from relying on the cooperation of national authorities to gain forcible entry, the EC may also impose periodic penalty payments if the undertaking does not submit to an inspection ordered by a EC decision. These penalty payments may amount to up to 5 per cent of the average daily turnover in the preceding business year.
The EC has the power to ask for on-the-spot oral explanations on facts or documents relating to the subject matter and purpose of an inspection from any representative or member of staff of a company and to record the answers. The company must cooperate actively and ensure that the most appropriate staff of sufficient seniority and knowledge of operations are available to deal with the enquiries. The EC may also compel an undertaking to provide copies of pre-existing documents and factual replies.
As is the case for information requests, a company has certain fundamental rights of defence during a dawn raid, including:
- the right not to be subject to an unauthorised investigation;
- the right to legal advice;
- the right not to be required to produce legally privileged documents (limited to correspondence with EEA-qualified external counsel - see above); and
- the right not to be required to incriminate itself (see above).
In the Deutsche Bahn case (2015), the EC had informed the officials conducting the dawn raid of another complaint against Deutsche Bahn, which was not the subject of the investigation at hand, and was not mentioned in the warrant. The ECJ ruled in 2018 that the use of the documents relating to the suspected infringements of which the officials had been informed (but that were not mentioned in the warrant) violated the right of defence of the companies involved. The Court clarified the Deutsche Bahn case finding that the conduct of an initial unlawful dawn raid will only be relevant to questioning the validity of follow-up inspection decisions based on the information resulting from the initial unlawful raid, rather than previous decisions (including the decision which authorised the initial raid itself) (Alcogroup and Alcodis (2018)).
Power to take statements
In addition, the EC has the power to take statements from any natural or legal person on a voluntary basis only (that is, such persons cannot be summoned to testify). This power is additional to the EC’s power to ask for on-the-spot oral explanations during a dawn raid.
Where the EC takes statements or conducts interviews, the recent ECJ decision in Intel (2017) has clarified that there is no distinction between ‘formal’ and ‘informal’ interviews and has made clear that the EC must record any interview it conducts for the purpose of collecting information relating to the subject matter of an investigation. The ECJ set a high bar to establish that the EC’s procedural breach provides a sufficient basis for annulling the EC’s decision. A firm seeking to rely on non-disclosure must show that it did not have access to exculpatory evidence and that it could have used such evidence for its defence.
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