The European Court of Human Rights rules dawn raids in Czech cartel violated fundamental rights

The European Court of Human Rights (“ECHR”) recently ruled that a dawn raid carried out by the Czech Competition Authority (“CCA”) violated the privacy rights of the Czech company under investigation, Delta Pekarny, as guaranteed by the European Convention on Human Rights. The significance of the ruling may stretch beyond Czech borders as it may imply that other Member States will also have to set more limits on the powers of their respective national competition authorities, in order to guarantee a more effective protection of fundamental rights.

Background

The CCA carried out a dawn raid at the premises of Delta Pekarny on 19 November 2003 in relation to possible anti-competitive agreements with two of its competitors in determining the sales prices of bakery products.

The inspection was initiated on the basis of the CCA's notification of administrative proceedings which only included a general reference to the relevant statutory provisions, and not a formal decision which would have been subject to judicial supervision. The Czech antitrust inspectors requested access to Delta Pekarny's documents, and particularly to computers and e-mail correspondence of four company representatives with the intention to access their entire mail boxes. One of the representatives refused to grant full access to the correspondence as it included private messages unrelated to the subject matter of the inspection. As a result, the CCA imposed a fine of 300 000 CZK (€11,500) on Delta Pekarny for obstructing an investigation by the CCA antitrust officials.

Rulings from Czech national courts

Delta Pekarny challenged the CCA’s decision all the way up to the Czech Constitutional Court. Delta Pekarny argued that the Czech rules violated its right to privacy. It relied on a previous decision of the ECHR, where the ECHR set out specific requirements that must followed by the authorities conducting dawn raids, such as a supervision by an independent court and a prior judicial authorisation .

The Czech courts dismissed Delta Pekarny claim for violation of its right to privacy guaranteed by Article 8 of the European Convention of Human Rights and ruled the “Colas decision” was not applicable to Delta Pekarny’s case. The Czech courts highlighted that, according to Council Regulation No 1/2003 an ex post judicial review mechanism was sufficient for the legality of dawn raids. Therefore, according to the Czech courts, as it was possible under the Czech law to challenge the legality and the enforcement of an inspection carried out by the CCA, the Czech rules did not breach Article 8 of the European Convention of Human Rights. The Czech courts considered that a prior judicial authorisation was not necessary in dawn raids because the public interest in exposing anti-competitive behaviour prevailed over fundamental rights. The Czech courts, therefore, ruled that an interference with Delta Pekarny’s right to privacy pursued a legitimate aim and was proportionate since the CCA did not go beyond the purpose of the investigation and ex post legal remedies were available to Delta Pekarny in any case.

The ECHR’s ruling

After exhausting all domestic legal avenues, Delta Pekarny turned to the ECHR in 2011. It argued that the Czech legislation allowing the CCA to enter company premises and copy all documents and correspondence did not provide sufficient procedural guarantees for the conduct of dawn raids.

In its assessment of Delta Pekarny’s arguments, the ECHR balanced the company's interests with the public interest to safeguard competition in the market. The ECHR considered that although dawns raids and subsequent seizure of documents are deemed necessary to collect evidence of anti-competitive behaviour, the proportionality test requires sufficient safeguards against abuse of power by the competition authorities. According to the ECHR, the competition authorities must be subject to judicial oversight and the purpose of the investigation at hand should be clearly defined. The ECHR further observed that if national legislation does not provide for a prior warrant from a national judicial authority, this can be offset by an effective ex post judicial control and remedies.

In the case at hand, the ECHR considered that legal remedies under the Czech law were not effective since judicial review was only available for ongoing interference during a dawn raid. Furthermore, at no time throughout domestic proceedings, were the enforcement of the CCA’s power to assess the merits, length and scope of the inspection subject to judicial review. Consequently, the ECHR ruled that the dawn raids carried out by the CCA at the company’s premises without a prior authorisation from an independent court and without effective ex post judicial control broke the fundamental right to private life.

Conclusion

This judgment is of significance not only to Czech companies that may be subjected to dawn raids from the CCA, but also to companies in other EU states where the competition legislation does not explicitly require competition authorities to obtain prior court approval before they conduct a dawn raid or fails to provide for an effective ex post judicial review.

The ECHR has placed significant emphasis on the importance of judicial oversight, whether prior to or after dawn raids, and this case illustrates that the competition authorities do not enjoy unlimited discretion while conducting dawn raids. It is essential that the dawn raid proceedings of the competition regulators do not infringe upon a company’s right to a fair trial, right to privacy and that they are subject to appropriate judicial oversight.