As is well known, the European Commission has various powers to conduct dawn raids or, as they are properly called, "inspections" on premises so as to facilitate the Commission's investigation of possible breaches of competition law. These powers are contained in Regulation 1/2003 which is the primary legislative instrument relating to EU competition procedure.
On 28 March 2012, the European Commission imposed a €2.5 million fine on Czech energy companies Energetický a prumyslový holding and EP Investment Advisors for obstructing an inspection. It was the first time ever that a fine was imposed for obstruction in the context of emails.
The dawn raid was conducted over three days (24 to 26 November 2009) at the companies' premises in Prague as part of a European Commission competition investigation. On 24 November 2009, after the notification of the inspection decision, the Commission inspectors requested to block e-mail accounts of key persons until further notice. This was done by setting a new password only known to the Commission inspectors. This is a standard measure taken at the beginning of inspections, to ensure that inspectors have exclusive access to the content of email accounts and prevent modifications to those accounts while they are searched. On the second day of the inspection, the Commission inspectors discovered that the password for one account had been modified in the course of the first day in order to allow the account holder to access the account. On the third day, the Commission inspectors discovered that one of the employees had requested the IT department on the previous day to divert all e-mails arriving in certain blocked accounts away from these accounts to a computer server. The company admitted that this procedure had been implemented for at least one e-mail account. As a result, the incoming e-mails did not become visible in the inboxes concerned, they could not be searched by inspectors and their integrity could be compromised.
In essence, the companies failed to block an email account and diverted incoming emails, in breach of their obligations to cooperate with Commission officials during such inspections and to disclose all documents relevant to the investigation. The Commission has power to impose fines for obstruction - Article 23(1)(c) of Regulation 1/2003 enables the Commission to impose a fine of up to 1% of a company's total turnover if the company, intentionally or negligently, produces the required books or other records related to the business in incomplete form during an inspection or refuses to submit to an inspection.
While it may seem a high fine for not blocking an email account, it is a small fine compared to the €38 million fine imposed in 2008 on E.On for breaking a seal which had been fixed to a door where materials were stored overnight during an inspection (see MEMO/10/686) and upheld by the General Court in Case T-141/08.
Joaquín Almunia, the Vice President of the European Commission who is in charge of competition policy, said: "Company information is nowadays essentially stored in IT environments like email systems and can be quickly modified or deleted. This decision sends a clear message to all companies that the Commission will not tolerate actions which could undermine the integrity and effectiveness of our investigations by tampering with such information during an inspection."
The decision is the first time that an obstruction related to emails occurred during an inspection. The clear lesson is that businesses under investigation must be zealous in their compliance with the inspection - which is often difficult to do in the heat and excitement of an unexpected inspection.