The Spanish Markets and Competition Commission (Comisión Nacional de los Mercados y la Competencia) ("CNMC") is increasingly resorting to WhatsApp messages in the course of its investigations to prove the existence of secret cartels. According to the CNMC, these mobile phone messaging systems are particularly important in antitrust authorities' investigations as they provide competitors with a very swift means of exchanging commercially sensitive information.
As well as WhatsApp messages, unconsented recordings of mobile phone conversations, made by one of the participants, are also being used more frequently as evidence in investigations.
However, the increased use of these systems of communication and the antitrust authorities' access to employees' mobile devices pose a significant challenge for companies when it comes to designing their compliance programmes. Companies must take into account the information accessible via those devices when monitoring and auditing their regulatory compliance programmes, and they must issue clear instructions to employees on their use of company mobile phones.
Two recent rulings by the Audiencia Nacional1 and the General Court of the European Union2 (the "General Court") are particularly significant on the matter as they reinforce the CNMC's and the European Commission's investigative powers in the context of dawn raids, by confirming: (i) the ability to access the mobile phones of employees of companies that are being investigated by the CNMC; and (ii) the validity as evidence, in a European law context, of recordings of employees' telephone conversations obtained in the course of a European Commission investigation.
We analyse those court rulings below as well as the practical implication that they have on companies that face the risk of inspections of this kind.
1. Access to the mobile phones of employees in the context of CNMC investigations
On 5 November 2013, the CNMC conducted a dawn raid at the business premises of Almendra y Miel, S.A. ("AyM"), a company that manufactures turrón (traditional Spanish Christmas confectionary items) in Spain. In the context of that investigation, the CNMC obtained a series of WhatsApp messages in which an employee of AyM and another, competing, company expressed the need to adopt a common stance in relation to a client present in the white-label turrón distribution market in Spain.
AyM and the employee lodged a contentious-administrative appeal that, among other things, requested the CNMC to annul the inspection order and the dawn raid inspection report that the CNMC had issued. The CNMC did not admit the appeal3 on the basis that it failed to meet certain procedural requirements.
A further contentious-administrative appeal was lodged before the Audiencia Nacional against the CNMC's decision not to admit the former appeal; this second appeal was dismissed on 18 July 2016.
During the appeal, the employee claimed that the CNMC inspection order did not entitle inspectors to check his mobile phone in the course of dawn raid on the company's business premises; however, the Audiencia rejected that claim on the basis that the order authorised the inspectors to inspect the company's employees' physical and electronic logs, "which included their mobile phones".
The employee also argued that his mobile phone, which also contained private information, was examined by the CNMC's inspectors without him being present. However, the Audiencia Nacional pointed out that he had not provided any evidence whatsoever to back up his claim. Furthermore, it indicated that the dawn raid inspection report had been signed by the employee without him having expressed any opposition or mention to that fact. The Audiencia went on to explain that the inspection report states that, before inspecting the employee's mobile phone, he was asked as to which documents were personal; those documents the CNMC then discarded when examining the remaining information later in his absence.
The above, as well as other considerations, led the Audiencia Nacional to dismiss the appeal lodged, thus confirming the CNMC's decision not to admit the prior appeal.
It is worth highlighting that the WhatsApp messages collected during the inspection of AyM were ultimately used as conclusive evidence in the CNMC's Decision4 dated 7 April 2016 in which it imposed a €11.6 million fine on AyM and other manufacturers of turrón for their involvement in a market sharing agreement regarding the main white-label turrón distributors in Spain.
2. The validity of recordings of phone conversations as evidence in the context of European Commission investigations
In its Decision of 27 November 20135 the European Commission fined four shrimp traders a total of €28 million for their involvement in a price fixing cartel.
Kok Seafood, one of the companies involved in the cartel, secretly recorded a series of telephone conversations with Heiploeg, another of the cartel members. Those audio recordings were found by the European Commission in the course of a dawn raid at the business premises of Kok Seafood.
Heiploeg lodged an appeal against the European Commission's Decision on the basis that Kok Seafood's recordings were inadmissible as evidence against it as Kok Seafood had made those recordings illegally.
However, the General Court argued that the European Commission had obtained those recordings lawfully, in the course of a dawn raid inspection at Kok Seafood's business premises.
Heiploeg went on to claim that Kok Seafood's recordings breached its right to respect for private and family life set forth in article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms ("ECHR"). The Court therefore had to assess whether the European Commission was able to use as valid evidence material that a third party (Kok Seafood) had obtained illegally, albeit collected lawfully by the European Commission (in the course of an inspection).
The General Court argued that evidence that had been obtained illegally (by Kok Seafood) but found lawfully (by the European Commission) could be used as evidence provided that the evidence: (i) did not violate Heiploeg's right to a fair hearing (article 6 ECHR); and (ii) was not the only evidence to charge Heiploeg with anticompetitive conduct6.
In this regard, the General Court argued that: (i) Heiploeg had been given the opportunity to review and challenge the authenticity and the use of the audio recordings in the context of the European Commission's investigation; and (ii) the European Commission had invoked other evidence as a basis for its decision to impose a penalty on Heiploeg, not only the telephone conversations.
Therefore, the General Court concluded that the recordings of telephone conversations that the European Commission had obtained during its inspection of Kok Seafood's business premises could be used as evidence against Heiploeg, despite Kok Seafood having made them illegally. As a result, as well as for other reasons, the General Court decided to dismiss Heiploeg's appeal and confirmed the lawfulness of the European Commission's Decision.
- The Audiencia Nacional has confirmed the CNMC's powers to access the mobile phones of employees of inspected companies and the information on those devices.
- Under European law, audio recordings of telephone conversations are admissible as evidence provided that: (i) the European Commission has obtained them lawfully; (ii) other evidence has been brought to bear in the decision to impose penalties for breaches of competition law; and (iii) the investigated undertaking is not deprived of its right to review the recordings and challenge the validity thereof in the context of the investigation.
- Companies must take these aspects into consideration when monitoring and auditing their compliance programmes and they must implement and circulate clear and precise instructions on the use of systems of communication from company mobile telephones.