The legality of on-site inspections (also known as dawn raids) carried out by the Office for the Protection of Competition at the premises of betting companies in early 2019 is currently under judicial review. Although the competent regional court declared the inspections unlawful and stated that the office might have become an instrument for settling scores between competitors, the decision is not yet final as it has been appealed by the office.(1)
In March 2019 the office conducted dawn raids at the premises of two betting companies, Fortuna and Tipsport, which were alleged to have participated in anti-competitive behaviour. Fortuna contested the legality of the dawn raids before the Brno Regional Court, claiming that they constituted a blatant misuse of the office's investigative powers as the inspections were carried out merely based on a competitor's complaint.
The Brno Regional Court ruled in favour of Fortuna, stating that it could not be excluded that the complaint had been submitted with abusive intent to discredit a competitor. According to the court, the documents seized from Fortuna's premises by the office were inadmissible as evidence of anti-competitive behaviour.
The office appealed against this decision, stating that the investigations were underpinned by substantiated evidence. Thus, the outcome of the dispute remains pending.
For its part, the office maintains that dawn raids are an efficient tool for investigating possible competition law infringements. Moreover, it recently published an information letter on dawn raids and intervention actions on its website.(2) Besides good practices concerning the behaviour and rights and obligations of investigated companies, the information letter provides statistics and an overview of the most common legal grounds brought by companies contesting the legality of dawn raids.
The statistics clearly indicate that the office is increasingly using dawn raids as part of its enforcement practices. In addition, at the office's annual conference in November 2019, its vice chair stated that the office carried out 23 dawn raids in 2018 and had already carried out 22 dawn raids by the end of October 2019. Moreover, the courts had found only one of its on-site inspections unlawful (ie, the Fortuna case).
According to the information letter, the most common legal grounds for contesting the legality of on-site inspections vary, but companies often object to:
- unjustified allegations of infringement;
- ambiguous or overly broad reasons for an investigation; and
- unauthorised seizures of documents.
It is therefore of the utmost importance that companies are aware of their rights and obligations during a potential dawn raid so that they can later contest the raid's lawfulness, if necessary.(3)
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(2) Available in Czech here.