Introduction
Amendments

Employees' privacy adequately protected?
Comment


Introduction

Following a 2013 Constitutional Court decision (for further details please see "Competition Protection Agency issues two long-awaited antitrust decisions"), Parliament has enacted a new regime in relation to antitrust inspections of the Competition Protection Agency.

The agency is now required either to seek a court order or to obtain consent from the undertaking under investigation (and its respective employees) before each investigation. This is in contrast to the previous regime, whereby the agency itself could implement an order on the commencement of an investigation.

The respective amendments to the Prevention of Restriction of Competition Act were adopted on April 28 2014 and came into force on May 7 2014, following publication in the Official Gazettes.

Amendments

Under the new regime, the agency may conduct investigations of undertakings only if it has:

  • a reasoned court order; or
  • the implicated undertaking's consent and, if necessary, the respective employees' consent.

When an investigation is carried out based on a court order, the agency must also ensure that two witnesses of legal age are present.

When applying for a court order, the agency must:

  • present reasonable grounds for its belief that the undertaking has infringed Article 6 or 9 of the act or its EU equivalents (ie, Article 101 or 102 of the Treaty on the Functioning of the European Union); and
  • justify that the investigation will likely reveal evidence that will be important to the respective proceeding.

Should the investigation include an inspection of electronic devices and information stored therein (eg, mobile phones, computers and information stored in the cloud), the agency must also justify that the respective electronic devices will likely contain electronic data that will be important in the proceeding.

The act further specifies that the Ljubljana District Court must issue an investigation order within 48 hours of receiving the agency's completed request, which must include:

  • a definition the of premises, documentation and electronic devices subject to investigation;
  • an explanation of the reasonable grounds for investigation;
  • a list of the evidence and information being sought;
  • a list of circumstances for the use of respective investigative powers and the mode of their use; and
  • a deadline for execution of the investigation.

The amendment also addresses some wording discrepancies and introduces the renumbering of the European treaties introduced with the Treaty on the Functioning of the European Union.

Employees' privacy adequately protected?

It is unclear whether or how the new regime addresses the concerns expressed by the information commissioner or protects the privacy of employees.

The amendment has introduced an interesting discrepancy when it comes to the treatment of employees: where the agency conducts a voluntary investigation, not only is the implicated undertaking's consent required, but also the consent of the respective employees. To the contrary, when an investigation is conducted on the basis of a court order, the act presumes that such an order is addressed to the implicated undertaking and the respective employees are covered under the same order, without an opportunity to challenge it themselves, should they deem that the order violates their privacy rights.

Furthermore, under the new Article 29(5) of the act, the individual employee (ie, the user of the respective electronic device subject to investigation) must give agency officials access to the device, provide all applicable passwords and explain how to use the device.

Under the act, the investigation of such electronic devices must be carried out in a way that:

  • minimally invades the rights of third parties who are not subject to investigation;
  • ensures the protection of information; and
  • ensures that no excessive damages are caused through the prompt exclusion of all unnecessary information or, in cases where the individual using the device has a legitimate reason to protect certain information on the device, by allowing such individuals to be present during the investigation.

Although the act sets some grounds for the protection of employees' privacy rights, there is still uncertainty. Individuals have no legal remedy to resist a court order (to which only the implicated undertaking is a party), and it is unclear how the entitlements defined above can be defended when an agency official is carrying out an investigation.

Applying the Constitutional Court's reasoning on the privacy of dwellings and communications of implicated undertakings as legal persons to individual employees – whose privacy is also considerably affected during an investigation – the enacted solution cannot be regarded as adequate and must be seen as too loose when considering constitutional guarantees.

Comment

The newly adopted amendment addresses the concerns of the Constitutional Court and guarantees that the agency's investigations – which represent an invasive intervention in the privacy of dwellings and communications – cannot be initiated without a prior court order, as guaranteed by the Constitution.

In this respect, companies should update their 'dos and don'ts' list on agency investigations and educate employees so that they understand the boundaries of the agency's investigation established through the respective court order. Employees should also be allowed to remind agency officials not to overstep their investigative powers without the threat of this constituting an obstruction of the investigation, which can be sanctioned with a fine of up to 1% of the implicated undertaking's turnover in the previous business year.

To the contrary, the amendment fails to address the concerns raised by the information commissioner with respect to violations of employee privacy rights and de facto introduces a dual system of protection – this time to the detriment of implicated natural persons, who should also be entitled to the same level of protection and be able to expect that the privacy of their communications is ensured. It remains to be seen how the agency and courts will address this discrepancy.

For further information on this topic please contact Eva Škufca at Schoenherr by telephone (+386 1 2000 980 or +32 2 743 4040), fax (+386 1 4260 711) or email (e.skufca@schoenherr.eu). The Schoenherr website can be accessed at www.schoenherr.eu.