On 13 August 2011, the Official Journal of the European Union published details of appeals brought by Deutsche Bahn AG (“DB”) (the sole supplier of electricity for traction trains in Germany) against the European Commission’s (“Commission”) information gathering powers. The appeals follow unannounced inspections (or ‘dawn raids’) undertaken by the Commission at the premises of DB (and some of its subsidiaries) in March of this year on the basis that DB may have infringed Article 102 of the Treaty on the Functioning of the European Union (“TFEU”). 

The dawn raids were conducted on the basis of two Commission decisions (made under Article 20(4) of Regulation 1/2003) and relating to an investigation into:

  • a possible preference of DB subsidiary undertakings by means of a rebate system in the supply of electromotive power; and
  • the use of a potentially anticompetitive model for the strategic use of the infrastructure administered by companies of the DB group and of the provision of rail-linked services.

DB claims that the EU General Court ("GC") should, amongst other things, (i) annul the Commission’s decisions to undertake the inspections, (ii) annul all measures taken on the basis of the inspections and (iii) order the Commission to return all the copies of documents made during the inspections, on the basis that:

  • the lack of prior judicial authorisation for the inspections was an infringement of the company’s fundamental right to inviolability of its premises:
  • the lack of a possibility of prior judicial review of the inspection decision was an infringement of the company’s fundamental right to an effective legal remedy:
  • the wide and non-specific subject matter of the inspection amounted to a ‘fishing expedition’ and infringed the company’s rights of defence: and
  • there was an infringement of the proportionality principle. The rebate system in issue had been in place for some years and had been monitored and approved by the national authorities and the courts. Accordingly, the Commission could have obtained the information elsewhere or by a less invasive measure (such as a simple information request).

The first two arguments are particularly interesting as they go to the heart of the Commission’s information gathering powers and would undermine the efficacy of, not just the Commission’s dawn raid powers, but those of national competition authorities. The Commission’s ability to carry out dawn raids without prior warning and without prior recourse to national courts is seen as a vital tool in its array of information gathering powers and has been long-defended by the EU courts. In relation to the latter two arguments, it is generally accepted that the Commission is not entitled to use a dawn raid as a mere fishing expedition. Any inspection should remain within scope and the Commission should target only those documents which are relevant to the subject-matter under investigation.

Cement manufacturers argue that Commission’s powers are not so concrete

Following a number of dawn raids in the cement sector in recent years, in December 2010 the Commission opened proceedings against cement manufacturers in a number of EU Member States for suspected breaches of Article 101(1) of the TFEU involving, in particular, hardcore restrictions of competition such as import/export restrictions, market sharing and price coordination in the markets for cement and related products. This is not the first time that the Commission has scrutinised the markets for cement and other building materials and both the Commission and a number of national competition authorities have imposed significant fines in the sector. 

In the context of the above investigations, in March 2011 the Commission adopted decisions under Article 18(3) of Regulation 1/2003 requiring the supply of certain information by undertakings in various EU Member States. On 13 August 2011, the Official Journal of the European Union published details of a series of appeals brought by various cement companies against these decisions in which the appellants claim, amongst other things, that:

  • there was an infringement of the principle of proportionality due to the excessive scope of the information requested, the high level of detail required and the short timeframe within which to process and submit the requested information;
  • the information request infringed the company’s rights of defence as it required its active involvement in the evaluation and analysis of company data, which are tasks falling within the Commission’s duty to adduce evidence; and
  • it was disproportionate for the Commission to rely on Article 18(3) (to request information by decision, specifying penalties for non-compliance) rather than the ‘more lenient option’ of issuing a voluntary request for information under Article 18(2).

Responding to information requests from the Commission (and, indeed, national competition authorities) imposes a significant burden on any recipient. The GC’s assessment of the above claims will hopefully offer some helpful guidance on the level of engagement required of a recipient of such a request. Both cases should also be viewed against the background of the fundamental protections afforded by Article 6 of the European Convention on Human Rights given increased recourse to human rights arguments in competition cases (evinced by the 27 September decision of the European Court of Human Rights in A. Menarini Diagnostics S.R.L. v Italy).