On 18 July 2016, the Spanish Appeal Court (Audiencia Nacional) handed down its judgment rejecting an appeal filed by two nougat producers who contested the legality of dawn raids that were conducted at their premises by the Spanish Markets and Competition Commission (“SMCC”).
On 25 October 2013, the Spanish Markets and Competition Commission (“SMCC”) adopted its decision to carry out inspections at the premises of two nougat producers, namely “Almendra y Miel SA” and “Confectionary Holding SL”. The object of the inspections was to gather evidence about an alleged cartel agreement prohibited by Article 1 of the Spanish 15/2007 Act (“SCA”). The SMCC requested a judicial authorisation to conduct the inspection which was rejected by the Court on the basis that the object, as set out in the administrative Order, was too general.
According to the case-law of the Spanish Supreme Court, it is not necessary to have a judicial authorisation to carry out a dawn raid. Instead it may be conducted with an administrative Order provided the company gives its express consent before the dawn raid is conducted (former Article 40 of the SCA and current Article 27.2 of the Act 3/2013 creating the SMCC). However, in the Montibello case, the Supreme Court stated that prior to consenting to the dawn raid, the company being inspected should be informed that, among other things, the court declined to provide judicial authorisation so that the company has full knowledge of what it is consenting to.
On 5 November 2013, the SMCC Directorate carried out inspections at the premises of the two cited companies after they had given their express consent. The inspectors did not disclose that the Court rejected an authorisation to conduct the inspection at the companies. Both companies filed an administrative appeal against the inspection Order but the Council of the SMCC rejected the appeal on the basis that it was not subject to appeal as it was only a procedural act. The companies appealed the SMCC Council decision to the Appeal Court on the same legal basis and made allegations including that the inspections:
- were conducted only on the basis of an administrative Order and that the inspectors did not inform the companies that the court had refused to issue a judicial authorisation; and
- infringed the privacy rights of an employee whose mobile phone was viewed by the inspectors who accessed his photographs and personal data (allegedly in a separate room without his presence), despite the data being irrelevant to the probe and not covered by the Order.
On 18 July 2013, the Appeal Court confirmed that the inspection was carried out in a lawful way within the limits of the Order. The Court stated that the Order contained all of the required elements, namely the object and aim of the inspections, the names of the investigated companies and the documents to be inspected. It also provided the date of the inspection, its scope and the possible penalties. The Appeal Court also considered that the product and geographical markets were well defined (nougat market in the Spanish territory).
The Appeal Court noted that the companies had their lawyers at the inspections from the first moment and that they only provided their consent to the inspection after they had consulted with their legal counsel. Moreover, the companies did not include any observation or protest in the signed document which authorised entry. In addition, the Court considered that the inspectors did not give the company the impression that they had a judicial authorisation.
The Court ruled in addition that the Order allowed the inspectors to access physical and electronic employees’ agendas, including mobile phones. The Appeal Court ruled that the privacy infringement allegations were not proved by any evidence, nor contradicted the content of the minutes of the inspections, which were drafted with the presence of the companies’ lawyer, and the employee admitted in any event that such data was not incorporated in the administrative file.
Since July 2016, decisions adopted by the SMCC may be appealed to the Supreme Court although such appeals may be rejected if they lack so-called “cassation interest”. Such requirement is likely to be interpreted in a wide manner as having special interest or value in order to create truly new case-law or to clarify very relevant aspects of the existing case-law.
If the Appeal Court’s judgment is appealed, the Supreme Court may well decide to accept the appeal it if it finds that there is a clear conflict with the Montibello case, as that ruling did not state that the inspectors must not give the impression that they were acting under the mandate of a judicial authorisation, but instead to clearly let the company know that such authorisation was rejected. It remains to be seen how the Supreme Court would assess the presence of lawyers at the inspections before consent was provided. The Supreme Court may also see the inspection of mobile phone content as a novelty point in order to take forward the appeal. In this regard, although the legislation granting dawn raid powers does not specifically mention the inspection of mobile phones, it seems to be very broad as it includes the right to access, among others, “books, registries and other documentation related to the activity of the company, in any material format, including electronic programs, magnetic files, optic or in any other format”.