The European Commission has published revised guidance on the conduct of dawn raid inspections at business premises of companies suspected of anti-competitive behaviour. The revised guidance clarifies the powers of inspectors to access and seize electronically stored data.
Powers of Inspectors
Under Regulation 1/2003, the Commission has far-reaching investigatory powers for infringements of the competition rules. The powers of inspectors during dawn raids include:
- Entering any premises, land or means of transport of the company;
- Examining the company’s books and other business records, irrespective of the medium on which they are stored;
- Taking copies of any extracts from such books or records;
- Sealing any business premises and books or records during the inspection; and
- Asking any member of staff for an on the spot oral explanations on facts or documents relating to the inspection, and to record the answers in any form.
Whilst a company may consult a legal adviser during the inspection, the presence of a lawyer is not a legal condition for the validity of the inspection, and inspectors will only accept a short delay pending consultation of the lawyer before starting their inspection.
The Revised Guidance – Key changes
The revised guidance highlights that a company’s obligation to cooperate with Commission officials carrying out a dawn raid inspection extends to access to all electronically stored data. It now specifically provides that a company may be required to provide members of staff to assist inspectors with IT-related tasks, such as the temporary blocking of individual email accounts or removing and re-installing hard drives from computers. In addition, it warns that when such actions are taken the company must not interfere in any way with these measures and must inform the employees affected accordingly.
Heavy Fines – Beware!
The Commission has the power to fine a company up to 1% of its total turnover in the preceding business year where, inter alia, it intentionally or negligently produces the required books or other records related to the business in incomplete form during inspections, or refuses to submit to inspections; or gives an incorrect or misleading answer in response to a question asked during the inspection; or breaks a seal affixed by officials.
Recent cases highlight the importance of businesses co-operating fully during dawn raid inspections and the heavy fines which will be imposed where they fail to do so. In EPH & Others (Case COMP/39793), the Commission imposed a fine of €2.5million for obstruction of an inspection by Commission officials, for failure to block email accounts and diverting incoming emails. Also, in the KWS v Commission (Case T-357/06) the Commission increased KWS' fine by 10%, due to KWS denying Commission officials entry to its premises for 47 minutes, pending arrival of its external competition counsel. In addition, in E.ON Energie v Commission (Case C-89/11), the CJEU upheld a fine of €38 million imposed on E.ON, by the Commission, for breaching seals placed by Commission officials during inspections.
In light of such heavy fines for failure to co-operate in dawn raid inspections it is vital for companies to ensure they have internal policies and training in place complying with the Commission's guidance.