Beyond the Scope of the Inspection Decision

Transcription

1 International and European Law Faculty of Law, Tilburg University Beyond the Scope of the Inspection Decision Is it just and fair to permit to collect the evidence found during an inspection, whereas the evidence is unrelated to the subject matter of the inspection; what are the conditions for such a permission and have they been changed in the recent case-law? Mária Patakyová (Anr: ) Thesis Supervisor: Dr. N. Zingales June

2 Content Abbreviations... 4 Introduction... 5 Chapter 1: Inspections and Their Review Inspections in the field of competition law The scope of the inspection decision Judicial review of the inspection decisions Right to a fair trial Concluding remarks Chapter 2: Justice and Fairness of the Collection of the Evidence beyond the Scope of the Inspection Decision The Concept of Rule of Law Decisions of the CJEU /87 and 227/88 Hoechst /87 Dow Benelux C-94/00 Roquette Frèresand proportionality test Correlation with the scope of the inspection decisions; T-135/09 Nexans; C-37/13 P Nexans Preliminary conclusion Decisions of the ECtHR Société Colas Est and others v. France Harju v. Finland Detla Pekrány a.s. v. Czech Republic Concluding remarks Chapter 3: Conditions for Collection of Evidence beyond the Scope of the Inspection Decision Is There a Shift in Deutsche Bahn? Conditions for collection of unrelated evidence Inspections in Deutsche Bahn Facts of the case View of the General Court View of the Court of Justice Concluding remarks Conclusion Bibliography Legislation Conventions Cases Court of Justice of the European Union

3 3.2. European Court of Human Rights Textbooks Articles Electronic Sources

4 Abbreviations CJEU EU Regulation 1/2003 The Court of Justice of the European Union European Union Regulation 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 EC [2003] OJ L 1/1 Regulation 17 Regulation 17/1962 First Regulation implementing Articles 85 and 86 of the Treaty [1962] OJ 013 ECHR Charter Convention for the Protection of Human Rights and Fundamental Freedoms of 4 November 1950 Charter of Fundamental Rights on the European Union [2012] OJ C 326/02 The Decision on the Decision of the president of the European Commission hearing officer of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings [2011] OJ L 695 NCA National Competition Authority 4

5 Introduction What has been seen cannot be unseen ; the English saying captures to a great extent the problematic issues discussed in this thesis. The discourse on the problems with the inspections in the field of European competition law is unfailing. One of them is concerned with a quite specific situation, namely when an inspection is being performed in an undertaking regarding one matter and the inspectors find evidence, information, suggesting a possible infringement of the European competition law in another matter. The question then can be asked whether the inspectors are allowed, based on information acquired in this manner, to start a new procedure on the latter matter. This situation will be further referred as a collection of unrelated evidence even though it does not necessary refer to a collection of documents or electronic devices per se. This thesis has been motivated by the observation that the use of unrelated evidence collected over the course of an inspection constitutes a concrete risk, as proved by the cases concerning the inspections in Deutsche Bahn 1, the situation may occur and its consequences may be of crucial importance. Moreover, the matter is characterised by its novelty as well, since the appeal judgement regarding Deutsche Bahn inspections was issued on 18 June Thus, the thesis will try to answer the following research question: Is it just and fair to permit to collect the evidence found during an inspection, whereas the evidence is unrelated to the subject matter of the inspection; what are the conditions for such a permission and have they been changed in the recent case-law? The structure of the research question determines the structure of the thesis itself. Hence, the first chapter will briefly introduce the inspections in the field of competition law, focusing on the issues relevant for the following chapters. The second chapter will concentrate on the issue of justice and fairness of the collection of evidence found during an inspection which is beyond the scope of the inspection decision. The meaning of justice and fairness is determined by the compliance with the Rule of Law and protected rights of the undertakings. The light on the latter issue will be shed from the perspective of the Court of Justice of the European Union 2 as well as the European Court on Human Rights 3. The concept of unrelated evidence found during the inspection will be put into relation with the scope of the inspection decision. 4 The third chapter will aim to, firstly, state the conditions which are necessary to be fulfilled for the collection of unrelated evidence to be possible; secondly, to elaborate on the possible shift in those conditions in the light of the recent case-law, namely the Deutsche Bahn cases. The conclusion will be dedicated to the complex answer for the research question. As to the methodology and sources of the thesis, the first chapter will be based primarily on the legal doctrine and secondary on the case law of the CJEU and the ECtHR connected to the selected issues on the inspections in the field of competition law. The descriptive method and analytic-synthetic method are applied together with the comparing 1 Joined cases T-289/11, T-290/11 and T-521/11. Deutsche Bahn AG and Others v European Commission [2013] (GC 6 September 2013); C-583/13 P Deutsche Bahn AG and Others v European Commission [2015] (ECJ 18 June 2015). 2 Hereinafter CJEU. 3 Hereinafter ECtHR. 4 T-135/09 Nexans France SAS and Nexans France v European Commission [2012] (GC 14 November 2012); C-37/13 P Nexans SA and Nexans France SAS v European Commission [2014] (ECJ 25 June 2014); T-140/09 Prysmian SpA and Prysmian Cavi e Sistemi Energia Srl v European Commission [2012] (GC 14 November 2012)2012). 5

6 between various opinions of the academics and findings of the Courts. The second chapter applies the theories of Rule of Law to the discussed situation whereas it tries to avoid descriptive method and rather use the analytic-synthetic one. The predominant sources are naturally the academic articles. The second part offers the analysis of the cases of the CJEU and the ECtHR selected according to their relevance judged upon their references in the novel judgements and in the academic articles. The description of the cases will be minimalistic, since the aim is to apply the legal analysis performed by the Courts to the situation in question and to compare their approaches. Therefore, the primary source is the case law supplemented with the relevant academic articles and opinions of legal practitioners. The third chapter is based on the abstraction of the conditions for the collection of unrelated evidence from the first two chapters, together with an analysis of the conditions which were not suggested on the other places of the thesis. The source is mainly the case law of the relevant Courts. The second part of the third chapter is based on analysis of the Deutsche Bahn cases together with the opinions of legal practitioners and academics. Apart from using the descriptive and analytic-synthetic method, a comparing is done in order to see if there is a shift in the understanding of unrelated evidence. Besides, the logical argumentation is used in all chapters when possible. In the conclusion, the main methods are synthetic method and method of comparing. 6

7 Chapter 1: Inspections and Their Review Protection of competition is an essential element for the proper functioning of the market economy, calling for an adequate framework of protection of the interests of the consumers. During the integration process in the EU, competition law, insofar as it affects the internal market, became exclusive competence of the EU. 5 As such, European competition law consists of substantive rules expressed in TFEU, regulations and considerable amount of soft law. The effectiveness of all of these rules would be but in jeopardy if the competent authorities were not granted broad powers to investigate the existence of violations. Limiting ourselves to the antitrust 6 part of the European competition law the fundamental secondary law is the Regulation 1/ While Regulation gives mandate to the European Commission on the one hand and the national competition authorities and national courts on the other, 8 the thesis will focus predominantly on the proceedings before the former. 1.1 Inspections in the field of competition law Looking at procedural Regulation 1/2003, one cannot overlook the importance of the provisions on powers of investigation, which enable the European Commission to detect and to proceed an infringement of Articles 101 or 102 TFEU. 9 European Commission is given a considerable range of powers consisting of conducting a sector investigation, 10 requiring necessary information via a simple request or via a decision, 11 interviewing persons 12 and conducting inspections 13. The latter is justifiably considered to be the most draconian mean to provide information. 14 It is regulated in two separate Articles of Regulation 1/2003. Article 20 is concerned with the inspections in the premises, land and means of transport of undertakings and associations of undertakings 15, thus in the so called business premises. This type of inspection can be conducted either by a written authorisation 16 or by a decision of the European Commission 17, whereas in the latter case the undertaking is obliged to submit to the inspection Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union [2012] OJ C326/47 (hereinafter TFEU ), Article 3 (1) (b). 6 Meaning Articles 101 and 102 TFEU. 7 Regulation 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 EC [2003] OJ L 1/1 (hereinafter Regulation 1/2003 ). 8 Regulation 1/2003, Articles Regulation 1/2003, recital Regulation 1/2003, Article Regulation 1/2003, Article Regulation 1/2003, Article Regulation 1/2003, Articles 20 and D. Chalmers, G. Davies, G. Monti European Union Law (3rd edn, reprinted, Cambridge University Press, 2015) Regulation 1/2003, Article 20 (2) (a). 16 Regulation 1/2003, Article 20 (3). 17 Regulation 1/2003, Article 20 (4). 18 There is also a possibility to conduct an inspection in non-business premises. Article 21 relates to non-business premises meaning any other premises, land and means of transport, including the homes of directors, managers and other members of staff of the undertakings and associations of undertakings (Regulation 1/2003, Article 21 (1) (a)). The right to inspect the non-business premises was added by the Regulation 1/2003 comparing to the Regulation 17 (Regulation 17/1962 First Regulation implementing Articles 85 and 86 of the Treaty [1962] OJ 013 (hereinafter Regulation 17 )) due to the fact that experiences had shown a possibility of keeping business records in the homes of directors and other people (see Regulation 1/2003, recital 26.) 7

8 According to Article 20 (2) and 21 (4), the persons conducting the inspections are entitled to enter the premises, to examine the records related to the business, take copies and extracts of them. 19 Moreover, in relation to the business premises, Article 20 (2) (d) empowers inspectors to seal a business premise or a book or a record and Article 20 (2) (e) gives a legal basis for the inspectors to ask a representative or a member of the staff of undertaking under inspection for explanation and on facts or documents relating to the subject-matter and purpose of the inspection and to record the answers 20. Generally, the inspections in the field of competition are a controversial issue due to the several reasons. First, the right to enter the business premises solely on the basis of a decision issued by the institution who is executing the inspection 21 might raise doubts on the legitimacy of such right and its compliance with the human rights rules. In particular, there is ongoing discussion concerning the compatibility with right to a fair trial as protected by Article 6 of the ECHR 22 and by its equivalent, Article 47 of the Charter 23 ; and right to privacy as protected by Article 8 of the ECHR and by its EU equivalent, Article 7 of the Charter. It is suggested by academics and practitioners that the viewing of the compatibility of the inspections by the Court in Luxembourg and the Court in Strasbourg differs to a substantial extent. 24 This issue touches upon the problem of the binding character of the ECHR and its interpretation by the Strasbourg court on the EU. The solution is suggested in the Article 52 (3) of the Charter. 25 It might seem somehow ironic that the Article 52 (3) of the Charter does not prevent EU to provide more extensive protection, whereas it looks rather the opposite. Nonetheless, the CJEU tends to take into account the judgements of the ECtHR 26, for example in the case Deutsche Bahn 27 which will be discussed in the further chapters. 28 Secondly, even though a priori judicial authorisation is required in some instances 29, the scope of control a national court is called to undertake is rather limited, 30 it cannot question the necessity of the inspection nor demand the information in the file of the European Commission as this competence only belongs to CJEU. 31 Thirdly, the powers of inspectors comprise the power to ask question and examine business records which might 19 It is important to note that it is the Commission which determines which documents are needed, not the undertaking. See Joined cases T-289/11, T-290/11 and T-521/11. Deutsche Bahn AG and Others v European Commission [2013] (GC 6 September 2013), para Regulation 1/2003, Article 20 (2) (e) in fine. 21 Regulation 1/2003, Article 20 (4). 22 Convention for the Protection of Human Rights and Fundamental Freedoms of 4 November 1950 (hereinafter ECHR ). 23 Charter of Fundamental Rights on the European Union [2012] OJ C 326/02 (hereinafter Charter ) 24 See for example A. Steen Dawn Raids and Human Rights: Where are We Now? (Kluwer Competition Law Block, 25 January 2016) < accessed 5 February Articl 52 (3) of the Charter: In so far as this Charter contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the said Convention. This provision shall not prevent Union law providing more extensive protection. 26 The European Court of Human Rights (hereinafter ECtHR ) 27 Case C-583/13 P Deutsche Bahn AG and Others v European Commission [2015] (ECJ 18 June 2015). 28 However, the problems with the compatibility with human rights in relation to the inspections still persist. Yet, it is not the aim of this thesis to provide the answer to the compatibility of the inspections with the human rights generally, it is more focused on one particular problem, as will be presented by the research question. 29 See regulation 1/2003, Article 20 (8); Article 21 (3). 30 Ibidem. See also joint cases 46/87 and 227/88 Hoechst AG v Commission [1989] ECR 2859 and case C-94/00 Roquette Frère SA v Directeur Général de la Concurrence de la Consommation et de la Répression des Fraudes [2003] 4 CMLR Regulation 1/2003, Article 20(8), Article 21 (3). 8

9 clash with the privilege against self-incrimination. 32 Fourthly, the effectiveness of the legal professional privilege is threatened to certain extent, since quite a strict rules apply as to what may be defined as information benefiting from this doctrine. 33 Finally, there are practical procedural problems with the review of documents labelled as a legal advice. 34 In this regard, an important role is played by the institute of Hearing Officer. 35 His powers can be divided according to the phase of the process before the European Commission, whereas the most prominent one for the purposes of this thesis are the powers in the investigative phase. 36 It is necessary to pay tribute to the CJEU for the expansion of right of defence to this phase of procedure. 37 The Hearing Officer is empowered, upon a request from an undertaking concerned, to examine claims that a document required by the European Commission in the exercise of its powers is covered by the legal professional privilege. He should promote resolution of the dispute between the director responsible and the undertaking and, where no resolution is reached, he may formulate a reasoned recommendation. 38 Moreover, the Hearing Officer safeguards the right to be informed of the procedural status of the undertakings, of subject matter and purpose of the investigation if they are subject to it. 39 Nevertheless, it is crucial to raise doubts on the independence 40 of the Hearing Officer. 41 Returning to the rights of defence, there are several possibilities for a defence to be raised against the investigative measures. At the same time, there is a risk that such defences be abused by investigated companies hampering the effectiveness of the investigations, or leading to the exclusion of important evidence that was collected in the course of the proceeding. It is necessary to highlight that undertakings under an investigation by the European Commission are usually well-established companies with knowledge of the field which they operate in; of the specific features of the products they do business with; of the market players, their market shares, possible enterers to the market etc. Furthermore, equipped with proper legal advises, they do not fall behind with knowledge of the competition 32 Regulation 1/2003, recital See case 155/79 AM&S Europe v Commission [1982] 2 CMLR 264; case T-112/05 AKZO Nobel Chemicals Ltd v Commission [2008] 4 CMLR It is possible to challenge the decision of the European Commission not to recognise certain documents as protected by legal professional privilege, based on Article 263 (4) TFEU. Source: S. M. Colino Competition Law of the EU and UK (7th edn, Oxford University Press, 2011) 86. However, there is still a problem with the timing of the determination whether a particular document is protected or not. Since the CJEU is the final instance in it, it is a matter of months rather than weeks to reach the final determination. Source: C. S. Kerse, N. Khan EC Antitrust Procedure (5 th edn,, Sweey & Maxwell, 2005) Nowadays, the posts are held by Wouter Wils and Joos Stragier. 36 Article 4 of DECISION OF THE PRESIDENT OF THE EUROPEAN COMMISSION of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings [2011] OJ L 695 (hereinafter the Decision on the Hearing Officer ) 37 N. Zingales The Hearing Officer in EU Competition Law Proceedings: Ensuring Full Respect for the Right to Be Heard? (2010) 7 The Competition Law Review 129, Article 4 (2) (a) of the Decision on the Hearing Officer. 39 Article 4 (2) (d) of the Decision on the Hearing Officer. 40 The independence of the Hearing Officer is stipulated in several provisions of the Decision on the Hearing Officer. To this end, see: W. P. J. Wils The Role of the Hearing Officer in Competition Proceedings before the European Commission (2012) 35(3) World Competition: Law and Economics Review, 4-5 < &EXT=pdf > accessed 24 March See for instance: N. Zingales The Hearing Officer in EU Competition Law Proceedings: Ensuring Full Respect for the Right to Be Heard? (2010) 7 The Competition Law Review 129,

10 rules. 42 Thus, it is not inconceivable that lawyers of an investigated party, being more resourceful, might be able to convince the European Commission of particular interpretation of law and facts in casu. On top of that, the undertakings are not always bonae fidei actors. To the extent that they are deliberately committing an infringement of EU competition rules, 43 one can expect that they try to hide the evidence and to disable the detection by the European Commission. 44 Besides, it is quite logical that if the European Commission possesses the evidence from the inspection, they will spare no effort on invoking the illegality of the inspection. As mentioned above, inspections can be conducted in business as well as non-business premises, based on an authorisation or on a decision. The thesis will predominantly concentrate on the inspections decisions based on Article 20 (4) of Regulation 1/2003 due to the fact, firstly, they are the most common one 45 and, secondly, the main cases the thesis will discuss are concerned with this type of inspection. While the difference between the two types of inspection is crucial, 46 the requirement to identify the scope of the inspection in both situations being imposed by Regulation 1/2003 in Articles 20 (3) 47, 20 (4) 48 and 21 (2) 49. This thesis will not further elaborate on the differences among particular types of inspections, as it will focus on the centrality of this requirement. 1.2 The scope of the inspection decision As will be elaborated in the following chapters, the scope of the inspection decisions serves several purposes. First, it can be held that the scope of the inspection decision determines the extent to which is the privacy of the undertaking unveiled for the purposes of the Commission s search. If information is beyond the scope of the inspection decision, generally it means it is protected by the right to privacy. 50 There is basically no difference between the inspection without the empowering inspection decision and the inspection during which the Commission is searching for the information beyond the scope of the inspection decision. 51 The doctrine of unrelated evidence is an exemption to this general rule. 42 M. Patakyová INŠPEKCIE V OBLASTI SÚŤAŽNÉHO PRÁVA - NEDÁVNE ROZHODNUTIA SÚDNEHO DVORA EURÓPSKEJ ÚNIE (2015) 2015 Bratislava Legal Forum, 766 < > accessed 2 February See for example R. Whish, D. Bailey European Competition Law (7 th edn, Oxford University Press, 2011) To this end see also Regulation 1/2003, recital Inspections base on Article 20 (3) of Regulation 1/2003 are rare. In a case of resistance it is quite simple to provide a decision based on Article 20 (4) of Regulation 1/2003. Source: C. S. Kerse, N. Khan EC Antitrust Procedure (5 th edn,, Sweey & Maxwell, 2005) /87 and 227/88 Hoechst AG v Commission [1989] ECR 2859, para Regulation 1/2003, Article 20 (3): [... ] shall exercise their powers upon production of a written authorisation specifying the subject matter and purpose of the inspection [...]. 48 Regulation 1/2003, Article 20 (4): The decision shall specify the subject matter and the purpose of the inspection, appoint the date on which it is to begin [...]. 49 Regulation 1/2003, Article 21 (2): The decision shall specify the subject matter and purpose of the inspection, appoint the date on which it is to begin [...]. 50 Theoretically, the documents not covered by inspection decision can be withheld. See: W. Snyder, DUE PROCESS IN THE EUROPEAN ECONOMIC COMMUNITY: RIGHTS OF BUSINESSES DURING COMMISSION INSPECTIONS (1991) 22 U. Tol. L. Rev. 955, 970. However, it is important to bear in mind that the undertaking are generally not advise to do so, since there is a possibility that the undertaking will be fined for the not-cooperation. 51 C-583/13 P Deutsche Bahn AG and Others v European Commission [2015] (ECJ 18 June 2015), Opinion of AG Wahl, para

11 Second, [i]n order to avoid the Commission going on fishing expeditions, the decision authorising the inspection must clearly indicate the purpose of the visit. 52 It flows from Regulation 1/2003 that the European Commission is provided to a considerable extent with discretion in relation to the inspections. On the other hand, it is also inevitable to establish a limit as to when the European Commission can perform a dawn raid, so the undertakings are not disproportionately harmed by so called fishing expeditions. 53 That is why the inspection can be performed only when it is considered to be necessary. 54 These reasons are then reflected on the justification of the decision. 55 Thus, the European Commission needs to have a suspicion as to whether an undertaking has infringed the EU competition law and in what manner. These suspicions are indicated in the justification of the inspection decision and, ultimately, serve to fulfil the obligation to state reasons. 56 The following chapters will elaborate on how precise the scope has to be determined and on how deep a justification has to be. Third, the undertaking under the inspection is obliged to fully cooperate with the inspectors 57 within the scope of the inspection decision. 58 This does not mean only to provide the access to the premises and records. There must be an active cooperation 59 of the undertaking which, flows also from the Article 20 (2) (e) of Regulation 1/2003. The undertaking is also required to choose the appropriate persons to answer a particular question. 60 Hence, it is a legitimate requirement from the side of the undertaking to know to what extent it needs to cooperate, i.e. what is the subject matter of the inspections. 61 It is also important with regard to the possibility of imposing of either a fine 62 or a periodical penalty 63 for infringement of duty to cooperate. Fourth, the scope of the decision is necessary for safeguarding of the right of defence. This aspect is connected to the abovementioned duty to cooperate. 64 For example, if the undertaking wants to challenge the decision, one of the aspects for the potential legal basis may be the too broad scope of the inspection decision. 65 However, in a situation where the undertaking is convinced that the document does not fall within the inspection decision, it cannot oppose providing a document based on the claim that it is not relevant, since it is the 52 G. L. Tosato, L. Bellodi EU Competition Law (1 st edn, Claeys & Casteels, 2006) The Commission shall not carry out inspections on speculative basis only. See: case C-37/13 P Nexans SA and Nexans France SAS v European Commission [2014] (ECJ 25 June 2014), Opinion of AG Kokott, para C. S. Kerse, N. Khan EC Antitrust Procedure (5 th edn,, Sweey & Maxwell, 2005) Statement of reasons must be adequate and appropriate to the measure. See mutatis mutandis to formal decision asking for information under Article 18(3) of the Regulation 1/2003 IN F. Carloni, G. Da Costa, Judgments in the Cement Case: Requirement for Greater Clarity, Specificity, and Justification of Information Requests from the Commission. (2016) 7 Journal of European Competition Law & Practice. 56 Charter of Fundamental Rights, Article 41 (2) c). 57 S. M. Colino Competition Law of the EU and UK (7th edn, Oxford University Press, 2011) 85; 58 The undertaking has a right to distinguish which document can be subject to the inspection. T-140/09 Prysmian SpA and Prysmian Cavi e Sistemi Energia Srl v European Commission [2012] (GC 14 November 2012), para See case 374/87 Orkem v Commission [1989] ECR 03283, para See S. M. Colino Competition Law of the EU and UK (7th edn, Oxford University Press, 2011) 85; opinion of AG Warner 136/79 National Panasonic Ltd v Commission [1980] 3 CMLR 169 in S. M. Colino Competition Law of the EU and UK (7th edn, Oxford University Press, 2011) See, for instance 61 case 85/87 Dow Benelux NV v Commission [1989] ECR 3137, para Based on Article 23 (1) (c) and (d) of Regulation 1/ Based on Article 24 (1) (e) of Regulation 1/ See 46/87 and 227/88 Hoechst AG v Commission [1989], para See for example C-37/13 P Nexans SA and Nexans France SAS v European Commission [2014] (ECJ 25 June 2014). 11

12 Commission who decides which documents should be provided. 66 The undertaking can only challenge the act of taking the documents a posterior. Apart from the judicial review, the Hearing Officer is also called to safeguard the rights of the undertakings. However, it must be highlighted that there is no provision on such a power expressis verbis. 67 On the top of that, this type of control is again a control a posteriori, due to the fact that the undertakings concerned could raise an objection to Hearing Officer against providing a document beyond the scope of the decision only after the inspection. When the inspection is taking place, it is the Commission who states which documents shall be provided. Fifth, as regards the power of the inspectors to ask for explanations on facts or documents relating to the subject matter and purpose of the inspection 68, the scope of the inspections can determine the questions that the inspectors are empowered to ask. 69 For example, it is disputable if an inspector can pose a question on documents obtained by some other means or during another inspection. 70 However, it is necessary to note also that it can be in practice difficult to oppose a question due to the possibility to impose the sanction. 71 It is less dangerous for the undertaking to oppose the use of the information a posteriori, since once it is found not related to the scope of the inspection decision, the Commission is required to refrain from using it for the purpose of its investigation. 72 Sixth, as stated by Article 28 (1) of Regulation 1/2003, the collected information is supposed to be used only for the purpose of its collection. Generally, the scope and purpose of the inspection decision delimits the use of the evidence gathered during its course. However, this general rule is not without exception. 73 Finally, the scope of the inspection decision also delimits the possible control of the General Court and Court of Justice in appeal in a sense whether the Commission possessed sufficiently serious indications justifying the interference into the private sphere of the undertaking Judicial review of the inspection decisions Judicial review is of crucial importance regarding any administrative procedure. It is even more true regarding the inspections decisions, since there is no, or at least not full, a priori judicial review of them. Moreover, the inspections threaten the fundamental rights of 66 To this end see cases 374/87 Orkem v Commission [1989] ECR para 27, 155/79 AM & S v Commission [1982], para The relevant provision might be Article 4 (1) of the Decision on Hearing Officer concerning general duty of the Hearing Officer to safeguard the effective exercise of procedural rights arising in the context of Chapter V of Regulation 1/ Article 20 (2) (e) of Regulation 1/ There is also a limitation, in particular the questions should be answerable in the circumstances of the inspection, hence not require further deep research. Source:. S. Kerse, N. Khan EC Antitrust Procedure (5 th edn,, Sweey & Maxwell, 2005) S. Kerse, N. Khan EC Antitrust Procedure (5 th edn,, Sweey & Maxwell, 2005) S. Kerse, N. Khan EC Antitrust Procedure (5 th edn,, Sweey & Maxwell, 2005) T-135/09 Nexans France SAS and Nexans France v European Commission [2012] (GC 14 November 2012), para C. Lister, DAWN RAIDS AND OTHER NIGHTMARES: THE EUROPEAN COMMISSION'S INVESTIGATORY POWERS IN COMPETITION LAW MATTERS (1990) 24 Geo. Wash. J. Int'l L. & Econ. 45, T-140/09 Prysmian SpA and Prysmian Cavi e Sistemi Energia Srl v European Commission [2012] (GC 14 November 2012), para

13 the undertakings as mentioned above. Without a proper judicial review the right to a fair trial may be infringed. 75 The judicial review is safeguarded by the CJEU which the undertaking under inspection must be informed about. 76 According to Article 263 TFEU, the undertaking may institute the proceeding within two months after the notification of the inspection decision. 77 Expiration of this period means that the decision is definite for the undertaking. 78 The grounds for challenge relevant in this context are: 79 : infringement of an essential procedural requirement; infringement of the Treaties, or infringement of any rule of law relating to their application; misuse of powers. 80 Due to the Article 278 TFEU, the action will not have suspensory effect, unless the CJEU would be of the opinion circumstances required so. However, it can be hardly feasible that the undertaking will be able to draw up the application, deliver it to the CJEU and obtain the decision within the hours and therefore prevent the Commission from performing the inspection. Besides, the undertaking cannot oppose by its own without the risk of being sanctioned. 81 It is also possible for the undertaking to obtain an interim measures based on Article 279 TFEU. 82 The rules on procedure are the same as for the suspensor effect of the action 83, therefore the only likely judicial review of the inspection decision is by an action after the inspection. Regarding the acts of the European Commission during the inspection itself, it cannot be challenged with the inspection decision as such. 84 There are basically two options how to 75 See Article 6 (1) of ECHR or Article 47 of Charter. 76 Article 20 (4) of Regulation 1/ The undertaking has a legal standing, because, in the view of Article 263 TFEU, the inspection decision is addressed to the undertaking and the inspection decision is the act of the European Commission other than recommendation and opinions. Inspection decision is considered to be a decision stating a definite position of the European Commission which is of legal interest for the undertaking. See 60/81 IBM v Commission [1981] ECR 2639, para See for example C-305/94 Limburgse Vinyl Maatschappij NV, Elf Atochem SA, BASF AG, Shell International Chemical Company Ltd, DSM NV, DSM Kunststoffen BV, Wacker-Chemie GmbH, Hoechst AG, Société artésienne de vinyle, Montedison SpA, Imperial Chemical Industries plc, Hüls AG and Enichem SpA v Commission [1999] ECR II-00391, (hereinafter C-305/94 LVM v Commission ) para Article 263 (2) TFEU. 80 It is worth noting that generally speaking the CJEU does not provide consistent basis for finding whether an inspection was unlawful or not. See D. Théophile, I. Simic, Legal Challenges to Dawn Raid Inspections under the Principles of EU, French and ECHR Law (2012) 3 Journal of Competition Law & Practice 511, S. Kerse, N. Khan EC Antitrust Procedure (5 th edn,, Sweey & Maxwell, 2005) 179. Therefore, the statement of the General Court in the case Deutsche Bahn case that the ex ante judicial control is compensated by bringing an action for annulment with simultaneous application for suspensory effect is questionable. See: joined cases T-289/11, T-290/11 and T-521/11. Deutsche Bahn AG and Others v European Commission [2013] (GC 6 September 2013), para However, it should be stressed that the feasibility of obtaining the interim measures is quite low, due to the burden of prove difficult to bear, as proved the case law of the CJEU. See N. Zingales The Hearing Officer in EU Competition Law Proceedings: Ensuring Full Respect for the Right to Be Heard? (2010) 7 The Competition Law Review 129, Rules of Procedure of the General Court [2015] OJ L 105, Articles To this end see the case T-135/09 Nexans France SAS and Nexans France v European Commission [2012] (GC 14 November 2012), paras In this case, the applicant asked for annulment of 1) the inspection decision itself; 2) the decision taken during the inspection to copy the entire content of certain computer files; 3) decision to interview an employee of the applicant during the inspection. The second and third decision was held 13

14 challenge the acts of the Commission during the inspection. The first one is the possibility to challenge a decision imposing a fine for refusal to produce the requested documents or to provide requested answers. This decision is a separate decision and it is admissible to the CJEU. 85 Apart from this, there is a second possibility to challenge the acts together with the final decision on the infringement of competition law. 86 Thus, it is the action on the final decision which can provide a vehicle to a challenge of the conduct of the inspection, for example if the final inspection decision will be based on a testimony which breaches the privilege against self-incrimination. 87 Mutatis mutandis, the same is true regarding the documents found during the inspection which are considered to be beyond the scope of the inspection decision with an extra possibility of challenging a subsequent inspection decision in a case that such would follow the finding of unrelated evidence during the first one. 88 None the less, what would happen in a situation where there will be no final decision and no subsequent inspection? If it is assumed that the undertaking concerned did not refrain from cooperation and allowed the inspectors to collect also unrelated evidence; hence there is no decision on fines; can be the situation brought before the CJEU? 89 The answer is in the affirmative, if the requirements of Article 340 (2) TFEU are fulfilled. 90 There are three conditions to be met in order for the EU to incur liability: 91 1) the rule of law infringed was to confer rights on individuals. In a situation when the evidence is collected beyond the scope of the inspection decision, this might be an infringement of the rights of defence and right to privacy. The undertaking can claim that its rights were infringed and thus enabling the Court to rule on this matter; to be intermediate measures which were only implementing the inspection decision. The applications for their annulment was held inadmissible as they were not challengeable acts. However, it is claimed by some scholars that the joined cases T-125/03 and T-253/03 Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission of the European Communities [2007] ECR II-03523, para 52 suggested that even measures taken during the inspection are open to legal standing, as they form tacit decisions. See D. Théophile, I. Simic, Legal Challenges to Dawn Raid Inspections under the Principles of EU, French and ECHR Law (2012) 3 Journal of Competition Law & Practice 511, 518. None the less, it has to be noted that this line of thinking is not supported by the recent case-law (T-135/09 Nexans France SAS and Nexans France v European Commission [2012] (GC 14 November 2012)). 85 Ibid., para 126; 86 C-305/94 LVM v. Commission [1996] paras 413, 414. An example of such a case is also T-357/06 Koninklijke Wegenbouw Stevin BV v European Commission [2012] (GC 27 September 2012), paras S. Kerse, N. Khan EC Antitrust Procedure (5 th edn,, Sweey & Maxwell, 2005) See joined cases T-289/11, T-290/11 and T-521/11. Deutsche Bahn AG and Others v European Commission [2013] (GC 6 September 2013). 89 There is also a possibility of bringing a matter before CJEU when it concerns a document allegedly covered by legal professional privilege. See D. Théophile, I. Simic, Legal Challenges to Dawn Raid Inspections under the Principles of EU, French and ECHR Law (2012) 3 Journal of Competition Law & Practice 511, 518. Arguably, this will not cover the majority of surprise findings. See joined cases T-289/11, T-290/11 and T- 521/11. Deutsche Bahn AG and Others v European Commission [2013] (GC 6 September 2013). 90 Article 340 (2) TFEU is a legal base for claiming damage caused by the Commission or its servants in the performance of their duty. For the relevance of this possibility, see: joined cases T-289/11, T-290/11 and T-521/11. Deutsche Bahn AG and Others v European Commission [2013] (GC 6 September 2013), para See for instance case C-352/98 P Laboratoires pharmaceutiques Bergaderm SA and Jean-Jacques Goupil v Commission [2000] ECR I-05291, para

15 2) the breach was sufficiently serious. As Chalmers 92 highlighted, even decent failure to observe rights of defence is likely to incur liability. Hence, if the right of defence is considered to be infringed, this infringement will be sufficiently serious. 3) the direct causal link is present between the breach and the damages. As to the damages themselves, there is panoply of recoverable pecuniary as well as nonpecuniary losses. 93 However, the mere infringement of fundamental rights is not enough, there is a need for an actual damage 94 to be proven which might be a problem. 95 Damage must be actual, certain and quantifiable. Hence, one may ask what damages are at stake. 96 Damages from trade secrecy leak? What if the Commission dully protects all the documents? Theoretically, it is also possible that damages can be proved when a new investigation is launched based on illegally obtained evidence. However, what if the Commission does not expressly rely on it? 97 Last but not least, there is possibility to claim that a document covered by legal professional privilege was seized 98 which would give further rights to the undertaking. 99 Two objections may be raised in this regard. The first one concerns the difficulty to obtain damages via this procedure. However, what matters here is the possibility to have the situation reviewed by the Court as such. Secondly, the undertakings do not usually struggle to obtain a compensation for damages but to obtain their documents back and destroy damages. 100 If the judicial review was considered insufficient, this might be problematic especially in the context of the ECHR. 101 In the following subchapter it will be discussed if the judicial review of the decisions issued by the Commission does not upset Article 6 ECHR. None the less, even if the collection of unrelated evidence does not result in another inspection decision or a final decision on infringement of competition law, it will be assumed that the possible review is safeguarded under Article 340 (2) TFEU. The fact that it might be difficult to prove the actual damages should not make this review irrelevant. 92 D. Chalmers, G. Davies, G. Monti European Union Law (3rd edn, reprinted, Cambridge University Press, 2015) Ibid., If the business secrets were not made available to the competitors or to any third party, what can be said to constitute an actual damage? Could damage be the expense on legal advisers in the newly open investigation based on unrelated evidence? None the less, the high burden of proof of actual damage might hinder this way of judicial review. 95 A. Steen Dawn Raids and Human Rights: Where are We Now? (Kluwer Competition Law Block, 25 January 2016) < accessed 5 February K. Gutman, THE EVOLUTION OF THE ACTION FOR DAMAGES AGAINST THE EUROPEAN UNION AND ITS PLACE IN THE SYSTEM OF JUDICIAL PROTECTION (2011) 48 Common Law Market Review, 695, A. Steen Nexans, Deutsche Bahn, and the ECJ s Refusal to Follow ECHR Case Law on Dawn Raids (2016) 7 Journal of European Competition Law & Practice, 180, Ibid. 99 See above, part 1.2. of this thesis. 100 A. Steen Dawn Raids and Human Rights: Where are We Now? (Kluwer Competition Law Block, 25 January 2016)< accessed 5 February A. Steen took a position that the insufficiency of protection of fundamental rights of undertakings raided by the Commission is flagrant. See A. Steen Nexans, Deutsche Bahn, and the ECJ s Refusal to Follow ECHR Case Law on Dawn Raids (2016) 7 Journal of European Competition Law & Practice, 180,

16 1.4. Right to a fair trial Before moving to the following chapter, it is appropriate to introduce the right to a fair trial in the context of the European competition law. Article 6 ECHR consists of two parts, whereas the first one is concerned with determination of civil rights and obligations or of any criminal charge against a person. In this case, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. It flows from the case-law of the Strasbourg court that, as a general rule, civil rights and obligations are involved in any legal issue the determination of which entails financial consequences for a natural or legal person. 102 Interestingly enough, the ECtHR also stated that there might exist certain pecuniary obligations to the State which are not to be considered as part of the civil rights and obligations, due to the fact they are exclusively part of the public law. 103 In the case of administrative decisions which are part of the public law, if the administrative decision is not made by an independent and impartial tribunal, it has to be subject to the subsequent control by a judicial body with a full jurisdiction. 104 The access to the courts must be always safeguarded. 105 This is true regarding the European Commission and its decisions as well, since it is not an impartial and independent tribunal according to Article 6 ECHR. The second part entitles special rights to those who are charged with the criminal offence. 106 Hence, the interpretation of criminal charge is of fundamental importance. Light on the notion of criminal charge was shed by the Engel case 107 which set three criteria for determination of criminal charge: 1. the classification of the proceedings under national law. In the situation in the research question, according to the general classification, European competition law is not part of the criminal law. It is rather of an administrative nature 108 ; 2. the essential nature of offence. It is difficult to classify the competition law infringements, however, it might be suggested that they are close to other administrative infringements such as infringement of tax law, custom law, sector regulations etc.; 3. the nature and degree of severity of the penalty that could be imposed. Under the European competition law as such, there is no possibility to impose imprisonment for the parties which could be a clear suggestion there is a criminal nature of the proceedings. 109 On the other hand, penalties are severe and thus could be considered to be close to the severity of criminal penalties. Even more precise set of criteria was provided in case Bendenoun v France 110, a case concerned with tax surcharges, where the Court held that: M. W. Janis, R. S. Kay, A. W. Bradley European Human Rights Law, Text and Materials (3 rd edn, Oxford University Press, 2008) Case of Schouten and Meldrum v. The Netherlands, App No 19005/91, 19006/91 (ECtHR, 9 December 1994 ). 104 Albert and Le Compte v Belgium, Merits, App No 7299/75, 7496/76 (ECtHR, 10th February 1983) para Case of Golder v. the United Kingdom, App No. 4451/70 (ECtHR, 21 February 1975), para M. W. Janis, R. S. Kay, A. W. Bradley European Human Rights Law, Text and Materials (3 rd edn, Oxford University Press, 2008) 719, Engel and others v Netherlands, App No 5100/71, 5101/71, 5102/71, 5354/72, 5370/72 (ECtHR, 8 June 1976) 108 Article 25 (3) of Regulation 1/ B. Rainey, E. Wicks, C. Ovey Jacobs, White, and Ovey The European Convention on Human Rights (6th edn, Oxford University Press, 2014) Bendenoun v France, App No 12547/86 (ECtHR, 24 February 1994) 16

17 1. the law shall be imposed by a general rule and applicable to everyone. It is important that the rule applies potentially to everyone. 112 It can be claimed European competition law applies to undertakings only. On the other hand, the specification of the subject of the rule should not preclude a criminal nature, as it is well known also for criminal law per se 113 ; 2. the law shall provide penalties in the event of non-compliance. The penalties are wellpresent in European competition law; 3. the act according to the law is a punishment which shall aim to deter re-offending. According to the Guidelines 114 [f]ines should have a sufficiently deterrent effect, not only in order to sanction the undertakings concerned (specific deterrence) but also in order to deter other undertakings from engaging in, or continuing, behaviour that is contrary to Articles 81 and 82 of the EC Treaty (general deterrence) the sanctions shall be substantial. It can be hardly disputed that the European Commission imposes fines of high amount. Yet, the determination of nature of European competition law is not a clear-cut. As it is suggested by some scholars, European competition law is not criminal in nature. 116 On the other hand, as suggested by ECtHR case law, the nature is criminal indeed. 117 In any case, even if it was admitted, that the criminal nature is presented, it should be born in mind that the subjects concerned are undertakings (therefore usually legal persons) and thus the scope of protection shall differ from criminal law per se, where the subjects are typically natural persons. 118 Moreover, even if it is admitted that European competition law is criminal in nature, what will be the essential difference regarding the question discussed in this thesis? 119 Is it the power of Commission to ask for documents even when they are self-incriminating? 120 On the other hand what may be a break-point here is the impossibility to assess an infringement without necessary information which is, usually, in the hands of the alleged infringers. It can hardly be imagined how the European Commission would work if the full privilege was recognised. The undertakings would be entitled, in effect, to reject production of any document, because even in the most technical one the infringing information might be discovered. 111 I. Aslam, M. Ramsden EC Dawn Raids: A Human Rights Violation? (2008) 5 The Competition Law Review, M. W. Janis, R. S. Kay, A. W. Bradley European Human Rights Law, Text and Materials (3 rd edn, Oxford University Press, 2008) For instance, crime of desertion can be committed only by a soldier. This, however, does not preclude the law and the procedure to be of criminal nature. 114 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 [2006] OJ C 210/ Ibid, para J. S. Venit EU COMPETITION LAW-ENFORCEMENT AND COMPLIANCE: AN OVERVIEW (1996) 65 Antitrust L.J. 81, Menarini Diagnostics S.R.L. vs. Italy, App No 43509/08 (ECtHR, 27 September 2011). 118 As stated by Giacomo Di Federico, competition law cases are not hardcore of criminal law. See: G. Di Federico, Deutsche Bahn: What the Commission Can and Cannot do in Dawn Raids (2013) 5 Journal of European Competition Law & Practice 29, It is interesting to note that, Article 47 of the Charter of fundamental rights does not make difference between civil and criminal matters. See: J. Cooper, Procedural Due Process, Human Rights and the Added Value of the Right to a Fair Trial (2006) 11 Jud. Rev. 78, D. Théophile, I. Simic, Legal Challenges to Dawn Raid Inspections under the Principles of EU, French and ECHR Law (2012) 3 Journal of Competition Law & Practice 511,