On 18 March 2013, the European Commission (the “Commission”) published revised guidance on the conduct of on-the-spot inspections at the business premises of companies suspected of having engaged in anti-competitive behaviour. The main aim of the revision is to reflect rapid technological changes in the last few years as well as a number of recent landmark cases relating to dawn raid procedures. It is thus generally considered as a codification and update of the Commission’s current practice in this area. In particular, the guidance spells out the procedure for seizing and copying data held on computers and storage devices.
Under Regulation 1/2003, the Commission has broad powers of investigation during competition investigations, including the power to conduct dawn raids at business premises. In this respect, the guidance recalls that Commission officials are empowered to:
- Enter any premises, property or vehicles belonging to undertakings or associations thereof;
- Examine the books and other related business records, irrespective of the medium in which they are stored;
- Take or obtain in any form copies of extracts from such books or records;
- Seal any business premises and books or records for the period or to the extent necessary for the inspection;
- Ask any representative or member of staff of the undertaking, or association of undertakings, for explanations on facts or documents relating to the subject-matter and purpose of the inspection and to record the answers.
The guidance then underlines the obligation of inspected undertakings to submit to dawn raids, i.e., to cooperate fully and actively with the inspection. Concretely, this may involve providing representatives or members of staff to assist the inspectors, not only for explanations on the organisation of the undertaking and its IT environment, but also for specific tasks by IT staff such as the temporary blocking of individual email accounts, temporarily disconnecting running computers from the network, removing and re-installing hard drives from computers and providing administrator access rights’ support.
The guidance stresses that undertakings must not interfere with or obstruct inspections. This principle was in fact tested in the recent EPH decision, where the Commission had imposed a € 2.5 million fine for the company’s refusal to submit to an inspection, i.e., the company had failed to properly ensure the blockage of an e-mail account and diversion of emails (see VBB on Competition Law, Volume 2012, No. 3, available at www.vbb.com). Similarly, the revised guidance now expressly states that, in the event that the inspectors decide to seal business premises and books or records, a minute will be made, and undertakings must then ensure that seals that have been affixed are not broken until the seals are removed again by the inspectors. This echoes the recent E.ON case in which the Court of Justice of the European Union (“ECJ”) had upheld E.ON’s € 38 million fine for obstruction of a dawn raid after the Commission discovered that its affixed seals had been tampered with (see VBB on Competition Law, Volume 2012, No. 11, available at www.vbb.com).
As far as undertakings’ rights are concerned, the guidance recognises their right to consult a legal advisor during inspections, but the presence of a lawyer is not a legal condition for the validity of the inspection. The inspectors can enter the premises without waiting for a lawyer to arrive, and will accept only a short delay before starting to examine business documents and records. Again, there is a risk that a prolonged wait may be interpreted as obstruction of the inspection. In the recent KWS case, for example, the Commission increased KWS’ fine by 10% for having denied inspectors entry to the company’s business premises for over 45 minutes, the time for external legal counsel to arrive on-site. Here, the General Court considered that while the right to seek the presence of a legal counsel should be taken into account, the Commission officials should at least have been given access to the premises to serve the decision and ensure that crucial evidence was not being destroyed.
Other key features of the revised guidance include an expanded list of the potential types of storage media that may be examined (e.g. electronic information) and search tools that may be used during inspections. For example, inspectors can search the IT environment and storage media (laptops, desktops, tablets, mobile phones, CD-ROM, DVD, USB-key etc) of the undertaking. For this purpose, the inspectors may not only use built-in (keyword) search tool, but may also make use of their own dedicated software and/or hardware (forensic IT tools). These forensic IT tools allow the Commission to copy, search and recover data whilst respecting the integrity of the undertakings’ systems and data. In addition, the inspectors may ask to use hardware (hard disk, CD-ROM, DVD, USB-key, connection cables, scanner, printer etc) provided by the undertaking but cannot be obliged to use the undertaking’s hardware.
At the end of the inspection, the revised guidance states that inspectors must cleanse all the forensic IT tools that contain data from the undertaking (although hardware provided by the undertaking is not cleansed by the inspectors). However, in the event that the selection of relevant documents for the investigation is not finished during the on-site inspection, the copy of the data still to be searched may be secured by placing it in a sealed envelope, so that it can be later inspected at the Commission's premises, in the presence of the undertaking.
Finally, the revised guidance provides that the undertaking receives a copy, in electronic or paper format, of all the documents and the data copied by the inspectors and may request a signed list of the copies and extracts taken by the inspectors during the inspection. This may serve several useful purposes, including facilitating more quickly the undertaking’s own internal investigations (e.g. in the context of possible leniency applications).
The Commission's revised guidance is a useful reminder of the undertakings' rights and obligations during dawn raids, in particular with respect to electronic information and digital storage media. Clearly, the undertakings' IT staffs play an increasingly crucial role during dawn raids.
