The Czech Competition Authority (CCA) published an information paper on dawn raids(1) during its annual competition law conference on November 15 2017. Its aims are twofold – namely, to provide:
- guidance explaining the powers and privileges of CCA officials in the course of a dawn raid; and
- a brief overview of the case law relating to dawn raids, focusing on judicial review of the legality of dawn raids carried out after the European Court of Human Rights' judgment in Delta Pekárny.(2)
In the first part of the paper, the CCA summarises its general best practices applied in the course of its investigations on business premises, centring on the rights of CCA officials and the obligations of investigated companies. In particular, the CCA focuses on companies' obligation to cooperate during a dawn raid (and on what this obligation entails), and summarises the necessary formalities of a written investigation authorisation decision issued by the CCA chair, including procedural aspects of the delivery thereof. The CCA also describes the rights of its officials during dawn raids (eg, the right to enter premises and gain access to documents and various devices, including the right to verify the nature of the documents and devices).
The second part of the paper focuses on the status quo of case law concerning the legality of dawn raids carried out by the CCA. This is particularly due to the fact that three years have passed since the ground-breaking Delta Pekárny judgment, which deemed ineffective the formerly available ex post judicial review available to investigated companies in order to challenge the legality of dawn raids, since it was not sufficiently immediate.(3) Investigated companies had two procedural options to challenge the legality of a dawn raid:
- one requiring the CCA to terminate the administrative proceedings without finding an infringement; and
- the other requiring the company to await the final decision on the infringement.
When the judgment was issued, it put all planned CCA dawn raids on hold.(4)
In order to guarantee sufficient immediate protection of fundamental rights in compliance with EU requirements, changes were introduced in 2016 to the effect that it was explicitly stated in applicable legislation that any investigated company can file a separate administrative action to challenge the legality of a dawn raid, irrespective of the status of the infringement proceeding (so-called 'separate administrative actions'). Such a separate administrative action must be filed within two months of the dawn raid.
In the paper, the CCA summaries that over the past three years, investigated companies have continued to challenge the alleged illegality of dawn raids ex post, and have also made use of the newly introduced separate administrative action.
In light of the above, the CCA discusses two judgments handed down after separate administrative actions have been filed. In both cases, the claimants challenged the scope of the CCA's investigation authorisation decisions, arguing that the CCA defined the subject of the dawn raid too broadly, having used the words "in particular". According to the claimants, this broad scope enabled the CCA to carry out a fishing expedition. As such, one of the three criteria for a dawn raid to be legal as defined by the European Court of Human Rights – the criterion of necessity (the other two being a legal basis and legitimate aim) – was not fulfilled. The case reached the Supreme Administrative Court, which ruled that the definition of the scope of the investigation authorisation decision using the words "in particular" or other demonstrative words constituted a defect of the authorisation to conduct a dawn raid. Nevertheless, such a defect itself did not establish the illegality of the dawn raid as such, provided that the CCA did not exceed the scope of initial suspicion which led to the dawn raid.
Another case highlighted by the CCA also addresses the scope of dawn raids. In this case, the action against the legality of a dawn raid was brought by the claimant after the final administrative decision was handed down by the CCA. The court ruled that three out of seven dawn raids carried out by the CCA did not meet the criterion of necessity in order to be considered legal, since the scope of the inspection was excessively general. The four subsequent inspections were found in breach of the necessity criterion as well, since the previous suspicion concerning a breach of competition law was rebutted by the first three inspections. Therefore, the CCA did not possess the knowledge or indications for the subsequent four interferences with the claimants' privacy. The appeal is now pending before the Supreme Administrative Court.
(1) Available online at www.uohs.cz/cs/informacni-centrum/informacni-listy.html (in Czech).
(2) Delta Pekárny AS v Czech Republic, App 97/11, ECHR 279, October 2 2014 judgment (NYR). For further information, please see "Competition Authority resumes dawn raids on business premises" and "Competition Authority cannot perform dawn raids without prior judicial approval".
(3) The CCA has the power to inspect business premises without any prior judicial warrant; a court order is needed only for the inspection of private premises.
(4) According to the paper, the number of dawn raids carried out dropped to only 13 in 2015.
This article was first published on www.internationallawoffice.com