Dawn Raid Guide - European Union

Antitrust dawn raids - administrative

The European Commission carries out antitrust dawn raids under administrative investigation powers only.

Scroll down and click on a question to see the relevant information.

The questions are divided into three sections: General Powers, Documents and other materials and Interviews.

For further information contact Tony Woodgate or Koen Platteau.

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GENERAL POWERS
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    Which agencies may carry out dawn raids?
    •  Dawn raids, known as unannounced (or surprise) inspections, relating to a European Commission (Commission) investigation into a possible infringement of the EU competition rules are carried out by the Commission, usually with the assistance of the national competition authority (NCA). At the request of the Commission, the NCA may also carry out raids on business premises on the Commission's behalf, using the same powers that the Commission would use if it were acting on its own account.

    Under what powers can a dawn raid be carried out?
    • The procedural requirements and investigative powers of the Commission relating to inspections are set out in Council Regulation (EC) No. 1/2003 (the Regulation); its powers of inspection are set out in Article 20(2). Raids on business premises are carried out under Article 20(3) or 20(4). Where the assistance of an NCA is sought (which is invariably the case), the NCA's powers in relation to a European Commission raid are governed by national law - in the UK, for example, under section 62 Competition Act 1998. Where the NCA is acting on behalf of the Commission in relation to inspection of a business, however, its powers are equivalent to those of the Commission as set out in Article 20(2), which may also be inscribed in national law (in the UK, in Section 62B Competition Act 1998). The Commission is also empowered to inspect domestic premises under Article 21(1) of the Regulation. It may not delegate those powers to an NCA. 

    What do the officials need to do before carrying out a raid? Is a court application required? What criteria, if any, must be met before a raid can take place?
    • Under Article 20(3) of the Regulation, an inspection of business premises can be carried out pursuant to a written authorisation by the Commission. Under Article 20(4) of the Regulation, an inspection can be ordered by a decision of the Commission. In inspections ordered by decision, it is usual for the Commission to request the assistance of the relevant NCA in case it is necessary to gain entrance to the premises using a degree of force. A court application is necessary if such assistance must be judicially authorised under domestic law. The application can be made on the spot if the undertaking opposes the inspection, or applied for as a precautionary measure. An inspection of domestic premises can only be carried out with the prior authorisation of the national judicial authority of the Member State concerned (Article 21(3)).

      The Commission has a wide discretion to carry out an Article 20 inspection "in order to carry out the duties assigned to it" under the Regulation (Article 20(1)). For an Article 21(1) inspection of domestic premises, it must have a reasonable suspicion that books and records related to the business and the subject matter of the inspection which may be relevant to prove a serious violation of Articles 101 or 102 are being stored on the premises, issue a decision ordering the inspection, and obtain prior judicial authority from the relevant Member State before carrying it out.

    What restrictions, if any, are the officials subject to? Can domestic premises be searched as well as business premises? Is the search limited to particular documents?
    • Can domestic premises be searched as well as business premises?

      Yes. Under Article 21(1) the Commission can enter "any other premises, land and means of transport", including domestic premises, subject to the requirement of reasonable suspicion set out above, a formal decision and a judicial warrant/order from the relevant national judicial authority.

      Is the search limited to particular documents?

      The search is limited to documents relevant to the subject matter and purpose of the investigation.

      Under Article 20(2) of the Regulation, the Commission has the power to:

      • examine business records and company books related to the business, irrespective of the medium on which they are stored
      • take copies or extracts from such records and books.

      The Commission is not entitled to:

      • seal domestic or other premises - only business premises
      • ask on the spot questions during an inspection of domestic premises.
    What documentation, if any, must the officials present before carrying out a raid?
      • a certified copy of the decision of the Commission, where the inspection is pursuant to a decision
      • the written authorisation (whether or not there is a decision)
      • explanatory notes to the decision and/or authorisation explaining the Commission's powers to carry out the inspection and the penalties that could be incurred under Article 23 of the Regulation, namely for providing incomplete records or answering questions misleadingly or incorrectly; for failing to rectify incorrect, incomplete or misleading answers within a time limit set by the Commission, for refusing to submit to an Article 20(4) inspection by decision or for failing or refusing to provide a complete answer to on the spot questions on facts (see also below). The information on an Article 20(4) inspection must also include the fact that the decision can be reviewed by the ECJ.
      • a minute of notification of the decision (where relevant), which the company inspected is asked to sign to confirm its receipt of the decision
      • individual staff cards, to identify the Commission officials authorised to inspect, and
      • if relevant, any Court order issued.
    Is the company or individual entitled to know the reason for the raid and who is under investigation?
    • The decision and/or the authorisation specifies the subject matter and purpose of the inspection, but the individual or company is not entitled to know who else is being investigated. The Commission has said that it will not enlarge upon the subject matter as set out in a decision or justify its choice to order the inspection by way of the decision. Officials may, however, explain procedural matters, particularly confidentiality, and the possible consequences of a refusal to submit to the inspection.

    Under what circumstances, if any, can force be used?
    • Inspectors are not entitled to use force to enter premises. Where entry is refused in relation to an inspection ordered by decision, the Commission may impose a fine. However, the Member State is obliged to render all necessary assistance to enable the Commission to carry out its inspection, where appropriate with the assistance of the police or an equivalent enforcement authority (Article 20(6) of the Regulation). National procedures, backed where necessary by an application for a court order or warrant, are likely to authorise the use of (reasonable) force.

    Is it possible to insist that a lawyer is present throughout the search?
    • There is no entitlement to insist on the presence of a lawyer throughout. The presence of a lawyer is not a legal condition for the validity of the inspection. Officials can enter the premises, notify the decision ordering the inspection and occupy the offices of their choice without waiting for the undertaking to consult its lawyer. The officials will accept only a short delay pending consultation of the lawyer before beginning the inspection. They will not wait if there is an in house lawyer on the premises.

    What obligations is the company or individual under? What are the penalties for not complying (worst case)?
    • In an inspection by authorisation only, the company is not obliged to comply but is instead asked to submit to the investigation voluntarily. In an inspection by decision, the company is obliged to permit the inspection and fines can be imposed for refusal to submit - either up to one per cent of total turnover in the previous year under Article 23(1) or a periodic penalty payment of up to five per cent of the average group daily turnover for each day that the company refuses to permit an inspection under Article 24(1)(e) of the Regulation. In reality, where a company refuses to submit voluntarily to an Article 20(3) inspection, the Commission can rapidly convert the authorisation into a formal decision and oblige the company to comply.

      The ECJ has held that undertakings are obliged to cooperate actively with the Commission (Orkem C-374/88). A lack of cooperation during an inspection could be seen as aggravating factor when it comes to determining the level of the fine in relation to a substantive finding that the company has infringed competition rules.

      Under Article 23(1)(c),(e) and (d), the Commission has the power to impose a fine of up to one per cent of group annual turnover where:

      • an undertaking provides incomplete books or other records
      • a member of staff gives an incorrect or misleading answer relating to the facts or documents relevant to the inspection during an inspection
      • the undertaking fails to rectify within a set time limit an incorrect, incomplete, or misleading answer given by a member of staff
      • a member of staff fails or refuses to provide a complete answer in relation to facts relating to the subject matter and purpose of an inspection under Article 20(4), or
      • a seal placed on documents or premises by inspectors is broken.
    What recourse is there if officials go beyond their powers during the raid?
    • Under Articles 20(4) and 21(2) of the Regulation, a formal decision authorising an inspection can be reviewed by the ECJ under Article 263 TFEU within two months of the decision being made known to the claimant (ie when it is presented during the inspection). This does not suspend the operation of the decision - separate, urgent proceedings would need to be taken before the President of the General Court.

      In principle, under Article 340 TFEU, the Commission may be required to make good any damage caused by its officials in the performance of their duties, in accordance with the general principles common to the laws of the Member States.

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    DOCUMENTS AND OTHER MATERIALS
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      Can officials take original documents?
      • No, they cannot. They are only entitled to take copies of original documents.

      Can officials take any document (regardless of relevance) and review later to check for relevance?
      • As a general rule, the Commission is entitled to examine all documents related to the business that fall within the scope of the investigation. However, the Commission has no "seize and sift" powers - it is not entitled to go on a fishing expedition and take copies of documents wholesale for subsequent review. It is under an obligation not to examine business records, or to stop examining such records, if they are obviously, or in the Commission official's opinion, not related to the subject matter of the investigation . However, it is for the Commission and not the company being inspected or a third party to decide whether or not a document should be produced to it 1.

        The Commission has acknowledged that where inspectors take copies of records which, in the opinion of the undertaking concerned, are not related to the subject matter of the investigation, the undertaking may ask the Commission to return the documents 2 .The Commission's Notice on Access to File acknowledges that the Commission may obtain a considerable number of documents during an investigation, some of which may prove to be irrelevant. Such documents may be returned to parties from whom they were obtained.

        1 Hoechst AG v Commission [1989] ECR 2859, para 31

        2 CSM-NV v Commission, [1992] OJ L305/16

      Can officials take a forensic image of digital media (regardless of relevance) and review later?
      • According to the Commission, yes, where the Commission's selection of documents and data is not finished on site, or when officials or (eg) accompanying IT experts find it necessary for the preservation of information that otherwise could be lost or when access to the selected data or documents is not possible on site. If the selection of the relevant documents for the investigation is not finished during the inspection the digital copy (DVD, Hard Disk, etc) of the data still to be searched is put in an envelope which will be sealed in situ and carried off by the officials. A replica of the digital copy is given to the company, which is then invited by the Commission to attend the opening of the sealed envelope and the selection of data in the Commission’s premises.

      Is it possible to prevent the disclosure of any documents?
      • On the grounds of relevance?

        Yes: documents that are obviously not relevant to the subject matter and purpose of the search need not be disclosed. However, the Commission's view is that it is for it, rather than for the company, to decide what is relevant.

        On grounds of legal privilege or secrecy?

        Yes: documents benefiting from legal professional privilege under EU law do not need to be disclosed. However, legal professional privilege under EU law only covers communications between external (EEA qualified) lawyers and their client, not communications between in house counsel and company staff. Communications from or to in-house lawyers that report the advice of external lawyers are also privileged. Preparatory documents drawn up for the exclusive purpose of seeking external legal advice are also privileged.

        The company must provide the Commission with appropriate evidence to substantiate the claim of privilege. It could, for example, allow the Commission to have a cursory look at the heading, layout or title of a document to support its claim 3, unless a cursory glance would reveal the contents of the document and so breach privilege.

        Where the Commission considers that a company has provided no evidence or explanations to show that the document is privileged, or considers that the claim is clearly unfounded, it will read the document and take a copy of it. Where it cannot be excluded that a document may be privileged, Commission officials may place the document in a sealed envelope and take it, with a view to subsequent resolution of the dispute. If the Commission remains of the view that the document is not subject to legal professional privilege it will issue a decision to the effect that it intends to unseal the envelope and read the document. The company can then appeal this decision to the General Court.

        Documents containing business secrets must also be disclosed. However third parties will not have access to business secrets or other confidential information on the Commission's file.

        3 Commission Best Practice Guidelines on the Conduct of Proceedings concerning Articles 101 and 102. January 2010.

      Is it possible to request copies of the documents and other material (including electronic material) that are taken?
      • Yes. The Commission will provide a copy of all the documents and materials taken by the officials, without a request to that effect being made.

      Is it possible to insist that a record is provided of everything that is taken during the search?
      • The company should request a signed list of the copies and extracts taken.

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      INTERVIEWS
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        Can questions be asked on the spot? If so, who can be asked and what restrictions, if any, are there on the kind of questions that can be asked?
        • Who can be asked?

          The Commission can question any member of staff or representative of the company.

          What restrictions, if any, are there on the kind of questions that can be asked?

          The officials may not compel an undertaking to provide it with answers which might involve an admission on its part of the existence of an infringement which it is incumbent upon the Commission to prove 1. However the Commission can require explanations relating to documents and as to facts eg a particular person's role or whether they attended a meeting.

          See the response above to the question What obligations is the company or individual under?

          1 Hoechst AG v Commission [1989] ECR 2859

        Can the officials interview individuals? Under what power and what is the process?
        • Yes, Commission officials may take a statement from an individual under Article 19(1) of the Regulation with that individual's consent. The individual may be interviewed for the purpose of collecting information relevant to the investigation which relates to "the subject matter of the investigation". However, this type of interview is unlikely to be carried out during a surprise inspection.

          Where the Commission conducts an interview under Article 19, it informs the interviewee of the legal basis of the interview and its voluntary nature, the purpose of the interview and the fact that a record will be made of it. A copy of any recording is made available to the interviewee for approval shortly after the interview.

        Is it possible to insist that a lawyer is present at an interview?
        • It is advisable for a lawyer to be present during on the spot questioning under Article 20 during a surprise inspection to ensure that only factual questions are asked of individual employees, but there is no legal requirement for a lawyer to be present, so the Commission could go ahead and ask its on the spot questions. There is nothing to prevent a lawyer attending an Article 19 interview.
        Is it possible to refuse to answer questions? If so, on what grounds?
        • Under Article 20(2)(e) of the Regulation requests for explanations of facts and documents must be answered. A refusal to answer legitimate questions could be regarded as an aggravating factor when the Commission ultimately imposes a fine. Alternatively, if an individual fails or refuses to answer a factual question during an inspection made under a decision, or provides an incorrect, incomplete, or misleading answer whether the inspection is under a decision or authorisation to any Article 20(2)(e) question, a fine of up to one per cent of total group turnover could be imposed. Interviews under Article 19 carried out outside a dawn raid are voluntary. No penalty therefore attaches to a refusal to answer questions in an Article 19 interview.

        This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.