Dawn raid drama: bycatch and data rooms
Beware of the fine line in antitrust investigations between illegal fishing expeditions and accidental discoveries pointing at a separate antitrust infringement.
The European Commission is not required to ignore bycatch, if it was genuinely found by accident. Neither does the ACM: a Dutch court confirmed that the ACM may extend the scope of its initial investigation if it stumbles across other potential antitrust violations while lawfully skimming through employees’ chat conversations and e-mails.
Similarly, competition authorities are not required to turn a blind eye to bycatch sent their way by other authorities. According to the European Court of Human Rights, the ACM can use evidence obtained through wire taps installed by other agencies for its antitrust investigations.
However, ‘seizure rights’ are not unlimited. The General Court underlined that the Commission may require the disclosure only of information deemed necessary to determine the existence of a suspected antitrust infringement. Moreover, even though the Commission is entitled to process personal data in this context, privacy rights must still be adequately protected.
Companies should keep a close eye on whether the search terms used by competition authorities match the investigation’s subject matter. In addition, making sure that a separate virtual data room is set up will adequately protect privacy rights.
No discard of bycatch
Earlier EU case law has clarified that the Commission may seize documents unrelated to the subject matter of the inspection decision, but only if they are genuinely accidental dawn raid discoveries (see our July 2015 newsletter). According to the Court of Appeal in The Hague, the ACM may do so too. With reference to the earlier EU case law, the Court of Appeal upheld an earlier ruling by the preliminary relief court finding that the ACM had lawfully extended the scope of its initial investigation after finding clues of another antitrust breach while cursorily scrolling through search term-filtered chat conversations and e-mails (see our August 2021 newsletter).
Moreover, the ACM is not bound by its own investigative powers when it comes to evidence gathering. Even though the ACM itself is not authorised to tap phones when investigating suspected antitrust violations, the European Court of Human Rights (ECtHR) ruled that it may lawfully use evidence collected from telephone taps installed by other agencies during criminal investigations for its own antitrust probes.
The telephone transcripts were provided to the ACM on the basis of Article 39f(1) of the Judicial Data and Criminal Records Act. This Act authorises the Public Prosecutor to disclose information forming part of a criminal file to third parties if this is necessary for compelling public interest reasons. In this context, the ECtHR considered the transmission of these transcripts to be lawful, particularly because:
- the wiretaps were installed legitimately;
- the transmission pursued a legitimate aim;
- the conditions and the procedure for the handover of the wiretaps were clear and sufficiently safeguarded by ex post judicial review; and
- the ACM could not have obtained the evidence by less intrusive means, since anti-competitive practices are rarely in writing.
The question is whether the ECtHR’s scales may soon tip the other way, since three of the seven judges were less convinced of the adequacy of the above-mentioned safeguards. In their dissenting opinion, they considered there were significant flaws in the national legal framework, such as a lacking requirement for the Public Prosecutor to make an apparent and judicially verifiable assessment of the data transfer’s necessity – recorded in a properly reasoned decision – before transferring it.
No limitless data supply
Reassuringly, competition authorities’ powers to require data from companies are not limitless however (see also our April 2016 newsletter). In Meta Platforms’ appeal against the Commission’s information request, the General Court reiterated that the Commission may only require the disclosure of information that might enable it to investigate presumed antitrust infringements.
According to the General Court, this means that the Commission’s information request will have to set out the investigation’s subject matter by clearly indicating the suspicions it intends to investigate. However, this does not mean that the Commission is required to explain the relevance of each search term used to find documents or to substantiate how each search term identifies only documents relevant to the investigation. In addition, any potential interference of the right to privacy resulting from processing the consequential bycatch of irrelevant documents of a private nature can be sufficiently protected under a virtual data room procedure set up for this purpose.
Conclusion
The ways in which competition authorities can obtain information on potential antitrust infringements are not limitless, but the bar for companies to refuse to supply data is set quite high.
When dealing with dawn raids and information requests, companies will need to keep their eyes peeled to determine the investigation’s subject matter and speak up to explore the exact boundaries of built-in safeguards. The courts are more than willing to lend a hand (see also our November 2020 and April 2023 newsletters).
This article was published in the Competition Newsletter of June 2023. Other articles in this newsletter:
