French supermarket dawn raids down the drain
On 9 March 2023, the European Court of Justice (ECJ) ruled that the European Commission should properly record interviews if they are used to gather information regarding the subject matter of the investigation. This obligation applies regardless of the stage of the proceedings and non-compliance can lead to the annulment of dawn raid decisions.
These are the lessons learnt from the three very similar judgments on the dawn raid decisions in the French supermarket cases. The supermarkets appealed the General Court’s rulings, in which the decisions had already been partly annulled. They argued that the General Court wrongly found that sufficient effective remedies are available to challenge the Commission’s conduct during an investigation.
The ECJ sided with the General Court in this regard, but did agree with the supermarkets that the Commission had failed to properly record the interviews on which the inspections were based.
Background
In 2017, the European Commission adopted the dawn raid decisions, which are the subject of these proceedings. According to those decisions, the Commission suspected that French supermarkets Casino and Intermarché and their joint purchasing alliance INCA Auchats participated in information exchanges on (i) discounts obtained on the supply markets and (ii) future commercial strategies.
The supermarkets filed separate appeals seeking to annul the dawn raid decisions. The General Court partially annulled the decisions in 2020 (see our November 2020 newsletter). It ruled that the Commission had insufficient strong evidence to support the dawn raids in so far as the information exchange on future commercial strategies was concerned.
The ECJ rulings
The supermarkets subsequently lodged separate appeals against the General Court’s rulings before the ECJ, albeit on largely similar grounds. They requested the ECJ to annul the dawn raid decisions in their entirety.
First, part of the appeals concerned the question whether an effective remedy is available to challenge the Commission’s conduct during an inspection. In short, the supermarkets argued that the remedies available were insufficient in light of case law of the European Court of Human Rights (ECHR), and that the General Court’s analysis of the various remedies was insufficiently specific. This was rejected. The ECJ agreed with the General Court that various sufficient remedies were available, such as appealing the inspection decision or the decision closing the procedure.
Second, the supermarkets also argued that the Commission had failed to properly record the interviews on which the dawn raids were based and that the General Court wrongly found that this obligation does not apply before the formal opening of the investigation. Here, the ECJ sided with the supermarkets. With reference to the wording of Article 19 of Regulation 1/2003 and Article 3 of Regulation 773/2004 (both on the power to take statements) and its earlier judgment in Intel, among other things, the ECJ found that the obligation to record interviews does not depend on the stage of the proceedings, but rather on the purpose of the interviews. If the interview serves to collect information on the subject matter of the investigation, the Commission must properly record the interviews.
The ECJ set aside the General Court's ruling and delivered a final judgment. It decided that the interview notes that the Commission did have could not have served as evidence for the dawn raids, because they were not shared with the interviewees for their approval. This is contrary to Article 3 (3) of Regulation 773/2004. The ECJ therefore annulled the dawn raid decisions in their entirety.
Conclusion
If interviews relate to the subject matter of the investigation, the Commission must record them and make the recording available to the interviewees for their approval. Companies under inspection should check whether any interviews held meet these requirements to establish whether there was sufficient evidence to conduct dawn raids.
This article was published in the Competition Newsletter of April 2023. Other articles in this newsletter:
- ECJ in Towercast: plan C for tackling concentrations?
- Guidelines vs Guidance: exclusionary abuse Guidelines due by 2025
- Forewarned is forearmed: RPM still top of mind
- Informal views issued in agricultural industry and banana sector
